Category Archives: Taxation

Budget 2019

#Budget2019

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HIGHLIGHTS OF BUDGET 2019

Tax
1.    Within 2 years, Tax assessment will be done electronically
2.    IT returns processing in just 24 hours
3.    Minimum 14% revenue of GST to states by Central Govt.
4.    Custom duty has abolished from 36 Capital Goods
5.    Recommendations to GST council for reducing GST rates for home buyers
6.    Full Tax rebate upto 5 lakh annual income after all deductions.
7.    Standard deduction has increase from 40000 to 50000
8.    Exempt on tax on second self-occupied house
9.    Ceiling Limit of TDS u/s 194A has increased from 10000 to 40000
10.    Ceiling Limit of TDS u/s 194I has increased from 180000 to 240000
11.    Capital tax Benefit u/s 54 has increased from investment in one residential house to two residential houses.
12.    Benefit u/s 80IB has increased to one more year i.e. 2020
13.    Benefit has given to unsold inventory has increased to one year to two years.


Other Areas

14.    State share has increased to 42%
15.    PCA restriction has abolished from 3 major banks
16.    2 lakhs seats will increase for the reservation of 10%
17.    60000 crores for manrega
18.    1.7 Lakh crore to ensure food for all
19.    22nd AIIMS has to be opened in Haryana
20.    Approval has to be given to PM Kisan Yojana
21.    Rs. 6000 per annum has to be given to every farmer having upto 2 hectare land. Applicable from Sept 2018. Amount will be transferred in 3 installments
22.    National kamdhenu ayog for cows. Rs. 750 crores for National Gokul Mission
23.    2% interest subvention for farmers pursuing animal husbandry and also create separate department for fisheries.
24.    2% interest subvention for farmers affected by natural calamities and additional 3% interest subvention for timely payment.
25.    Tax free Gratuity limit increase to 20 Lakhs from 10 Lakhs
26.    Bonus will be applicable for workers earning 21000 monthly
27.    The scheme, called Pradhan Mantri Shram Yogi Mandhan, will provide assured monthly pension of Rs. 3,000 with contribution of Rs. 100 per month for workers in unorganized sector after 60 years of age.
28.    Our government delivered 6 crores free LPG connections under Ujjawala scheme
29.    2% interest relief for MSME GST registered person
30.    26 weeks of Maternity Leaves to empower the women
31.    More than 3 Lakhs crores for defence
32.    One lakh digital villages in next 5 years
33.    Single window for approval of India film makers

Tax Saving ELSS

With Financial Year coming to an end, it is time you start planning for your Tax Saving immediately. You can save up to Rs. 45000/- in Tax alone based on the Tax Slab you are in. Keep in mind: Money Saved is Money Earned.

Equity Linked Savings Scheme (ELSS):

ELSS is a mutual fund scheme which provides deduction/tax benefit under Section 80C of the Income Tax Act, up to Rs.1,50,000 per annum. There is no upper limit to investing in ELSS.

ELSS invests in diversified equity funds. Returns from ELSS are market linked which aims at providing capital appreciation over 3 year period.

It is the best available scheme which offers higher returns combined with tax benefits for a lock-in period of just 3 years. It comes with least lock-in period when compared to Tax Saving Fixed Deposits or Public Provident Fund.

Both Individuals and HUFs can invest in ELSS.

Investment under the scheme can be continued even after 3 years.

Even though the risk involved in investing in ELSS is higher than Bank Fixed Deposit or Company Fixed Deposit or Public Provident Fund, the returns have always been much higher ranging from 12% to 18%

Investment can be made either in a lump sum or through a Systematic Investment Plan (SIP).

If the investment is made through SIP, each investment/instalment should complete 3 years before it can be redeemed.

ELSS is an ideal scheme for long term wealth creation.

Invest in ELSS with VRIDHI:

We at VRIDHI analyse all Mutual Fund schemes on a continuous basis to help our investors choose the right schemes. We also have regular intereactions with the Mutual Fund company officials and Fund Managers and express our opinions and concerns which may affect the investors.

When you invest with VRIDHI, you can leave the tracking job to us and focus on your own work.

Click Here to contact us.

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Save Tax

SAVING TAX is SAVING MONEY

Government allows you to Plan and Save Tax

Don’t Delay, the more you delay, chances are, you may get stuck with wrong products in hurry burry

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If you need a presentation for a group in your company, we can do that.

Tax Planning 2017-2018

Most people plan to save their taxes in fag end of the financial year. This leads to various mistakes due to lack of time.

It makes immense sense to plan your taxes in the beginning of the financial year.

If planned properly, the income earners up to Rs.5 Lacs can plan to pay minimal to zero tax in FY 2017-18. We at VRIDHI will be glad to do the Tax Planning for you. Call us today.

How to report F&O trading in your income tax return

Income from F&O deals is almost always treated as business income, irrespective of frequency or volume of transactions

by Archit Gupta, 5-9-2016, Mint, Source: http://www.livemint.com/Money/GvW3JB9PpYhvw6dvHEENjI/How-to-report-FO-trading-in-your-income-tax-return.html

Taxpayers who deal in derivatives, describe their experience with the tax filing process as vague and confusing. Here are some basics that can help.

A derivative means an instrument whose value is derived. It has no value of its own. Its price is based on the underlying asset. Derivatives of stocks and indices can be traded on Indian stock exchanges. The most popular form of derivatives are futures & options (F&O). A futures contract means an agreement to buy or sell on a future date. This contract expires on a pre-set date. On expiry, futures are executed by delivery of the underlying asset or via payment. Options and futures are alike but when you do an options contract, you can choose to not make the transaction.

Income from F&O deals is almost always treated as business income. This treatment is irrespective of the frequency or volume of your transactions. That may come as a surprise if you are salaried and have never run a business. Taxpayers who have business income have to file ITR-4.

As per Indian tax laws, incomes are reported under five heads—salary, house property, capital gains, business and profession and other sources (any residual income that cannot be classified in other heads). F&O trade is reported under the head ‘business’ in your tax return.

Reporting F&O trade as a business means:

*You can claim expenses from your business income

*As a result you may earn a profit or incur a loss

*Losses must be reported and losses have tax benefits

*Your total income (from all five heads) continues to be taxed at slab rates.

Businesses may be speculative or non-speculative, and the tax treatment is different. The income tax Act says that F&O trade is considered as a non-speculative business. Intra-day stock trades are treated as a speculative business.

Remember that cost indexation and capital gains exemptions are only allowed on sale of capital assets such as equity shares, mutual funds, land, house, and others. Since F&O trades are considered a business, tax rules of capital gains rules do not apply.

The first hurdle is to prepare your business’s profit and loss details. To calculate gross income from F&O trades, take your transaction statement for the whole year. Look at your receipts; these may be a positive or a negative value. Sum these up for the whole year. Expenses can be deducted from your gross income. Some expenses that you can deduct include rent or maintenance expenses of premises used for the business; mobile or telephone; internet charges; demat account charges; broker commission; depreciation on laptop used for trading; and any other expense directly related to your work.

Business income is calculated for the financial year for which you are filing your return. You will also have to prepare a balance sheet which is reported in ITR-4. It is basically a statement of your assets and liabilities.

Many people get confused when they have more than one type of dealing in the stock market. Some do intra-day stock transactions along with F&O trades. Some may hold stocks as long-term investments and also invest in mutual funds. In such a situation, you should calculate your business income from all of these separately. F&O trade income and intra-day stock trading will have separate expenses. Don’t worry if you have consolidated expenses; for example, you use the same premises to trade in both, or use a single phone. Simply bifurcate these expenses on a reasonable basis. You can allocate them using a ratio based on time spent.

If you invest in stocks for the longer run, you can treat them as capital assets. These will not be reported as business if you don’t trade in them often. There is an element of judgement involved and the main criteria is your intent. So, choose carefully. If you have some stocks that you trade often and some that you hold for longer, you can separate them into business and capital assets. Remember to choose on a fair basis and apply your choice consistently. You have to report gains from capital assets under the head ‘capital gains’, which has different tax rules. Mutual funds, too, may be treated as investments and taxed separately.

You will end up paying higher tax if you do not report your losses since losses have tax benefits and reduce your total taxable income. Losses from F&O can be set off from income from other heads (except salary income). Say, your loss from F&O business is Rs.1 lakh, salary income is Rs.5 lakh, income from rent is Rs.2 lakh, and interest income isRs.50,000. Your total taxable income shall be Rs.6.5 lakh.

If losses are not fully set off in the same year, you can carry them forward for 8 years. However, in the following 8 years, it can only be set off from non-speculative business income.

If you have F&O loss, you must get your accounts audited. Audit is also mandatory if your turnover exceeds Rs.1 crore. If accounts are not audited, a minimum penalty of 0.5% of turnover may be levied (maximum Rs.1.5 lakh). The due date of filing of tax returns for financial year 2015-16, where audit is mandatory, is 30 September 2016.

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