Mukesh Patel.in
practical tax & investment planning online
international tax expert / columnist / author / speaker

INTERESTING ISSUE ON COST OF ACQUISITION

Cost Inflation Index for FY 2011-12 notified at 785 reflects a rise of 10.4% over last year’s 711

             Readers are aware that for purposes of computation of long term capital gains, a taxpayer is entitled to compute Indexed Cost of Acquisition, which is determined with reference to the Cost Inflation Index (CII) notified by the Government for the relevant financial year.

             Vide its Notification No.35 of 2011 dated 23-06-2011, the Central Government has notified the Cost Inflation Index (CII) for FY 2011-12 at ‘785.’ The CII for FY 2010-11 was ‘711.’ The increase of 74 points during the past one year reflects a rise of 10.4% in the Cost Inflation Index, also confirming the fact that the common man has continued to suffer under the double digit inflation impact! (more…)

TAX PLANNING VIA WILL

Plan tax-friendly distribution of properties to reap valuable tax savings for your family!

                     Through execution of a Will, a person can ensure that useful tax planning benefits are availed of by his legal heirs after his death. It is common to see a testator wishing to distribute his properties amongst close members of his family.

                    When a father executes a Will, he may want to distribute his properties amongst his children. At such a time, the father should also keep in mind their taxable income and wealth. If the children have taxable income or wealth attracting tax at a high bracket, distribution of assets to them would further increase their income-tax and wealth-tax liabilities.

                    In such a case, if the father distributes such properties under the Will to his daughter in laws, sons’ HUFs or grandchildren, whose taxable income and wealth are either below taxable or in a comparatively low tax bracket, this would be extremely useful from the point of view of tax planning. (more…)

IS HOUSE UNDER CONSTRUCTION LIABLE TO WEALTH TAX?

P & H High Court answers this interesting question in favour of the taxpayer! 

                   What would be the position regarding the taxability under Wealth-tax in respect of a building under construction? Can the Department tax the value of construction incurred for the incomplete building or contend that the value of such land on which the building is under construction is liable to Wealth-tax?

                    The above questions raise a very interesting point for consideration. Infact, an identical situation arose before the Punjab and Haryana High Court in the case of ‘CIT v. Smt. Neena Jain’ 189 Taxman 308, wherein the amount spent by the taxpayer in construction of the house was not shown in her Wealth-tax return, as according to her, residential house being under construction did not fall within the definition of ‘assets’ in section 2(ea). The Assessing Officer, however, held that incomplete house of the taxpayer very much fell within the purview of assets in section 2(ea) and, as such, it was liable to Wealth-tax. (more…)

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