Tax Ready Reckoner for Investments - FY: 2015-16:
PrintListen to this Article
Tax Ready Reckoner for Investments - FY: 2015-16:
EQUITY:
Stocks:
1. If you hold on to them for a year, the long-term capital gain is tax free
2. Short-term capital gain is taxed at 15%
3. Dividends are tax free
DEBT FIXED INCOME INSTRUMENTS:
Savings a/c:
1. Interest up to Rs 10,000 is tax free, taxed at slab rate after that
2. TDS not deducted on savings interest.
Fixed deposits:
1. Full interest taxed at slab rate
2. TDS of 10% if interest in any financial year crosses Rs 10,000
Recurring deposits:
1. Full interest taxed at slab rate
2. TDS wef. this FY, the interest on RD is also subject to TDS like F.D.
Tax-free bonds:
1. Full interest is tax free
2. The long-term capital gain (after holding for 1 year) taxed at 10%
3. Being interest bearing instruments, no indexation benefit allowed
4. Short-term capital gain taxed at marginal rates.
Normal bonds and debentures:
1. Full interest taxed at slab rate TDS of 10% if interest in any financial year crosses the Rs 5,000 mark
2. The long-term capital gain (after holding for 1 year) taxed at 10%
3. Being interest bearing instruments, no indexation benefit allowed
4. Short-term capital gain taxed at marginal rates.
MUTUAL FUNDS:
Equity funds:
1. Long-term capital gain (after holding for 1 year) is tax free
2. Short-term capital gain is taxed at 15%
3. Dividends are tax free
Arbitrage funds:
(Provided they maintain equity fund status)
1. Long-term capital gain (after holding for 1 year) is tax free
2. Short-term capital gain is taxed at 15%
3. Dividends are tax free
Equity oriented balanced funds:
1. Long-term capital gain will be tax free
2. Short-term capital gain taxed at 15%.
3. Dividends are tax free
Debt funds:
1. Long-term capital gain (after holding for 3 years) is taxed at 20% after indexation
2. Short-term capital gain taxed at marginal rates
3. Dividends are tax-free in the hands of the investor, but scheme pays a very high dividend distribution tax of 28.32%
Debt-oriented balanced funds:
1. Long-term capital gains (after holding for 3 years) taxed at 20% after indexation
2. Short-term capital gain taxed at marginal rates
3. Dividends are tax-free in the hands of investors, but scheme pays a very high dividend distribution tax of 28.32%
Gold funds:
1. Long-term capital gain (after holding for 3 years) taxed at 20% after indexation
2. Short-term capital gain taxed at marginal rates.
GOLD:
Gold bullion and ornaments:
1. Long-term capital gain (after holding for 3 years) taxed at 20% after indexation
2. Short-term capital gain taxed at marginal rates.
Gold bonds:
1. Small interest received in the middle will be taxed at slab rates
2. Long-term capital gains (after holding for 1 year) taxed at 10%
3. Being interest bearing instruments, no indexation benefit allowed
4. Short-term capital gains taxed at marginal rates.
INSURANCE:
Endowment policies
1. Final proceeds tax free if premium in any year did not exceed 10% of the sum assured
2. TDS of 2% if the total receipt crosses Rs 1 lakh in financial year
3. Investors should consider service tax paid on premiums also while calculating returns
4. Service tax for endowment plans, it is 3.5% for first year's premium and 1.75% for the renewal premium.
ULIPS:
For ULIPs, service tax is 14% on all charges (like mortality charges, AMC fees, switch fees, etc)
REAL ESTATE:
1. Rent received (or notional rent for the locked up second home) are taxed at slab rate
2. Deductions available for rent includes property tax, repair costs, home insurance, etc
3. The long-term capital gain (after holding for 3 years) is taxed at 20% after indexation
4. Short-term capital gain is taxed at the marginal rates.
REAL ESTATE INVESTMENT TRUST (REIT):
1. Long-term capital gain (after holding for 1 year) from REIT units listed and traded in stock exchanges will be tax free
2. Short-term capital gain from REIT units listed and traded in stock exchanges will be taxed at a lower rate of 15%
3. REIT will be pass- through vehicle and is not liable for any income received by it
4. Rents received by REIT and distributed will be taxed at the hands of investors as rental income
5. Interest received by REIT and distributed will be taxed at the hands of investors as interest income
6. Dividends received by REIT and distributed will be tax free in the hands of investors.
Securities Transaction Tax (STT): STT is levied on stocks and equity mutual funds in lieu of tax-free dividends and also lower capital gain taxes. Equity mutual funds are defined as schemes that maintain more than 65% equity exposure and because of that, equity oriented balance funds and arbitrage funds also comes under this category.
Dividend distribution tax (DDT): The mutual fund dividends are tax-free, but there is a dividend distribution tax (DDT) applicable for debt mutual funds. The high DDT (works out to be 28.32% now) has taken the sheen out of the dividend options in debt mutual funds.
Indexation benefit: While computing long-term capital gain (LTCG), indexation benefit is provided as compensation against inflation. For example, if the LTCG is 10% p.a. and the inflation is 7% p.a., you need to pay tax only on 3% additional gains. Indexation benefit is not available for instruments that have interest components.
Category : Income Tax | Comments : 0 | Hits : 1081
Income Tax Alert - Here Are 5 High-Value Transactions That May Come Under Scrutiny. Large Cash Deposits: Any cash deposit exceeding Rs 10 lakh in a financial year across savings accounts draws the attention of the income tax department. Even if deposits are spread across multiple accounts, the cumulative amount beyond the threshold triggers scrutiny. Fixed Deposits: Surpassing the Rs 10-lakh limit in fixed deposits within a financial year prompts inquiries regarding the source of f...
Delhi Court Sentences Woman to 6 months Jail for not filing the return of income (ITR) discussed. Accordingly, the accused is held guilty of not filing the return of income for the assessment year 2014-15 under Section 276CC of The Act. Accordingly, the accused is convicted for an offence punishable under Section 276CC of the Act," the court said in the judgement. "The convict is awarded a sentence of simple imprisonment for six months with a fine of Rs 5,000 and in default to unde...
Corporates, Non-corporates or government department all are procuring major part of services or goods from the MSMEs. There are provision under the Micro, Small, and Medium Enterprises Development (MSMED) Act, to ensure that businesses make payments to MSMEs within a specified time frame, and failure to which can impact the deduction claims for such payments. To facilitate timely payments to micro, small, and medium enterprises (MSMEs) and address the challenges faced by these businesses in rec...
In the Income tax act, the words “Turnover”, “Gross receipts” and Sales are used at many places. In the common business parlance, the terms sales and turnover are used interchangeably. However, as per Income Tax law, guidelines are available on the question of what constitutes turnover. Understanding the concepts of these words is necessary for the purpose of the tax audit. An audit is mandatory for corporate assessees, irrespective of the amount of turnover. In ...
Very Important Income Tax Update regarding Micro and Small Enterprises Section 43B-any amount remains unpaid on year end to creditors, being micro/small entity, beyond 45 days or less, as agreed or 15 days if no agmt, shall be added to taxable Income resulting in huge additional tax liability. Keeping such creditors unpaid is risky. If payment for purchases made from *Micro and Small units* remains outstanding on 31st March, there may be huge tax liability. Therefore...
Comments