Financial Advisor: tax slab

Tuesday, July 15, 2014

Budget hit Debt Mutual Fund Market

Budget hit Debt Mutual fund Market

In this budget, the debt oriented mutual fund has got tax shock by finance minister. In his budget proposal the finance minister has proposed to raise long term capital gain to 20% from 10%. The long term investment period has been defined 36 months now for non equity mutual funds or debt mutual funds. Before budget, the long term period was 12 months. Stunned by changing in tax rule for non equity funds, the fund houses has deferred their forthcoming issues and even some fund houses have returned the money to the investors which they had collected last week.

While interest income on fix deposit is taxable as per tax slab, returns from debt funds were taxed at 10% if hold more than 1 year. Now, returns from FMPs and other non equity mutual funds held for less than 3 year will be taxed as normal tax slab applicable to the investors.

The worst thing is that according to finance minister statement, it would be implemented from 1st April, 2014. For example, if one investor who is in 30% tax slab and invested in 1 or 2 year FMPs or in debt mutual funds with 10% tax in mind. Now he will be paid 30% tax instead of 10% if the 1-2 year FMP matured after 2014. One or two year FMPs schemes have got worst affected.

Now the fund houses and 1-2 years debt fund investor are looking towards government for some relief statements.

If you want more information regarding investment or you have any other query about investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Friday, July 11, 2014

Union Budget: 2014-15

Union Budget: 2014-15

Overall budget is in positive direction and will support revival of economy. Our finance minister has kept positive direction for fiscal prudence by maintaining 4.1% fiscal deficit target and further reducing it for coming years. Budget is positive for sectors like Banking, Infra, Real Estate. FM has also given some respite to taxpayers by giving few reliefs like increase in lower exemption tax bracket, increasing the limit for investments under 80C, increasing the Deduction limit on account of interest on loan. All the above measures will leave more money in the hand of individuals. We are mentioning here the key points from the budget.

The fiscal deficit target for FY15 has been maintained at 4.1% and an ambitious target has been set for FY16 at 3.6% and FY17 at 3%.

Retrospective tax rules have not been changed. All the cases will be scrutinized by high level committee.

Personal Income-tax exemption limit raised by Rs. 50,000/- that is, from Rs. 2 lakh to Rs.2.5 lakh in the case of individual taxpayers, below the age of 60 years. Exemption limit raised from Rs.2.5 lakh to Rs.3 lakh in the case of senior citizens.

Investment limit under section 80C of the Income-tax Act has been raised from Rs.1 lakh to Rs.1.5 lakh.

Deduction limit on account of interest on loan in respect of self occupied house property has been raised from Rs.1.5 lakh to Rs.2 lakh.

To remove tax arbitrage, rate of tax on long term capital gains increased from 10% to 20 % on transfer of units of Mutual Funds, other than equity oriented funds.

Incentives for Real Estate Investment Trusts (REITS) with complete pass through for the purpose of taxation and will support financing of real estate and real estate sector. A modified REITS type structure for infrastructure projects as the Infrastructure Investment Trusts (INVITS) attract long term finance from foreign and domestic sources including the NRIs.

Requirement of the built up area and capital conditions for FDI to be reduced from 50,000 sq me to 20,000 sq m and from USD 10 mn to USD 5 mn respectively for development of smart cities.

10 year tax holiday extended to the undertakings which begin generation, distribution and transmission of power by 31.03.2017.

Investment allowance at the rate of 15% to a manufacturing company that invests more than Rs.25 cr in any year in new plant and machinery. The benefit to be available for three years i.e. for investments upto 31.03.2017.

FDI in insurance and defence sector has been increased upto 49% from current 26%.

Target of NH construction of 8500 km will be achieved in current financial year.

Excise duty increased from 12% to 16% on pan masala, from 50% to 55% on unmanufactured tobacco and from 60% to 70% on gutkha and chewing tobacco.

Excise duty on cigarettes has been increased in the range of 11% to 72% across segments with higher burden on cigarettes with lower then 65 mm.

Full exemption from excise duty is provided to various equipment and material used in solar plant.

Central Excise duty on branded petrol is being reduced from 7.5 per litre to Rs 2.35 per litre.

Excise duty reduced from 12% to 6% for footwear in price range from Rs 500 to Rs 1000. Footwear below Rs 500 is exempt from excise. And Footwear over Rs 1000 will continue to attract 12% Excise duty.

Colour picture tubes have been exempted from basic customs duty to make cathode ray TVs cheaper and more affordable to weaker sections. To encourage production of LCD and LED TVs below 19 inches in India, basic customs duty on LCD and LED TV panels of below 19 inches has been reduced from 10 % to Nil.

FM has also mentioned lot of wish list in the budget relating to new urea policy, GST, capital for banks, 4% agriculture growth, coal supply, and power etc.

We will discuss further about impact of budget on the sectors. If you want more information regarding investment or you have any other query about investment feel free to ask us.