All about TAX

in
Financial Year

2009 – 2010 
From - WWW.SQUAMBLE.COM
 Tax Slab for F.Y. 2009 - 2010
Taxable Income of Senior
Taxable Income of Men Taxable Income of Women Citizens Tax

Upto Rs.1,50,000 Upto Rs.1,80,000 Upto Rs.2,25,000 Nil

Rs.1,50,000 To Rs.3,00,000 Rs.1,80,000 To Rs.3,00,000 Rs.2,25,000 To Rs.3,00,000 10%

Rs.3,00,000 To Rs.5,00,000 Rs.3,00,000 To Rs.5,00,000 Rs.3,00,000 To Rs.5,00,000 20%

Rs.5,00,000 and Above Rs.5,00,000 and Above 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

 2. How much will you save and

 3. How to Save Tax

 Tax Free Incomes :
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
 Gift Tax
Gift Tax was abolished with effect from
October 1, 1998.

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/-.
 Gifts received from following is Tax Free.

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.
 Filing of Income Tax Return :

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 30.

4. The penalty for Non- Filing of Income

Tax Return is Rs.5000 (after
Assessment Year).
 Computation of Gross
Taxable Income
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
 Salary or Pension Income
 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.
 Income from House Property

 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.
 Income from House Property
 In case Property is given on rent, then we have to find
out the :
 Annual Rental Income
 From this deduct Property Tax paid if any
 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.
 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 from Interest
 Interest Income from the following sources
to be included in Gross Taxable Income:
 Interest on company deposits.

 Interest on debentures/bonds.

 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 private loans given to relatives,
friends or any other entity.
 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.
 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.
 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.
Short Term Capital Gain
 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.
 Tax Treatment on Short Term
Capital Gain
 Itis 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
 Incase 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

 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.
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.
 Section 54 EC
 Long-Term Capital Gain Tax (after availing
indexation benefit ) can be saved by investing
amount within 6th 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.
 Contributions to Employees Provident Fund/
GPF
 Unit-Linked Insurance Plan
 Contribution to Public Provident Fund Scheme
(Max. Rs.70,000).
 National Savings Certificates VIII
 Tuition Fees Upto Two Children.
 Repayment of Housing Loan ( Principal)
 Pension scheme of LIC of India or any other
insurance company.

 Subscription to eligible issue of units of Mutual

Fund (ELSS).

 Interest accrued in respect of NSC VIII issue.

 Fixed Deposit with Banks having a lock – in

period of 5 Years
 Premium on Mediclaim Policy.
 Life insurance Premium:
 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.
 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)
 whereas in other savings schemes, only
the amount saved (with interest) is
payable.
 Long-term savings

 “EASY Instalment” facility.

 Premium payment for insurance is either

monthly, quarterly, half yearly or yearly.
 LOAN Facility Available.

 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.

 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.

 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.

 This scheme is available throughout the year.

 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%.

 The minimum investment limitation of the
scheme is Rs.100/- and with no upper limit.

 This scheme has a maturity period of 6

years.

 There is a provision of loan on the basis of

this scheme.
 Working on NSC Interest
 Amt Invested Rs. 100.00

 Interest Earned @ 8% P.A. Rs. 8.00

 Tax @ 30% on Rs.8/- Rs. 2.40
 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.

 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.
 This scheme has a maturity period of 15
years.

 Loan Facility is available.

 Loan amount can be returned in maximum of 36
installments.

 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.

 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.

 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 1961.

 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
Instrument Expected Returns Lock-In Period

National Savings Certificate - NSC 8.00% 6 years

Public Provident Fund - PPF 8.00% Up to 15 years

Mutual Fund ELSS / ULIP Around 15%-20% 3 years

Investment 1 Lac End Value of Investment in Rs. Lac after - Years

Avenue Returns 3 6 8 10 15 20

NSC 8.16% 1.27 1.60 1.87 2.19 3.24 4.80

PPF 8.00% 1.28 1.63 1.92 2.26 3.40 5.11

ELSS / ULIP 15.00% 1.52 2.31 3.06 4.05 8.14 16.37

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

 (Self, Spouse and Children Rs. 15,000/-)
 additional for parent Rs. 15,000/- and
 in case of senior citizen Rs. 20,000/-
I hope this information was helpful. If
you need any further help you can get
in touch with me via my email id
harishsoneji@hotmail.com
You can also get in touch with me on
www.squamble.com