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…)

Minus Social Security : EET=Inequity

Hard Hit Small Salaried Deserve Lower Starting Tax Rates!

Both Employment & Retirement Made More Taxing!

• Allowances & Perks – no longer exempt: House rent allowance (HRA), leave travel concession (LTC), medical reimbursement, value of free or concessional medical treatment and children’s education & hostel allowance.

• Puny deductions that will still continue: Professional tax paid, transport allowance to the extent prescribed and prescribed special allowances to meet expenses incurred for official duties.
  
• Retirement may not be as relaxing: Leave encashment on retirement, to be fully taxable.
• VRS compensation, death or retirement gratuity and commutation of pension to be exempt, only if deposited in a Retirement Benefit Account (RBA).
• However, any amount drawn from RBA (including PF contributions and accretions after 1^st April, 2011) under any circumstances to be treated as taxable in the year withdrawal. (more…)

Tax Bombshell hangs on Insurance!

Code Has Not Visualized Many Dreadful Consequences!

Many Insurance Products under Severe Tax Threat

• Any sum received under a life insurance policy including any bonus thereon will be exempt, only if the premium does not exceed 5% of the capital sum assured and such sum is received only upon completion of the original period of contract or upon the death of the insured.
• All existing ULIPs, Money Back & Guaranteed Return Plans of Insurance Companies, including surrender values of insurance drawn before maturity to take the tax hit.
• Even the return of premium payments out of the investor’s own tax-paid capital, would again attract tax in all such cases. (more…)