SHARE INVESTMENT NOT BUSINESS!

Mumbai High Court Stresses On Need For

Uniformity & Consistency In Approach!

“Activity of a taxpayer accepted as investment in shares in earlier years cannot be treated as business in subsequent years, if facts are the same.” This landmark ruling of the Mumbai High Court delivered on 6^th January, 2010 will make several investors heave a sigh of relief, in the backdrop of the recent onslaught of the Income-tax Department in treating capital gains from securities liable to tax as business income from trading in shares. While long term capital gains from securities are exempt and short term gains attract a concessional tax, business income gets taxed at normal rates. (more…)

Inherit Today, Sell Tomorrow, Still Keep Away Tax Sorrow!

ITAT Special Bench Grants Unique Tax Shelter

For Capital Gains On Gifted & Inherited Assets!

If your grandfather had acquired a plot of land for Rs.10 lakhs in late 1981, which you receive by way of inheritance on his death now in 2009 and you are planning to sell the same in early 2010 for a consideration of Rs.63 lakhs, what would be the income-tax you would be required to pay on your capital gains? Difficult to believe, but ‘zero tax’ is the correct answer.

(more…)

NRIs treated as Not Required Indians

Harsh, Illogical & Discriminatory Taxing Provisions For NRIs!

Proposals That Will Hurt The Global Indian Sentiment

Flat Rate of Tax

• 20% flat tax on interest & other investment income.
• 30% flat tax on all capital gains.
• Apart from 20% & 30% TDS on above, TDS at a baffling rate of 35% prescribed on all residual income.

No Personal Exemption

• No personal exemption or deduction allowed in computing the above income treated as ‘income from special sources.’

Weird Interpretation

• Poor drafting leads to such a weird interpretation that transfer of a capital asset may attract 30% tax on gross sale consideration.

What a Discrimination?

• Ironical but true! Non-Indian sports-persons, say Ricky Ponting or Shoaib Akhtar, required to pay a concessional tax of 10% on their game, advertisement and column earnings in India, thus enjoying a more privileged tax status than our own sons of the soil living abroad.

(more…)

Now no Capital Gain without Tax Pain!

End Of Tax Honeymoon For Market Investors!

Understanding The New Capital Gains Regime

New Rules for Computation

• Present distinction between long term and short term gains to be eliminated.
• Current exemption for capital gains arising from transfer of personal effects and agricultural land beyond specified urban limits to continue.
• Base date for computing cost of acquisition shifted from 1^st April, 1981 to  1^st April, 2000. 
• Indexation benefits can be availed for all assets held for atleast one year.  

No More Tax Concessions

•  Zero tax on STT paid long term capital market gains and 15% concessional rate for short term market gains to end on 31^st March, 2011. 
• No more concessional rates of 10%/20% for taxing specified long term gains. 
• All capital gains to be taxed at the taxpayer’s applicable marginal rate. Securities Transaction Tax (STT) to be simultaneously eliminated.

 Exemptions Abolished & Redesigned

• Present exemption u/s. 54EC via investment in specified bonds abolished. 
• Current exemptions u/s. 54, 54B and 54F attempted to be redesigned under a new scheme of relief for roll over on the basis of a given formula.  (more…)