Tax Planning & Help

NON DEDUCTION OF T.D.S BY TRUST

Posted by : rajanshah24

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Trust have not deducted T.D.S on Rent payment, but Trust is exempted from payment of Tax if 85% of revenue have been spend for the purpose of trust.

How 85% is arrived at
Is it dis allowance of rent income (as T.D.S is not deducted on it) will be considered as application of income?...

COST INF. INDEXFOR FY 08-09 NOTIFIED

Posted by : ashalanshu

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Dear friends, The CII for FY 2008-2009 had been notified by the Govt. of India. the figure for the current FY is 582.

all boarders & friends who had asked earlier, regarding Indexed LTCGs, please do take notice of the same & calculate their exact tax liability & plan accordingly.

If any problem, plz. do visit here at MMB.
Thanks

Ashal...

www.financeandstockadvice.blogspot.com

Posted by : Guest

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he could guide you not only in tax matter but also investment , mutual funds and equity market...

Income Tax On Fixed Deposite

Posted by : Guest

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Dear Sir,

I am salaried person of a PSU and Tax payer in the bracket of 30%.

I want to invest Rs 50000/- in fixed deposite in view of increased interest rates.

However, to save the tax on the interest earned on proposed Fixed deposite, i want to buy it in the name of my spouse who is a house wife and have PAN Card.

So i am planning to buy the FD in her name for a period of one year and submit her IT return as individual.

I request you to kindly advise me whether it is allowed as per Income Tax Act.

Regards


Sanjeev
...

MF Tax Queries

Posted by : RANJAN

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Dear Raj,
I always prefer dividend reinvestment (atleast in the initial years) to growth. This gives you the option to switch to pay out in the later years. Let us say you are investing for retirement.(at age 60). Till the year 58 have dividend reinvestment and then switch to payout. Under growth option you pay STT on withdrawal. Under dividend payout you save STT. So if you are getting a good dividend - the option to switch to annuity after retirement need not be excercised. Dividend is tax free & annuity is taxable. Even if you switch to annuity - you can do partly depending upon the LIMIT for tax free income. ...

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MF Tax Queries

Posted by : vvrk

Dear Ashal,
Thank you for the info.

Looking at the tax treatment, dividend reinvestment in equities is a bad option.

Thanks,
Raj

Plz Help - Investment & Tax Saving

Posted by : Vip's

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I want to Invest 10 Lakh, so can u pls suggest how should i sub-distribute my Investment (apart from Shares & MF, as i have already invested some of them).
Plz Help me out
Thnx...

Taxation OF SARDAR SAROVAR BONDS

Posted by : ashalanshu

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Dear biharilalgm, The SSDDB r listed on BSE. If u sell ur DDBs now on BSE, The LTCGs 'll accrue to u. Hence u can pay tax either @ 10.3% w/o Indexation, or 20.6% with indexation. U can opt any way which bring down ur tax liability. Ur LTCG tax calculation 'll be as under -

A. Purchase Cost in 1993-94 = 3600
B. Cost Inflation Index of 1993-94 = 244
C. Cost Inflation Index of 2008-09 = it is yet to notify by the Govt. of India but for sake of calculation i'm taking it as 590, please replace it as when actual CII for current year is notified.
D. Indexed Purchase cost = A*C/B = 3600*590/244 = 8705
E. Sell price = 50000
F. Indexed LTCG = E-D = 41295
G. Tax on indexed LTCGs = 20.6% of F = 8507
H. Unindexed LTCGs = E-A = 46400
I. Tax on Indexed LTCGs = 10.3% of H = 4779

From the above calculation, it is clear that unindexed LTCGs tax is lower for u in this case. so opt for the same.

Thanks

Ashal...

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Taxation OF SARDAR SAROVAR BONDS

Posted by : biharilalgm

What is the tax effect on sale today OR redemption on due date in january 2014 ,of SARDAR SAROVAR DEEP DISCOUNT BOND issued at rs.3600 in 1993 to day market value about rs.50000/-maturity value rs 110000/ in January 2014 Biharilal Mehta, 15.08.2008

Taxation OF SARDAR SAROVAR BONDS

Posted by : biharilalgm

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What is the tax effect on sale today OR redemption on due date in january 2014 ,of SARDAR SAROVAR DEEP DISCOUNT BOND issued at rs.3600 in 1993 to day market value about rs.50000/-maturity value rs 110000/ in January 2014 Biharilal Mehta, 15.08.2008...

Your tax queries, answered!

Posted by : Guest

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my father is retired & has no income & house is in his name. To avail tax benefit i want to add name as co-owner of house for its total reconstruction thru loan.Kindly show the way to do this...

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Your tax queries, answered!

Posted by : Guest

we are going tosellone piece of land which was purchased before 50 years by my grand father.on income of the selling the land which type of tax will be applied & how we can save the tax or exempted.Pl. do the needfull.
Jitendra baroda

MF Tax Queries

Posted by : ashalanshu

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Dear vvrk, In case of Div. reinvestment, STCGs Tax is applicable only if there is any STCGs between the allotment price of Unit to sell price of unit. There r some positives also.

thru Div. reinv. u have the option, to convert anytime from div. reinv. to div. payout. In this case as div. payout from eq. funds r tax free, no more tax \\`ll be applicable. Also thru div. reinv. u r entering in fund at different NAV.

I personally prefer growth option, if no need to book regular profits in the form of dividends. If the person need some regular income, Div. payout option is better, in comparison to growth.

thanks

Ashal...

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MF Tax Queries

Posted by : vvrk

Dear Ashal,
Thank you for the info.

Looking at the tax treatment, dividend reinvestment in equities is a bad option.

Thanks,
Raj

MF Tax Queries

Posted by : vvrk

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Dear Ashal,
Thank you for the info.

Looking at the tax treatment, dividend reinvestment in equities is a bad option.

Thanks,
Raj...

In reply to:

MF Tax Queries

Posted by : ashalanshu

Dear VVRK, Here I assume the fund in question is Eq. MF. If my guess is right here it goes the answer for ur query.

As the initial Units r held for more than a year, LTCGs tax is zero, subject to STT paid by u (or deducted by ur MF house). for Units received against Div. reinvestment option, as the holding period is less than a year, STCGs if any \\`ll be charged @ 15.45% (including Edu. cess & higher edu. cess), again subject to STT paid by u (or deducted by ur MF house).

Gold ETFs r at par with debt funds for taxation purpose.
Hence anybody who wants to take an exposure of Gold in her/his portfolio, s/he should prefer Gold ETFs over physical gold.

Reason in case of Physical gold, Time limit of LTCGs eligibility is 3 years but it is 1 year in case of Gold ETFs. Also there is not much issue involved about purity, storage, liquidity for Units of Gold ETFs in comparison to physical gold.

Thanks

Ashal

MF Tax Queries

Posted by : ashalanshu

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Dear VVRK, Here I assume the fund in question is Eq. MF. If my guess is right here it goes the answer for ur query.

As the initial Units r held for more than a year, LTCGs tax is zero, subject to STT paid by u (or deducted by ur MF house). for Units received against Div. reinvestment option, as the holding period is less than a year, STCGs if any \\`ll be charged @ 15.45% (including Edu. cess & higher edu. cess), again subject to STT paid by u (or deducted by ur MF house).

Gold ETFs r at par with debt funds for taxation purpose.
Hence anybody who wants to take an exposure of Gold in her/his portfolio, s/he should prefer Gold ETFs over physical gold.

Reason in case of Physical gold, Time limit of LTCGs eligibility is 3 years but it is 1 year in case of Gold ETFs. Also there is not much issue involved about purity, storage, liquidity for Units of Gold ETFs in comparison to physical gold.

Thanks

Ashal...

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MF Tax Queries

Posted by : vvrk

Dear Ashal,
I just realized my message got truncated for some reason.

Can you clarify the following tax related queries of mine.

First: Let us assume I invested in a MF with Dividend Reinvestment Option in 2005. In 2008 July, the MF declared dividends which got reinvested. If I sell my complete holdings in Aug 2008, what will be the tax treatment on the units alloted due to dividend reinvestment.

Second: What is the tax treatment on gold etf\\`s. Are they treated like equity if invested for atleast one year.

Thanks,
Raj

MF Tax Queries

Posted by : vvrk

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Dear Ashal,
I just realized my message got truncated for some reason.

Can you clarify the following tax related queries of mine.

First: Let us assume I invested in a MF with Dividend Reinvestment Option in 2005. In 2008 July, the MF declared dividends which got reinvested. If I sell my complete holdings in Aug 2008, what will be the tax treatment on the units alloted due to dividend reinvestment.

Second: What is the tax treatment on gold etf\\`s. Are they treated like equity if invested for atleast one year.

Thanks,
Raj


...

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MF Tax Queries

Posted by : vvrk

Dear Ashal,
I need some clarification from you regarding taxes.

First: Let us assume I invested in a MF with Dividend Reinvestment Option in 2005. In 2008 July, the MF declared dividends which got reinvested. If I sell my complete holdings in Aug 2008, what will be the tax treatment on the units alloted due to \\\\

Your tax queries, answered!

Posted by : abs32

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Dear Ashal,

Thank you so very much for resolving my issue!

I highly appreciate your patience and determination to get a solution.

Thanks a lot!

Abhishek
...

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Your tax queries, answered!

Posted by : ashalanshu

Dear abs32, the moment u gifted ur shares to ur wife, these r now her capital asset. So Taxes if any r to be paid, it is she who 'll pay.

As the shares were held for more than 15 years(ur holding period 'll also be considered for calculation of LTCGs as ur wife had received these shares as gift from u), these r Long term capital asset. Hence ur wife can pay the LTCGs Tax @ 10.3% w/o indexation or 20.6% with indexation. whichever way to bring down her over all tax liability.

Now comes the question of saving LTCGs Tax. To save Tax, the amount of LTCGs should be invested in a residential property, with any one of following condition, here i asume, the sell date of shares for ur wife is 20th Aug, 2008.

1. If ur wife had purchased a ready built house between 21 aug 2007 to 20 aug 2008 i.e. upto one year prior to booking LTCGs. The cost of such house is at least equal to LTCGs or more than it.

2. If ur wife purchase a ready built house between 20 aug 2008 to 19 aug 2010 i.e. till 2 years after booking the LTCGs.The cost of such house is at least equal to LTCGs or more than it.

3. If ur wife is constructing a house (including purchase of land from gain amount & construction on it subsequently), the construction should be completed between 20 aug 2008 to 19 aug 2011 i.e. within 3 years from the booking of LTCGs. The cost of such house (including land price) is at least equal to LTCGs or more than it.

for option no. 2 & 3 above, ur wife 'll have to open a "Capital gain saving account" in any bank & 'll have to deposit all the Gain amount in it mandatorily (as the amount 'll be invested over the period)

One important thing, ur wife 'll have to report this LTCG in her return of Income Tax, while filing the same next year to carry over the same for next 2-3 years as the case may be under option 2&3.

I hope the above answer 'll satisfy u. plz. feel free to ask if u r still in doubt.

Thanks

Ashal

Tax on gifts.

Posted by : sanjeevcmail

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1) I have a NRI A/c. What is the tax liability if I transfer money to my wife's resident savings A/C.
2) Is it possible to open a demat A/c through my ICICI NRI A/C?...