Are you a businessman or self employed person??

If you are a businessman or a self employed person then you should aware of the income which is chargeable to tax as per Income tax act, 1961

Following are the incomes which are chargeable to income tax

1.  the profits or gains of any business or profession which was carried on at any time during the previous year

2.  profit on sale of license granted under import (control) order under scheme of exports

3.  cash assistance received or receivable against exports under any scheme of government

4.  duty draw back against exports under scheme of the government

5.  the value of any benefit or perquisite, whether convertible into money or not, arising from any business or profession

6.  any interest, salary, bonus, commission or remuneration by whatever name received by a partner of firm from such firm

7.  any sum received under a key man insurance policy including the sum allocated by way of bonus on such policy

8.  any sum, whether received or receivable in cash or in kind, on account of nay capital asset being demolished, destroyed, discarded or transferred, if whole of the expenditure on such capital asset has been allowed as a deduction under section 35AD

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ARE YOU A NON RESIDENT AND EARN ANY INCOME BY WAY INVESTMENT IN SHARES????

If you are an non resident and earn any income by way of sale of shares in Indian companies then you are come under the tax bracket under the head capital gain.

In case an assessee i.e. a non resident, earn any income by way of transfer of shares or debentures in an Indian company, shall be computed by converting

1.  The cost of acquisition of the assets

2.  The expenditure incurred wholly and exclusively in connection with such transfer

3.  Sale consideration received or accruing as a result of transfer of  capital asset

into the same foreign currency as was initially utilized in the purchase of such shares or debentures. The capital gain so computed in the foreign currency then thereafter converted into Indian currency.

The above said manner of computation of capital gain shall apply to capital gain arising from every reinvestment.

The key advantage of this computation is that the government is giving benefits to non residents with regards to loss that may arise due foreign exchange.

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GET FAMILIAR WITH THE TERM CAPITAL GAINS

What is capital gain?

Capital gains are any profits and gains i.e. any income arising from the transfer of capital assets effected in the previous year shall be chargeable to income tax under the head capital gains in the previous year in which transfer took place.

Now, the question comes in the mind what is the capital asset?

Capital asset means property of any kind held by assessee whether or not connected with his business or profession but it excludes:-

1.  Stock in trade meant for assessee’s business or profession

2.  Personal effects, that is to say, movable property held for personal use by the assessee or by nay of his family member but again it excludes jewellery, archaeological collections, drawings, paintings, sculptures or any art of work

3.  Agricultural land in India situated in rural areas.

4.  Gold deposit bonds issued under the gold deposit scheme, 1999 notified by the central government

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SAVE INCOME TAX ON THE INCOME ARISING FROM SALE OF SHARES

If you have earned any income by way of sale of shares, you can save yourself from the tax implications. The income earned by way of sale of securities like shares, are subject to income tax but if you fulfill the conditions laid down in the section 10(38) of income tax act, 1965 you can save tax which ,may arise from the sale of shares

The conditions are as follows:

1.  The shares must be hold for more than 12 months

2.  Shares must be equity shares or unit of equity oriented fund

3.  Such transaction of sale must be entered into or after 01.04.2004

4.  Such transaction is chargeable to securities transaction tax

ANALYSIS

1.  This exemption is available to all assessee including foreign institutional investors and non residents

2.  Such shares must be held by assessee as capital assets not as stock in trade

3.  This exemption is available to equity shares or equity oriented units only

4.  It doesn’t cover securities like preference shares, debentures etc

If an assessee fulfills all the conditions as specified above, he can save his income so earned by way of sale of the above specified securities

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SALE SILVER AND STILL DOES NOT ATTRACT CAPITAL GAIN

If you have silver in any form and want to sell it but scared of attracting capital gain, you can save capital gain by selling silver in the form of silver utensils

With reference to the case of CIT Vs BENARSHILAL KATARIKA, the assessee sold the silver utensil and assessing officer was in the opinion that the selling of silver utensils are capital asset and hence capital gain would be attracted.

However, the high court held that silver utensils consisted of thalis, katoris, tumblers etc. which are meant for the personal use although they are not be used daily. Whether silver utensils constitute personal effects depend on the financial status of the assessee.

Therefore, silver utensil constitute personal affect and doesn’t constitute capital assets and hence it is not liable for capital gain

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GOLD DEPOSIT BONDS MAY BECOME YOUR KEY TAX SAVING INSTRUMENT

If you have gold idly lying with you and it is unable to generate any income except its incremental price, then you may opt for gold deposit bond.

Gold deposit bonds issued under gold deposit scheme, 1999 notified by central government is also an hot investment option for those investor who have investment in the form gold like in the form jewellery , gold bars, sovereigns etc

The key highlights of this scheme are as follows

1.  It provide annual interest of 2% p.a

2.  Interest earned on the bonds and capital gain arising from the transfer or redemption would be exempt from income tax

3.  Wealth is also not get attracted on these bonds

4.  It is easily redeemable at any point of time and more over redemption is on the fair market value prevailing in the market at the time of redemption

This option is opt by many users and they are taking the advantages of this scheme

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THINK BEFORE YOU INVEST

Investment is always a key decision factor in the mind of every investor. Every one wants to earn healthy return out of the amount invested by him, but its very difficult to decided in which area the money should be invested whether to invest in shares or mutual funds or fixed income securities or government bonds etc. But after reading this article we enable you to take decisions. The following points may be considered before you invest in any instrument:-

1.      TYPE OF INVESTOR: Firstly you should aware of yourself what type of investor you are. Are you aggressive, moderate or conservative approach investor. What is your risk taking ability?

2.    MAKE PORTFOLIO: After you decide your risk taking ability, you should make your portfolio accordingly, if you are capable of taking risk, then you should invest in equity market which offers you maximum return but it also offer maximum risk to your capital but if you want security of your capital then you may invest in the government bonds, this is save investment, it assures capital but doesn’t offers you higher returns.

3.    DURATION OF YOUR INVESTMENT: There after you should also take into consideration the time period of your investment. If you want to invest money for long period then you may opt for equity market as these are generally provide healthy returns if you are a long term investor.

4.    REGULAR UPDATES: Keep your self updated about investment market that you may plan your portfolio further or may revise your portfolio accordingly

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TAX PLANNING MAKE YOU RICHER!!!!!

Tax planning plays a vital role in your portfolio

A small Portfolio plan has been described herein, which may make you feel the importance of tax planning in your portfolio

Suppose your monthly income is Rs 30,000 and your monthly expenses is Rs 20,000

It means you save Rs 10,000 monthly.

Suppose you just keep this money in your saving account which offers you only 3.5% to 4% interest annually.

By this you will earn interest of Rs 1943 at the end of the year and at the end of year you will have to pay tax on your salary which is Rs 3,60,000 is Rs 18740 (including tax on interest from saving account)

But if you plan your portfolio you will not only earn higher interest moreover you will save your Tax liability too.

Interest earned at the end of year(in Rs)                 

Monthly income                  Rs 30000      

Monthly expenses                Rs 20000

Monthly savings                        Rs 10000

Now,     

Insurance premium (monthly)         Rs 1000        nil

Saving a/c (monthly)                  Rs 2000        388

Tax saving bonds (through sip)       Rs 5000        2249

Public provident fund (monthly)      Rs 2000        899                   

Total                                          Rs 10000       3536

Moreover you have deposited of Rs 1,08,000 in the form of public provident fund, insurance premium and tax saving bonds which is eligible for deduction under section 80c of income tax act, 1961

Therefore, your tax liability will be in this case is of Rs 7688 (including tax on interest on saving account and return on tax saving bonds)

The key highlight of this portfolio is that you have earned an additional interest of Rs 1588 and moreover you have save tax of Rs 8812 and additionally you will get an insurance coverage too and you have some amount in your saving account which is meant for meeting urgent needs.

In this portfolio we have assumed that the monthly interest on saving is 3.5% and interest on tax saving bonds and on PPF account is 8%

The interest rate may vary depending on the investment company’s or different banks or as per government policy.

The tax slab is used for the purpose of assessment year 2012-2013 and the individual portfolio used here is assessee other senior citizen and female assessee.

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EARNED ANY CAPITAL GAIN???????

Have you earned any capital gain and you are planning to acquire any house property you may save tax implications arising due to capital gain

If you want to save tax implications, you may invest your money by acquiring house property in rural areas, this will not only save your tax on capital gain, more over when you will sell out that property you will not get attracted by any tax liability as consideration arising due to sale of any house property in rural areas is exempt from tax.

People invest in house property in rural areas like in the form of farm houses, the purpose is for investment you may use it for holidays purposes, you may visit these places just to relax your mind, as these places are free from fast life as in cities which is full of pollution whether in the form of air pollution or noise pollution, you will find immense pleasure and relax your nerves,

If you are planning to buy nay house property you may buy it in rural areas.

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SUFFERED ANY LOSS IN BUSINESS????

If you earn losses from business, you can carry forward your loss to the subsequent years where such loss cannot be set-off due to the absence or inadequacy of sufficient profits in the relevant previous year.

Following are the conditions that must be considered for carry forward, carry forward and set-off of losses:-

1.  The loss should have been incurred in business, profession or vocation.

2.  The loss should not be in nature of a loss in the business of speculation.

3.  The loss may be carried forward and set-off against the income from business though not necessarily against the profits and gains of the same business or profession in which loss was incurred, but a loss carried forward cannot under any circumstances, be set-off against the income from any other head other than profits and gains of business or profession.

4.  The loss can be carried forward and set-off against the profits of assessee who incurred that loss, it can now be carried forward and set-off by his successor only if he carried on the same business.

5.  The loss can maximum carry forward for the period of 8 yrs immediately succeeding the assessment year in  which loss was incurred.

6.  As per section 80 of income tax act, 1961, the assessee in order to carry forward the loss to subsequent year, he must required to file income tax return.

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INVESTMENT - A CORE DECISION MAKING PROCESS

Investment is an core decision making process. Decision of making investment in any instrument is very important from the point of view of both return and risk. Investment in an three way process, it means investor should follow the following steps before making any investment

STEP 1. THINK BEFORE YOU INVEST

Firstly, the investor must think in which instrument he wants to invest his hard earn money. If he is of conservative nature then he should opt for instruments which provide least risk. Generally instrument with least risk element provide less return, for example, investment in government bonds, bank fixed deposit etc, these instruments provide least risk which is generally known as safe investment option but these instrument provide interest ranging between 7% to 11 % p.a depend upon tenure of investment.

If he is of moderate nature then he should involve risk element in his portfolio, which provide more interest than of conservative nature investor, for this purpose, he may invest in SIP in diversified mutual funds which offer higher return

But if investor is of aggressive nature and ready to take risk, then he should invest in equity market which gives highest return as compared to the other two, but in this case the risk is highest, an investor may suffer heavy losses.

STEP 2. UNDERSTAND YOUR INVESTMENT INSTRUMENT

Secondly, investor must read all the investment documents carefully, he must aware of the return and risk attached to the investment

STEP 3. INVEST IN THE INSTRUMENT

At last, he should invest in the instrument after reading all the documents, and his portfolio needs.

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FIXED INCOME INSTRUMENTS- A HOT INVESTMENT OPTION

FIXED INCOME INSTRUMENTS- A HOT INVESTMENT OPTION

If you are an investor with an conservative approach and doesn’t want risk element in your portfolio then your portfolio must be consists of fixed income instrument. In today’s market, fixed income instruments are giving higher return as compared to the other options although investment in equity may give higher return but it always carry an risk element, which means that the return may fluctuate as per the market condition.

When it compared with fixed income instrument although fixed income instruments provide the comparatively less return then equity but still its rate of return is fixed throughout its tenure which means it is independent of market.

The following are the fixed income instruments available in the market:-

1.  Fixed Deposits- Rate Of Interest may vary from 8 % to 10.5% p.a, rate of interest may vary from bank to bank and its also depend on the tenure of deposit.

2.  Public Provident Fund- Rate Of Interest is 8% p.a

3.  National Saving Certificates- Rate Of Interest is 8% p.a

4.  Post Office Savings- Rate Of Interest is 8% to 8.5% p.a

5.  RBI Bonds- Rate Of Interest is 8% p.a

The main advantage of investment in above investment is that the investor gets the tax relaxation. The investment made in these instruments, the investor can save tax subject to specifying limit depend upon the different option and as per income tax act, 1965

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GOLD SHINE IN THE FIELD OF INVESTMENT

GOLD SHINE IN THE FIELD OF INVESTMENT

Investment in the gold is hot option in the field of investment. What makes it very popular due to two reasons, firstly it’s a safe investment as its value doesn’t see downward movement as in shares in which returns are not predictable and its give better returns as compared to other investment.

 You can invest in gold through many routes:-

1. GOLD FUTURES

Gold futures is suited for the active investors as in this type of gold investment the risk is high, but the transaction cost, brokerage and warehousing charge vary between .003 to 2.0%.

There is 100% investment in gold in gold futures. In gold futures, returns is mostly higher than those from physical gold, in terms of liquidity, it is highly liquid form of investment.

2. E-GOLD

E-Gold is suited for the passive investors as in this type of gold investment the risk is low, but the transaction cost, brokerage and warehousing charge vary between 0.2 to 2.5%.

There is 100% investment in gold in E-GOLD. In gold futures, returns is mostly higher than those from physical gold, in terms of liquidity, it is highly liquid form of investment.

3. GOLD ETF

Gold ETF is suited for both active as well as passive investors as in this type of gold investment the risk is moderate, but the transaction cost, brokerage and warehousing charge vary between 0.2 to 0.5%.

There is 90-100% investment in gold and 0-10% in debt in case of GOLD ETF. In gold futures, returns is mostly higher than those from physical gold, in terms of liquidity, it is highly liquid form of investment.

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YOUR STRATEGIES NEED TO BE CHANGE AT DIFFERENT STAGES OF YOUR FINANCIAL LIFE

YOUR STRATEGIES NEED TO BE CHANGE AT DIFFERENT STAGES OF YOUR FINANCIAL LIFE

A. an individual’s financial needs are dynamic and your attitude towards finances should evolve over your life cycle

B.  Young professionals are situated in the right spot: they have steady income flow ahead of them and no liabilities. This is the time to start saving.

C.  At this stage, be more aggressive in investing, with more focus on equities.

D. Middle years are when you have a clear idea of your liabilities. Chalk out a clear plan for your financial goals.

E.  This is also the time to start making lump sum payments for certain expenses like house, car and so on.

F.  The final key stage is planning for retirement. The crucial part is here is to understand how much money you will need to live a proper life.

One should be clear in his investment approach. A proper investment portfolio will not only benefit him today but also secure his future. In brief, while planning for retirement, the key is understood how much money you will need to live the life style you are accustomed to. As today’s luxuries may be tomorrow’s necessities.

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source of information:   outlook money 

OWE MORE THAN ONE HOUSE- KEEP YOURSELF READY TO PAY TAX ON OTHER

OWE MORE THAN ONE HOUSE- KEEP YOURSELF READY TO PAY TAX ON OTHER

If you own more than one house property and both the houses are self occupied than the second house will be taxable under the head house property.

the government gives option to assessee to pay tax on the other house property at his own choice, it means assessee has option to pay tax on any house i.e. one house in this case will be self occupied and the other one will be deemed to be let out and its fair value will be taxable under the head house property in the relevant assessment year.

the assessee in this case, if he owned more than one house property and both are self occupied then he should evaluate the fair rental value of both the houses and house whose fair rental value is less, he should pay tax on that according to the slab rate of relevant assessment year.

If the assessee had obtained any housing loan on that let out property (which is deemed to be let out in above case), and paid any interest on above house, then he can claim deduction for the interest paid in the relevant assessment year

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YOUR EDUCATION LOAN CAN ALSO SAVE YOUR TAX

YOUR EDUCATION LOAN CAN ALSO SAVE YOUR TAX

If you have taken any education loan for the higher studies, you can save your tax. This deduction is allowed under section 80e of income tax act, 1961.

Section 80e provides deduction to an individual- Assessee in respect of nay interest on loan paid by him in the previous year out of his income chargeable to tax.

The loan must have been taken for the purpose of pursuing his higher education or for the purpose of higher education of his or her relative i.e. spouse or children.

Higher education means full time studies for any graduate or post graduate course in engineering, medicine, management or for post-graduate course in applied science or pure sciences including mathematics and statistics.

This education is allowed for computing the total income in respect of the initial assessment year ( i.e. the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan) and the seven assessment year immediately succeeding the initial year or until the interest paid in full by the assessee, whichever is earlier.

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TAX IMPLICATIONS FOR LOAN AGAINST SALARY, OR ADVANCE AGAINST SALARY

Tax implications for loan against salary, or advance against salary

Loan is different from salary. When employee takes any loan from his employee, which is repayable in certain specified installments, the loan amount cannot be brought to tax as salary of the employee.

Similarly, advance salary is different from advance

Salary. It is an advance taken by the employee from his employer. This advance is generally adjusted with his salary over a specified time period. It cannot be taxed as salary

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