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

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 1st April, 2011) under any circumstances to be treated as taxable in the year withdrawal. (more…)

Roti, Kapda but No Makaan!

Analyzing Tax Gain & Pain In The New EET Regime

  • Tax Incentives for Housing Scrapped: Current deductions in respect of interest & repayment of housing loan abolished under the new Code.
  • Higher Deduction For Savings & Children’s Education: Individual & HUF entitled to an aggregate deduction of upto Rs.3 lakhs in respect of permitted savings & children’s tuition fees payment, as compared to current ceiling of Rs.1 lakh.
  • Accretions Exempt but Withdrawal Taxable: No tax on accretions to the permitted savings. However, any withdrawal from permitted savings to be taxed.
  • Tax Shelter for Old PF/PPF Accumulations: Future withdrawals out of accumulated balance of PF & PPF as on 31stMarch, 2011 to enjoy special exemption. (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…)
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