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

INVESTMENT PLANNING YOUR GUIDING STARS!

Security, Yield & Liquidity are the Three Guiding Stars which should influence an Investor’s Decision Making

              The key to successful Investment Planning lies in making the right choice of investments that best suit the investor’s specific requirement!

              What are the important considerations which you as an investor must keep in mind while planning your Investment Portfolio? Security, Yield and Liquidity are the three Guiding Stars which should influence any investor in making his decision. (more…)

SMART BOND FOR EXEMPTION!

Enjoy exemption from long term capital gains by planning investment in specified bonds!

               Section 54EC of the Income-tax Act provides for exemption of taxable long term capital gains (LTCG) arising from the transfer of an asset, to the extent the amount of such gains are invested in notified bonds within a period of six months from the date of transfer.  Notified for this purpose are the three year bonds issued by National Highways Authority of India (NHAI) and Rural Electrification Corporation (REC).

               Until FY 2006-07, there was no monetary ceiling prescribed in regard to investment in such capital gains bonds and hence a taxpayer could virtually invest his entire taxable gain, even running into crores of rupees, in these bonds and avail the benefit of 100% exemption under Section 54EC.

               However, the Finance Act, 2007 amended Section 54EC so as to provide that this exemption would be available subject to the condition that the investment in the notified capital gains bonds made on or after 1st day of April, 2007 does not exceed Rs.50,00,000 during any financial year. (more…)

KBC – NO FREEDOM FROM TAX!

All winnings from Lottery or Games are taxed at flat rate of 30% & TDS is mandatory before Prize is handed over!

Though the popular TV Game Show KBC (Kaun Banega Crorepati) will launch its 5th Avataar on India’s 64th Independence Day 15th August, 2011, it will indeed be ironical that its prize winnings will enjoy ‘no freedom from tax.’ 

Participants receiving cheques signed by Big B for the full prize money as shown on your TV screen is mere hype, since no one really gets to take anything home before the taxman gets his pound of flesh (read tax) at a flat 30.9% from the same! (more…)

TAX BENEFITS UNDER FMP!

Taxpayers in Top Brackets can enjoy Totally Tax-free Returns availing Multiple Indexation!

              Arjun had invested Rs.25,00,000 in March, 2010 in a 13 months Fixed Maturity Plan (FMP) offered by a leading Mutual Fund. The indicative return offered to him was 11% upon maturity of the FMP in April, 2011.  Arjun will be fortunate to earn Rs.2,75,000 as his return on investment totally tax free. How does this work?
              Arjun’s return on FMP investment over the holding period of more than 12 months qualifies as Long term Capital Gains (LTCG) and is entitled to enjoy the double indexation benefit. The Cost Inflation Index (CII) for FY 2009-10 was 632 and for FY 2011-12 is 785. On the basis of the same, against his cost of Rs.25,00,000 in 2009-10, the indexed cost would work out to Rs.31,05,222. Keeping in view the maturity consideration of Rs.27,75,000 received by Arjun, he would be in a position to show a notional loss of Rs.3,30,222. Thus on his return of Rs.2,75,000, the liability to income tax will be effectively zero.   (more…)

FOREX ENTITLEMENTS,BOTH EASY & LIBERAL!

Know how to acquire Foreign Exchange for travel, education, medical treatment & investment overseas

With the substantial liberalization of Current Account Transactions in Foreign Exchange even for Resident Indians, you can now liberally acquire Foreign Exchange for a host of purposes without seeking any prior permission of the Reserve Bank of India (RBI). Such Forex can be released by Authorized Dealer Banks on a simple Application cum Declaration Form A-2 prescribed for the purpose under FEMA guidelines. Listed hereunder are the latest norms and guidelines announced by RBI for such transactions: (more…)

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