Fire your tax related queries and i would get it solved!!!

[diosys]

I am new to this forum please any body help. What is the Tax slab (Capital gains and Income Tax with example)

Hi Jaya...

The tax slab are as listed below...Effective FY 2007-08

Men
1-110000 - Tax Nil
110000-150000 - Tax 10% on Difference between income and 1.5Lac
150000-250000 - Rs. 4000 + Tax on 20% of Diff between income and 2.5
250000 and above - Rs. 24000+ Tax on 30% of diff between income and 2.5

Senior Citizen
1-195000 - Tax Nil
195000-250000 - Tax on 20% of Diff between income and 2.5
250000 and above - Rs. 11000+ Tax on 30% of diff between income and 2.5

Women
1-145000 - Tax Nil
145000-150000 - Tax on 10% of Diff between income and 1.5
150000-250000 - Rs. 500 + Tax on 20% of Diff between income and 2.5
250000 and above - Rs. 20500+ Tax on 30% of diff between income and 2.5

The above caluclated tax would be increased by 3 % education cess in all the cases....

The Capital gain on short term capital gain from equities is 10% and on LTCg is Nil.....

 

[yoogi]

Few doubts: (not all of them useful to me as of now. But it might be very useful in planning future investments.)

A) Please elaborate on short/long term capital gains in terms of duration and asset classes (equities and other important asset classes like prescious metals, Arts, Agri Land, commercial land, premises, primary residence & what nots.).

B) If one earns from pure Speculation (day trading for example) does he enjoy same deduction and tax slabs? Are lottery, winning events (luck based or otherwise.) are classified same as derivatives trading?

C) Also agricultural income, dividends are tax free without upper limits. Is that correct? are there any other form of income that are tax free.

D) Can single proprietorship's firms enjoy exemption on money donated to nonprofit organizations and other social causes? what is the maximum extent of such expenditure. (We enjoy tax slabs of individuals.)

Many thanks.

 

[sanx]

Excellent thread .

If a person is employed and he pays tax through his company for the work he does there .
Now this person does intraday trading when ever he has free time.

1.Now if this person have turnover( adding both profit and loss ) of more than 40 lakhs per annum ,then he should pay 30 % of 40 lakhs and above?

2.What if I make 2 lakhs or 4 lakhs in profit in intraday trading per annum in my freetime , how much tax should i be paying ?

suppose if I invest this amount (got from intraday trading ) to buy stocks for long term ,should i still pay tax ( if i am supposed to) .?

Now in case of 1 or 2 if I need to pay tax , If I dont pay tax.How will the tax ppl come to know about it ? are they going to check each and every ICICI ,sharekhan,indiabulls account ..? how ?



Thanks
sanx

 

[diosys]

Few doubts: (not all of them useful to me as of now. But it might be very useful in planning future investments.)

A) Please elaborate on short/long term capital gains in terms of duration and asset classes (equities and other important asset classes like prescious metals, Arts, Agri Land, commercial land, premises, primary residence & what nots.).

B) If one earns from pure Speculation (day trading for example) does he enjoy same deduction and tax slabs? Are lottery, winning events (luck based or otherwise.) are classified same as derivatives trading?

C) Also agricultural income, dividends are tax free without upper limits. Is that correct? are there any other form of income that are tax free.

D) Can single proprietorship's firms enjoy exemption on money donated to nonprofit organizations and other social causes? what is the maximum extent of such expenditure. (We enjoy tax slabs of individuals.)

Many thanks.

Dear Yoogi...

1.) In all cases except equities and equities related securities Short term gain is when the asset is sold within 3 years from the date of accusation otherwise it is Long term.....In case of equities the short term asset would be that which would be sold within one year from the date of accusation..

2.) Yes if a individual does day trading then he would also enjoy the tax slabs be it that his income is 1000 crore or Rs, 1000....The moment someone does business or any activity in a partnership then the tax slabs would not be available and the tax would be payable at flat 30% plus the applicable surcharge....Secondly lottery and etc are not classified as derivative trading...The are assessed under the head of Income from other sources....

3.) There is a slight difference between taxing of agri and dividend income...Dividend income is not at all included in one income....It is not an exemption but it is not income itself hence not included in the total income...Whereas in the case of agri income it is also not included in the income for the tax payable BUT is included in the income to determine the rate of tax on which the person would be liable to pay the tax on the taxable portion of his income...I hope you are able to understand...

4.) Yes you can avail the benefit....there is no upper limit to the same...Provided the person whom you are paying the donation is approved by the Income Tax department and is registered U/s 80 G of the Income tax Act, 1961....On the receipt given by him it should be mentioned that he has got himself registered under section 80G of the IT act...

 

[yoogi]

diosys, thank you so much.

Looks like one will be better off by buying farm lands around city than stocks. When the city expands, there is a long term capital appriciation and farm returns are definitely better than stock dividends.

Only problem is lack of liquidity of such assets and the magnitude of one time investment that is necessary to make it profitable.

 

[diosys]

Excellent thread .

If a person is employed and he pays tax through his company for the work he does there .
Now this person does intraday trading when ever he has free time.

1.Now if this person have turnover( adding both profit and loss ) of more than 40 lakhs per annum ,then he should pay 30 % of 40 lakhs and above?

2.What if I make 2 lakhs or 4 lakhs in profit in intraday trading per annum in my freetime , how much tax should i be paying ?

suppose if I invest this amount (got from intraday trading ) to buy stocks for long term ,should i still pay tax ( if i am supposed to) .?

Now in case of 1 or 2 if I need to pay tax , If I dont pay tax.How will the tax ppl come to know about it ? are they going to check each and every ICICI ,sharekhan,indiabulls account ..? how ?



Thanks
sanx

Dear Sanx...

1.) You have not mentioned whether you are dealing in derivatives or cash only...I am assuming that you are dealing in derivatives...Even if you earn 1000 or 10000 or 10000000 it does not matter....In the case of an Individual there are always tax slabs...it does not matter how much you earn....Only in cases other than Individual and HUF the others have a flat rate of taxing system...Please also note that if you are dealing in derivatives and your total tournover (as mentioned by you is correct way of determining that) is in excess of Rs. 40,00,000 then you are liable to get your books audited by a Chartered Accountant otherwise there is a huge penalty of Rs. 1,00,000....Please be careful here

2.) How much tax that will be payable can only be determined if the entire income of the person is known...I have given the method to calculate the tax liability two posts before....Please refer to that...

3.) Even if you buy stocks for long term out of intra day profit then also you are liable to pay tax on this profit....

4.) Please note that PAN has been made mandatory for all demat accounts and similarly you would also have furnished the same....Now there is a report called AIR (Annual Information Report) which is submitted by the exchanges to the Income Tax Department highlighting the amount of transactions done on a single PAN....Hence if not today then tomorrow certainly you would be caught...Then what would follow you cannot imagine...Then would levy HUGE penalty and would certainly initiate prosecution against you...I am not from the Income Tax department hence please be sure that there is no bias in my words....What is said is very much possible if it is not declared...One word of caution to you is to act as a responsible citizen...

TAX Planning is Healty....Tax Avoidance is accepted.....TAX evasion is worth visiting the jail...

 

[nsaivamsi]

In Nityas' Tax calculator( Version 10.1 , year 2007-2008) the Tax rate for Short term is calculated at 10%. Is this correct or wrong ?? From this thread i have come to know that for shortterm it is 30% plz. correct me.

http://www.ynithya.com/taxcalc/

Regards,

VAMSI

 

[lvgandhi]

Dear Sanx...

1.) You have not mentioned whether you are dealing in derivatives or cash only...I am assuming that you are dealing in derivatives...Even if you earn 1000 or 10000 or 10000000 it does not matter....In the case of an Individual there are always tax slabs...it does not matter how much you earn....Only in cases other than Individual and HUF the others have a flat rate of taxing system...Please also note that if you are dealing in derivatives and your total tournover (as mentioned by you is correct way of determining that) is in excess of Rs. 40,00,000 then you are liable to get your books audited by a Chartered Accountant otherwise there is a huge penalty of Rs. 1,00,000....Please be careful here

2.) How much tax that will be payable can only be determined if the entire income of the person is known...I have given the method to calculate the tax liability two posts before....Please refer to that...

3.) Even if you buy stocks for long term out of intra day profit then also you are liable to pay tax on this profit....

4.) Please note that PAN has been made mandatory for all demat accounts and similarly you would also have furnished the same....Now there is a report called AIR (Annual Information Report) which is submitted by the exchanges to the Income Tax Department highlighting the amount of transactions done on a single PAN....Hence if not today then tomorrow certainly you would be caught...Then what would follow you cannot imagine...Then would levy HUGE penalty and would certainly initiate prosecution against you...I am not from the Income Tax department hence please be sure that there is no bias in my words....What is said is very much possible if it is not declared...One word of caution to you is to act as a responsible citizen...

TAX Planning is Healty....Tax Avoidance is accepted.....TAX evasion is worth visiting the jail...

Dear Diosys,
I am closely following the thread. Really nice job. Your last sentence is worth in gold.

 

[nsaivamsi]

Excellent thread and very good contribution by Mr.Diosys.

My Doubt -

I Have checked in www.ynithya.com ( Tax Claculator ) regarding Capital Gain Tax calculation .

In this thread i have come to know that for shortterm trading ( intra day) tax is calculated at 30% but in tax calculator (excel file of nithya) for intra day its calculating @10%.

can anyone clarify my doubt regarding this %'s.

Regards,

VAMSI

 

[diosys]

Excellent thread and very good contribution by Mr.Diosys.

My Doubt -

I Have checked in www.ynithya.com ( Tax Claculator ) regarding Capital Gain Tax calculation .

In this thread i have come to know that for shortterm trading ( intra day) tax is calculated at 30% but in tax calculator (excel file of nithya) for intra day its calculating @10%.

can anyone clarify my doubt regarding this %'s.

Regards,

VAMSI

Dear Sir....

Let me dispel your doubts....

What Mr Nitya Says is correct and what I say is also correct....

It all depends under which head do you wish to get taxed....If you get taxed in Business income (even dealing in shares can) then you are liable for straight forward 30% (or according to the tax slab you fall in if you are an individual) taxation otherwise the normal rule of 10% taxation would be applicable to you...

If you are still having a doubt then please feel free to contact again...

Further more if you wish more clarity on the subject you might wish to refer the first page of this thread wherein i have explained in the 3rd (i think) post the detail analysis as to how to determine your tax liability in case of day trading...Please refer that also...