All about TAX in Financial Year 2009 – – 2010 From -

Tax Slab for F.Y Taxable Income of MenTaxable Income of Women Taxable Income of Senior CitizensTax Upto Rs.1,50,000Upto Rs.1,80,000Upto Rs.2,25,000Nil Rs.1,50,000 To Rs.3,00,000Rs.1,80,000 To Rs.3,00,000Rs.2,25,000 To Rs.3,00,00010% Rs.3,00,000 To Rs.5,00,000 20% Rs.5,00,000 and Above 30% Note : 3% Education Cess also on the tax amount after tax and surcharge (if any) What is surcharge? * If salary is above 10 lacs, 10% surcharge will also be applicable.

Following things will be discussed : 1. Tax Slab in 2009 for salaried employees 1. Tax Slab in 2009 for salaried employees 2. How much will you save and 2. How much will you save and 3. How to Save Tax 3. How to Save Tax

The following incomes are completely exempt from Income Tax Without any upper limit. 1. Interest on PPF/ GPF / EPF. 2. Interest on GOI Tax Free Bonds. 3. Dividends on Shares and on Mutual Funds. 4. Any Capital Receipt from Life Insurance Policies. i.e. sums received either on death of the insured or on Maturity of Life Insurance Plans. However, in case of Life Insurance Policies issued after March 31, 2004, exemption on Maturity payment u/s.10(10)D is available only if premium paid on any year does not exceeds 20% of the Sum Assured. Tax Free Incomes :

5. Interest on Saving Bank Account in Post Office. 6. Long term Capital Gain on sale of shares and equity MF Dividend Income : Dividend income from companies / equity – oriented Mutual Funds is Completely Exempt in the hands of investors. Dividend is also Tax Free in the hands of investors in case of debt – oriented Mutual Funds Schemes Tax Free Incomes :

Gift Tax was abolished with effect from October 1, The gifts are no longer taxable in the hands of donor or donee. However, with effect from September 1, 2004, any gift received by an individual or HUF will be included in taxable income, provided the amount of gift exceeds Rs.50000/-. Gift Tax

1. Spouse 2. Brother or Sister. 3. Brother or Sister of Spouse. 4. Brother or Sister of either of parents of the individual. 5. Any lineal ascendant or descendant of the individual. 6. Any lineal ascendant or descendant of the spouse of the individual. 7. Spouse of the persons referred to in (2) or (6) 8. Gifts received on the occasion of marriage 9. Gift received under a WILL by way of inheritance are also tax free. Gifts received from following is Tax Free.

1. Filing of income Tax Return is Compulsory for all individuals whose Gross Annual Income exceeds the Maximum Amount which is not chargeable to income tax i.e. Rs.1,80,000 for Resident Women, Rs. 2,25,000 for Senior Citizens and Rs. 1,50,000 for other individuals and HUFs. 2. The last date of filing income tax return is July 31, in case of individuals who are not covered in point 3 below. Filing of Income Tax Return :

3. If the income includes business or professional income requiring tax audit (turn over Rs.40 Lakhs), the last date for filing the return is September The penalty for Non- Filing of Income Tax Return is Rs.5000 (after Assessment Year). Filing of Income Tax Return :

Income is Computed under the foll. 5 Heads: 1. Income from salaries 2. Income from House Properties 3. Profit & Gains of Business & Profession 4. Capital Gains 5. Income from Other Sources Computation of Gross Taxable Income

Salary or Pension Income The pay which you get has many components, like HRA, conveyance allowance and others. The pay which you get has many components, like HRA, conveyance allowance and others. Out of this income some things are deductible on your hand and after deducting you arrive at a amount called Taxable income, on which you have to pay tax. Out of this income some things are deductible on your hand and after deducting you arrive at a amount called Taxable income, on which you have to pay tax.

Income from House Property If the property is self occupied then the Income from House Property is treated as NIL. If the property is self occupied then the Income from House Property is treated as NIL. If any loan is taken for the purchase of the property then the amount paid towards interest up to a maximum of Rs. 1,50,000/- is deducted from taxable income. If any loan is taken for the purchase of the property then the amount paid towards interest up to a maximum of Rs. 1,50,000/- is deducted from taxable income.

Income from House Property In case Property is given on rent, then we have to find out the : In case Property is given on rent, then we have to find out the : Annual Rental Income Annual Rental Income From this deduct Property Tax paid if any From this deduct Property Tax paid if any From balance amount-deduct30% towards repairs & maintenance From balance amount-deduct30% towards repairs & maintenance From the residual figure- deduct the amount of interest paid on loan taken for the purchase of the property. From the residual figure- deduct the amount of interest paid on loan taken for the purchase of the property. The resultant figure is the Income from House Property The resultant figure is the Income from House Property

Profit from Business / profession Income as arrived on the basis of Profit & Loss A/c Income as arrived on the basis of Profit & Loss A/c

Income from Interest Interest Income from the following sources to be included in Gross Taxable Income: Interest Income from the following sources to be included in Gross Taxable Income: Interest on company deposits. Interest on company deposits. Interest on debentures/bonds. Interest on debentures/bonds. Interest on savings bank account/ fixed deposits with banks. Interest on savings bank account/ fixed deposits with banks.

Income from Interest Interest on post office savings schemes like MIS, NSC, KVP etc. Interest on post office savings schemes like MIS, NSC, KVP etc. Interest on private loans given to relatives, friends or any other entity. Interest on private loans given to relatives, friends or any other entity. Interest on government securities. Interest on government securities. Note: Deduction u/s 80 L has been omitted now and accordingly,interest income from the above sources is Fully Taxable now. Note: Deduction u/s 80 L has been omitted now and accordingly,interest income from the above sources is Fully Taxable now.

Capital Gains Capital gain arises when certain assets like property (plot or a built up commercial / residential unit) or shares / mutual fund units / bonds etc are sold for a profit. Capital gain arises when certain assets like property (plot or a built up commercial / residential unit) or shares / mutual fund units / bonds etc are sold for a profit. The treatment of capital gains is slightly different. The treatment of capital gains is slightly different. It mainly depends upon whether the capital gain (profit on sale) is Short Term or Long Term. It mainly depends upon whether the capital gain (profit on sale) is Short Term or Long Term.

Short Term Capital Gain Capital gain is considered to be short term if immovable property is sold / transferred within THREE years of acquisition. Capital gain is considered to be short term if immovable property is sold / transferred within THREE years of acquisition. Similarly, if shares or other financial securities such as mutual fund units are sold within ONE year of purchase, the profit earned is treated as short term capital gain. Similarly, if shares or other financial securities such as mutual fund units are sold within ONE year of purchase, the profit earned is treated as short term capital gain.

Tax Treatment on Short Term Capital Gain It is included in the gross taxable income like other sources of income and normal rates of tax apply, which depend on the gross taxable income from all sources including short term capital gains. It is included in the gross taxable income like other sources of income and normal rates of tax apply, which depend on the gross taxable income from all sources including short term capital gains.

Tax Treatment on Short Term Capital Gain In case of Sale of equity shares or units of equity oriented Mutual Fund schemes, short term capital gains are taxed at a Flat Rate of 15%, irrespective of the tax slab on other sources of income, provided securities Transaction Tax is paid on such sale. In case of Sale of equity shares or units of equity oriented Mutual Fund schemes, short term capital gains are taxed at a Flat Rate of 15%, irrespective of the tax slab on other sources of income, provided securities Transaction Tax is paid on such sale.

Long Term Capital Gain If Immovable Property is sold after THREE years of purchase, Or If Immovable Property is sold after THREE years of purchase, Or Financial securities such as shares, deep discount bonds, units of open - ended or close – ended schemes of mutual funds are sold/redeemed/transferred after holding the same for more than Twelve Months, then the gain is considered to be long term capital gain. Financial securities such as shares, deep discount bonds, units of open - ended or close – ended schemes of mutual funds are sold/redeemed/transferred after holding the same for more than Twelve Months, then the gain is considered to be long term capital gain.

Tax Treatment on Long Term Capital Gain With effect from October 1, 2004, long term capital gain on transfer of listed shares/units of equity oriented mutual funds schemes has been exempted from tax, provided securities transaction tax has been paid on such sale. With effect from October 1, 2004, long term capital gain on transfer of listed shares/units of equity oriented mutual funds schemes has been exempted from tax, provided securities transaction tax has been paid on such sale.

Long Term Capital Gain Non listed shares/units of equity oriented mutual fund schemes, tax is payable in respect of long term capital gains at a flat rate 20% and the amount of gain has to be adjusted for inflation. This inflation adjustment is known as indexation benefit. Non listed shares/units of equity oriented mutual fund schemes, tax is payable in respect of long term capital gains at a flat rate 20% and the amount of gain has to be adjusted for inflation. This inflation adjustment is known as indexation benefit.

Section 54 EC Long-Term Capital Gain Tax (after availing indexation benefit ) can be saved by investing amount within 6 th months in any of the following two schemes specified under section 54 EC ( upto Rs. 50 Lakhs only): Long-Term Capital Gain Tax (after availing indexation benefit ) can be saved by investing amount within 6 th months in any of the following two schemes specified under section 54 EC ( upto Rs. 50 Lakhs only): 1 Bonds issued by Rural Electrification Corporation ( REC ) 2 Bonds issued by NHAI (National Highways Authority of India)

There are various Tax Saving Schemes: Life Insurance Premium. Life Insurance Premium. Contributions to Employees Provident Fund/ GPF Contributions to Employees Provident Fund/ GPF Unit-Linked Insurance Plan Unit-Linked Insurance Plan Contribution to Public Provident Fund Scheme (Max. Rs.70,000). Contribution to Public Provident Fund Scheme (Max. Rs.70,000). National Savings Certificates VIII National Savings Certificates VIII Tuition Fees Upto Two Children. Tuition Fees Upto Two Children. Repayment of Housing Loan ( Principal) Repayment of Housing Loan ( Principal)

Pension scheme of LIC of India or any other insurance company. Pension scheme of LIC of India or any other insurance company. Subscription to eligible issue of units of Mutual Fund (ELSS). Subscription to eligible issue of units of Mutual Fund (ELSS). Interest accrued in respect of NSC VIII issue. Interest accrued in respect of NSC VIII issue. Fixed Deposit with Banks having a lock – in period of 5 Years Fixed Deposit with Banks having a lock – in period of 5 Years Premium on Mediclaim Policy. Premium on Mediclaim Policy.

Life insurance Premium: Life insurance is a Very Good Investment. It gives Risk Cover, Tax Saving and Good returns. Life insurance is a Very Good Investment. It gives Risk Cover, Tax Saving and Good returns. It is a contract that pledges payment of an amount to the person assured (or his nominee) on the death of insured person. It is a contract that pledges payment of an amount to the person assured (or his nominee) on the death of insured person.

Savings through life insurance guarantee full protection against risk of death of the saver. Savings through life insurance guarantee full protection against risk of death of the saver. Also, in case of demise, life insurance assures payment of the entire amount assured (with bonuses wherever applicable) Also, in case of demise, life insurance assures payment of the entire amount assured (with bonuses wherever applicable) whereas in other savings schemes, only the amount saved (with interest) is payable. whereas in other savings schemes, only the amount saved (with interest) is payable.

Long-term savings Long-term savings “EASY Instalment” facility. “EASY Instalment” facility. Premium payment for insurance is either monthly, quarterly, half yearly or yearly. Premium payment for insurance is either monthly, quarterly, half yearly or yearly.

LOAN Facility Available. LOAN Facility Available. Also generally accepted as security, even for a commercial loan. Also generally accepted as security, even for a commercial loan.

A policy that has a suitable insurance plan or a combination of different plans can be effectively used to meet certain monetary needs that may arise from time-to-time. A policy that has a suitable insurance plan or a combination of different plans can be effectively used to meet certain monetary needs that may arise from time-to-time. Children's education, start-in-life or marriage provision or even periodical needs for cash over a stretch of time can be less stressful with the help of these policies. Children's education, start-in-life or marriage provision or even periodical needs for cash over a stretch of time can be less stressful with the help of these policies.

Alternatively, policy money can be made available at the time of one's retirement from service and used for any specific purpose, such as, purchase of a house or for other investments. Alternatively, policy money can be made available at the time of one's retirement from service and used for any specific purpose, such as, purchase of a house or for other investments. Loans are granted to policyholders for house building or for purchase of flats (subject to certain conditions). Loans are granted to policyholders for house building or for purchase of flats (subject to certain conditions).

National Savings Certificates (NSC) : National Saving Schemes (NSC) is used to be one of the popular Income Tax Saving schemes. But nowadays it is not so lucrative. National Saving Schemes (NSC) is used to be one of the popular Income Tax Saving schemes. But nowadays it is not so lucrative. This scheme is available throughout the year. This scheme is available throughout the year. It can be operated singly, jointly, or by a minor with his/her parent or guardian. It can be operated singly, jointly, or by a minor with his/her parent or guardian. Return on this scheme at interest rate of 8%. Return on this scheme at interest rate of 8%.

The minimum investment limitation of the scheme is Rs.100/- and with no upper limit. The minimum investment limitation of the scheme is Rs.100/- and with no upper limit. This scheme has a maturity period of 6 years. This scheme has a maturity period of 6 years. There is a provision of loan on the basis of this scheme. There is a provision of loan on the basis of this scheme.

Working on NSC Interest Amt Invested Rs Amt Invested Rs Interest 8% P.A. Rs Interest 8% P.A. Rs % on Rs.8/- Rs % on Rs.8/- Rs Net Interest Received Rs Net Interest Received Rs. 5.60

Public Provident Fund (PPF) : Under this scheme, there is a return at the interest rate of 8% p.a. Under this scheme, there is a return at the interest rate of 8% p.a. The minimum investment limit is Rs. 500/- and maximum limitation is Rs. 70,000/-. The minimum investment limit is Rs. 500/- and maximum limitation is Rs. 70,000/-. It can be opened any time throughout the year. It can be operated either singly or jointly. In case of minor, with parent / guardian. It can be opened any time throughout the year. It can be operated either singly or jointly. In case of minor, with parent / guardian.

This scheme has a maturity period of 15 years. This scheme has a maturity period of 15 years. Loan Facility is available. Loan Facility is available.

Loan amount can be returned in maximum of 36 installments. Loan amount can be returned in maximum of 36 installments. A person can withdraw an amount (not more than 50% of the balance). A person can withdraw an amount (not more than 50% of the balance). Tax Benefit Under Section 80C of Income Tax Act, 1961 is available. Tax Benefit Under Section 80C of Income Tax Act, 1961 is available. Interest on this scheme is tax free. Interest on this scheme is tax free.

Mutual Fund (ELSS) / ULIP PLANS An ELSS (Equity Linked Savings Scheme) is a mutual fund scheme that invests in equity & equity-related securities. An ELSS (Equity Linked Savings Scheme) is a mutual fund scheme that invests in equity & equity-related securities. ULIP Plans ( Unit Linked Insurance Plan) is a Plan that offers Tripple Benefit ULIP Plans ( Unit Linked Insurance Plan) is a Plan that offers Tripple Benefit  Tax Benefit  Insurance Cover  Benefit from the long term growth potential of equities.

ULIP & ELSS are also eligible investments under section 80C of Income Tax Act ULIP & ELSS are also eligible investments under section 80C of Income Tax Act ELSS have a lock-in period of three years. This allows the investors to benefit from the long term growth potential of equities. ELSS have a lock-in period of three years. This allows the investors to benefit from the long term growth potential of equities.

ELSS / ULIP – Key Differentiation ELSS is the only investment product that offers …. Twin Advantages Equity Returns Tax Benefits

ELSS / ULIP – A Comparison InstrumentExpected ReturnsLock-In Period National Savings Certificate - NSC8.00%6 years Public Provident Fund - PPF8.00%Up to 15 years Mutual Fund ELSS / ULIPAround 15%-20%3 years Investment1 Lac End Value of Investment in Rs. Lac after - Years AvenueReturns NSC8.16% PPF8.00% ELSS / ULIP15.00% Mutual Fund ELSS/ ULIP Plans returns are the assumed returns dependent on the markets and are not guaranteed or assured

Deduction u/s 80D Mediclaim Policy Medical Insurance Premium paid for Medical Insurance Premium paid for (Self, Spouse and Children Rs. 15,000/-) (Self, Spouse and Children Rs. 15,000/-) additional for parent Rs. 15,000/- and additional for parent Rs. 15,000/- and in case of senior citizen Rs. 20,000/- in case of senior citizen Rs. 20,000/-

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