September 2, 2010

Impact of Direct Tax Code on Salaried Individuals

Filed under: Economy — Tags: deliberations, direct taxes, disappointment, dtc, fixed deposits, hindu undivided family, income tax act, insurance policies, lakh, lakhs, national savings, nps, nsc, pension system, personal taxation, public provident fund, rs 1, slabs, time education, tuition fees — admin @ 9:38 am

So, it is finally here! After months of deliberations and tweaks, the much-awaited Direct Taxes Code (DTC) will replace the age-old Income Tax Act from April 1, 2012. So how will the new DTC impact you and me and the millions of salaried individuals in this country? Let us see!

Personal taxation slabs: A disappointment!

While there was widespread cheer about the proposed personal taxation slabs in the original form of the DTC when it was proposed last year, the current DTC act wears an insipid look. It has nothing major to offer on personal taxation slabs except that men, women and Hindu Undivided Family (HUF) will now face Rs. 2 lakhs of tax free exemption.

This is how the new tax slabs in DTC will look. There will be no tax up to Rs 2 lakh. There will be 10% tax on income between Rs 2,00,001 and Rs 5 lakh; 20% tax on income between Rs 5,00,001 and Rs 10 lakh; and finally 30% tax for income above Rs 10 lakh.

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July 15, 2010

Understanding liquidity can help you time your investments

Filed under: Economy — Tags: investments, liquidity — admin @ 5:51 pm

We hear about it quite often. Perhaps it is the most widely used term in today’s financial world! We are talking about “liquidity” in markets. But what does this term “liquidity” mean? Simply put, it is the money that is present in a financial system and available to all participants including the individuals, corporate bodies and the government as well.

What determines liquidity?

The liquidity in a financial system is determined by the demand and supply of money. In India, this demand and supply scenario and subsequently the liquidity in the financial markets is regulated and managed by the Reserve Bank of India, the country’s central bank. This could be done in three ways.

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July 7, 2010

How much tax can you save in real estate investments?

Filed under: Economy — Tags: 3 years, borrowings, buying a farm, buying a house, capital gains, income tax act, interest outgo, investing in real estate, notional value, preference, proportion, real estate investments, residential properties, residential property, restriction, rural areas, section 24, shortfall, sole purpose, tax implications — admin @ 5:50 pm

The first preference of investment for a majority of us is real estate. Right from buying properties for residential and commercial uses or for renting it out or for buying a farm house or lands in urban and rural areas investing in real estate has always been an exciting proportion.

However real estate investments can attack income tax and tax on capital gains when sold and hence it calls for a thorough planning to save such taxes.

Residential property

When buying a house for self-occupation

If you have only one residential property and occupy it too then you are not liable to pay tax on its notional value of the rent. However, the tax implications could be different if you own more than one residential property and occupy it too. In such a case you will be required to pay taxes on your other residential properties which are calculated on the basis of reasonable rent.

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June 17, 2010

Top Investment Myths

Filed under: News and Views — Tags: asset classes, contrary to popular belief, doing the rounds, extent, interest rate rise, interest rate risk, investment decisions, investments, investor, liabilities, money, mutual funds, myth, myths, nav, private companies, risk appetite, total value, understanding bonds, value increases — admin @ 4:35 am

Busting some investment myths

Experience teaches us a lot of things. And the world of investment is no exception. That said it is equally important to realize that having lost money in investment once should not be a reason to not see the opportunities that lies ahead. This holds true particularly for those people who had lost money in investments before. Let us see some of the popular investment myths which should be avoided at any cost!

1. Never do it alone

Today the markets are not as simple as they appear. They are complex in nature. Right from finding out your investment purpose, your risk appetite, the asset classes which would suit it, and predicting the market conditions at least to some extent requires a certain degree of expertise. Hence as an investor you need an expert’s advice to make the right investment decisions. While it does help to have knowledge about investments it can never substitute an expert’s advice.

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June 12, 2010

New Rules In Income Tax (TDS)

Filed under: Economy — Tags: april 1, certificates, challan, digital signatures, direct taxes, due date, due dates, fortnight, income tax rules, month of march, provisions, quarterly returns, quarterly statements, quarters, receipt numbers, salaried employees, salaries, tax deduction, tds — admin @ 4:21 am

CBDT brings in new changes in TDS rules

The Central Board of Direct Taxes (CBDT) has revised the Income Tax Rules, 1962 by bringing in new changes to the provisions regarding Tax Deduction at Source (TDS) that are filed on or after April 1, 2010.

New rules for TDS deposits

Every month the employers deduct tax on the salaries and other payments distributed to the employees. According to the new rules, the employers should deposit the tax deduction for a month within 7 days from the end of that month. However, the tax deducted for the month of March, which is the end of the financial year, can be deposited on or before April 30 of the year.

For annual TDS certificate

The new CBDT rules also make it mandatory for the employers to issue the Form 16 or the annual TDS certificate to their salaried employees by May 31 soon after the end of the financial year. Previously the deadline was April 30.

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May 20, 2010

PAN – Permanent Account Number

Filed under: Economy — Tags: april 1, banks, cash flow, central government, domestic payments, double taxation avoidance, immovable property, income tax act, lower taxes, maximum limit, mutual funds, pan number, payee, provisions, repercussions, tax authorities, tds — admin @ 5:56 am

Is your total income exceeding the maximum limit not chargeable to income tax? Then it is time that you get yourself a Permanent Account Number or PAN! Even if your answer is a no to the above question you will still require a PAN number if you are someone coming under the class or group as specified by the central government!

So the next time you file your income tax you are legally obliged to quote your PAN number on all papers including the tax payment challans. Moreover, you should quote your PAN if you:

Buy or sell an immovable property; or
Have deposits in banks that exceeds the allowable limits; or
Buy mutual funds more than the specified limits.

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May 13, 2010

Kisan Vikas Patra

Filed under: Economy — Tags: bonds, case of death, cash cheque, debt instrument, denominations, encashment, fixed deposits, forfeiture, government of india, interest income, interest rate, investment tool, kvp, limelight, maturity period, patra, post offices, rate regime, rs 50, seven months — admin @ 6:37 pm

Are you a risk averse investor? Are you looking at investing in some debt instrument? Are you done with your tax saving investments and have also exhausted your PPF limits? You do not want regular income and don’t mind locking your money to earn double returns.

Then Kisan Vikas Patra can be a an instrument where you can invest. While the name suggests that only a farmer can invest money in Kisan Vikas Patra it is not the case. Anyone wishing to invest money at safe places can go for Kisan Vikas Patra.

Kisan Vikas Patra (KVP) is a saving instrument that provides interest income similar to bonds. The KVP is a safe investment tool, as it is backed by the Government of India. The principal is assured and hence it is a safe avenue for investing your money. With low interest rate regime, such saving instruments are in limelight again. KVP is available at all Head Post Offices and authorized post offices throughout India.

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May 3, 2010

Tax Planning – How to plan it

Filed under: Economy — admin @ 5:31 pm

Last minute tax planning? Here’s how!

It is always better to plan your taxes in advance. But what if for some reason you sleep over tax planning and have very little time for filing income tax returns? Relax! Here’s a quick guide!

The different investments schemes under Section 80 C can save you taxes up to Rs. 100, 000. These are:

1. PPF (up to Rs. 70, 000).
2. NSC and deposits schemes like Post office Savings Deposits, five year bank fixed term deposits and equity linked saving schemes.
3. Life insurance or premium paid on ULIP policies and tuition fees for your 2 children. (more…)