Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: empanelment :: form 3cd :: ACCOUNTING STANDARDS :: ACCOUNTING STANDARD :: Central Excise rule to resale the machines to a new company :: articles on VAT and GST in India :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: list of goods taxed at 4% :: VAT RATES :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: due date for vat payment
 
 
Direct Tax »
 Businesses need not deduct GST on advances received for goods supply: CBEC
 Redress taxpayers' grievances on priority: CBDT to I-T department
 No tax relief on EPF interest if not employed: ITAT
  CBDT signs 7 more unilateral APAs with taxpayers
 Income tax returns (ITR) filing: Get capital gains tax exemption on new property; here is how
 Reach out to non-filers of GST returns: CBEC to fields offices
 CBDT may shelve plan to seek corporate tax estimates in advance
 IT expertise at banks' board level a must, says RBI ED
 Clarification on Indirect Transfer provisions in case of redemption of share or interest outside India under the Income-tax Act, 1961
 To avoid double-taxation CBDT says no tax at upstream foreign fund if local fund paid already
 CBDT extends due date for filing Income Tax Returns and Tax Audit Reports

Decode the Direct Tax Code
June, 21st 2010

Anagha and Arun, a working couple employed with a private sector firm, have investments in mutual funds and equity markets. They have been hearing of changes being introduced by the Direct Tax Code in bits and pieces, but are yet to figure out how it would impact their investments. Let us look at the changes proposed in revised draft of the DTC and assess what will be the likely impact on investments made in stocks and equity-oriented mutual funds:

Short-term capital gains

Definition: It has been revised to gains made on investments held for less than a year after the financial year in which the investment is made. For instance, if Anagha has made an investment in an equity-oriented mutual fund on May 30, 2010 and sells it before March 31, 2012, it will be categorised as short-term capital gains.

Tax treatment: Currently short term gains are taxed at a flat rate of 15 per cent, but this is set to change. According to the DTC discussion paper, short-term capital gains will be added to income, and be taxed at the marginal tax rate. So the amount of tax will depend on the tax bracket you fall in. For instance, if Anagha falls in the highest tax bracket that attracts a tax of 30 per cent and had a short-term capital gain of Rs 1,00,000, then she will have to shell out Rs 30,000 as tax as against Rs 15,000 currently. However, if Anagha falls in the 10 per cent tax bracket, she will have to shell out only Rs 10,000 as per DTC and not Rs 15,000 as mandated now. Therefore, she will gain more. So

individuals in the lower tax bracket will benefit from this new move.

Long-term capital gains

Definition: Gains made on investment held for at least a year after the financial year in which the investment is made will be categorised as long term. So for Anagha's investment to qualify as long term, she will have to hold her investment in equity mutual funds at least up to 31st March, 2012, in case investment is made in 2010.

Tax treatment: Long-term capital gains will also be clubbed with the income of the investor and taxed at the marginal tax rate. However, the income tax department will not levy tax on the total profit earned. The revenue department plans to introduce a deduction rate, which will be announced later. The deduction rate which will be a per cent of your capital gains will be tax free. If Arun had a long-term capital gain of Rs 1,00,000 and the deduction rate is, say, 40 per cent, then he will not have to pay tax on Rs, 40,000. The balance Rs 60,000 will be added to his income and will be taxed depending on the income tax slab he falls in. If Arun is in the 30 per cent bracket, he would have to pay Rs 18,000 as tax which is an effective rate of 18 per cent. However, if he was in the 10 per cent bracket, the tax he would have to pay would be Rs 6,000 which is an effective rate of 6 per cent. So investors in the lower tax bracket stand to benefit vis-a-viz the higher tax bracket investors.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Customer relationship management software CRM software Operational CRM Collaborative CRM

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions