Presentation at IRS on 22nd Jul,2014 on wealth creation & PRBS

PPT OF Presentation at IRS on wealth creation & PRBS

Union Budget 2014 updates :-

- No changes in income tax rates.

- Increase personal tax exemption limit by Rs 50,000 i.e Rs 3,00,000 for senior citizens and Rs 2,50,000 for other than senior citizens.

- Increase limit of 80C from Rs 1,00,000 to Rs 1,50,000. Also increased the limit of PPF to Rs 1,50,000.

- House Loan interest limit for self occupied is increased from Rs 1,50,000 to Rs 2,00,000.

- Debt fund definition has been redefined. Debt fund previously was less than one year was consider as short term, but now it is redefined to three years. Because of this the tax impact is huge. As the fund size is more than Rs 3,00,000 Crore impact. Please contact an expert, if you have debt fund or FMP for guidance.

- Fiscal deficit 4.3% and revenue deficit 2.9%

- No change in Service tax rate.

PRBS (Post Retirement Benefit Scheme):-

                    Previously  PRBS was a defined benefit scheme.

From 01.01.2007 the Scheme will be converted to a defined contribution scheme.

ONGC deducted tax on PRBS at maximum rate @ 30.9% for every employee. But certain deduction is available to employee regarding superannuation benefit. This may generate a huge amount of refund to each employee.

A predefined process mentioned in Income Tax Act, is required to follow when claiming PRBS refund.

Some important points regarding Income tax:-

1. PRBS arrears received will be entitled for REFUND, as it is an arrear of previous year resulting a huge refund, even if your taxable income is in the previous year in highest slab.

2.Leave travel allowance is available for two journeys in a every block of four calendar years (like 2006-09, 2010-13) for self and family ( includes spouse, children and mainly dependent brother, sister, parents) permissible only if in the India. One unavail journey can be carry forward to next block.

3. House rent allowance is available, if you are staying in a rented house and actually expended & paid for it.

4. If you have more than one residential house, you can only show one house as a  self-occupied house. The other houses will be deemed to be rented house.The annual value of the house will be let-out value. 

5. Capital gain in respect of shares, mutual funds is exempt if STT is paid on it (already paid in mostly cases), If it is more than one year, otherwise short term gain.

6.House, land (agriculture/non-agriculture), building etc. is liable for capital gain tax. There are lot of exemption and tax planning is available for pre and post transactions.

7. Fixed deposit, RD, bonds, saving bank interest is liable for tax.

8. Show your exempt PPF interest, share dividend and other exempt income.

9. Spouse income is clubbed with transferor's income if directly transfer by assessee. E.g. If you transfer FD in your spouse name, the interest of the same is included in transferor's income.

10. Use judicial tax planning with the help of expert's advice. Use H.U.F., company, firm, spouse and children as a legitimate tax planning. 

11. If income is above taxable limit you cannot submit Form 15G or 15H to bank, otherwise you may be penalise for wrong statement.

Wealth tax:-

1. Wealth tax is taxable @1%  if total wealth is above Rs. 30 lac, below Rs 30 lac there is no wealth tax. Assessee is also required to file return annually of an asset held on 31st march.

2.Certain movable and immovable properties are exempt. We are giving examples of exempt and non-exempt properties for the purpose of wealth tax which are common. Fixed deposit, shares, bank balance and business assets are exempt assets.

3. Farm house, motor car, jewellery, bullion of gold, etc., urban land are taxable assets.

4. Assets transfer to spouse, daughter in-law  and minor child will be the wealth of transferor.

5. One house of a choice is non taxable wealth. The other house is taxable wealth. The valuation of the same is as per valuation rule provided in the Act.

6. Valuation of assets of business, valuation of a interest in a firm / association of a person/ life interest is as per valuation rule provided in the Act.     

7. Cash above Rs 50,000/- is taxable.

Wealth planning:-

                     Wealth planning is a subject which is ignored knowingly or unknowingly. There is no rocket science. There are basic investment choices like Fixed income schemes (Bank/ Private / Bond / Rated companies) , Share investment ( Mutual fund/ PMS/ Listed company share), Immovable property (Land/ Building/ Shops). This investment needs to be made a choice qua risk, reward and return. There are materials, guidelines and consultancy available on this. Right choice with a relax state of mind will give a handsome return with least risk. I have consciously not given detail information, because it is needed according to individual perception. The information regarding choice of investment needs to be comprehensive, clear and without ambiguity.

Union Budget 2014 updates :-

- No changes in income tax rates.

- Increase personal tax exemption limit by Rs 50,000 i.e Rs 3,00,000 for senior citizens  and Rs 2,50,000 for other than senior citizens.

- Increase limit of 80C from Rs 1,00,000 to Rs 1,50,000. Also increased the limit of PFF to Rs 1,50,000.

- House Loan interest limit for self occupied is increased from Rs 1,50,000 to Rs 2,00,000.

- Long term capital gain tax on debt fund increased to 20%.

- Fiscal deficit 4.3% and revenue deficit 2.9%

- No change in Service tax rate.

Some important points regarding Income tax:-

1. PRBS arrears received will be entitled for REFUND, as it is an arrear of previous year resulting a huge refund, even if your taxable income is in the previous year in highest slab.

2.Leave travel allowance is available for two journeys in a every block of four calendar years (like 2006-09, 2010-13) for self and family ( includes spouse, children and mainly dependent brother, sister, parents) permissible only if in the India. One unavail journey can be carry forward to next block.

3. House rent allowance is available, if you are staying in a rented house and actually expended & paid for it.

4. If you have more than one residential house, you can only show one house as a  self-occupied house. The other houses will be deemed to be rented house.The annual value of the house will be let-out value.

5. Capital gain in respect of shares, mutual funds is exempt if STT is paid on it (already paid in mostly cases), If it is more than one year, otherwise short term gain.

6.House, land (agriculture/non-agriculture), building etc. is liable for capital gain tax. There are lot of exemption and tax planning is available for pre and post transactions.

7. Fixed deposit, RD, bonds, saving bank interest is liable for tax.

8. Show your exempt PPF interest, share dividend and other exempt income.

9. Spouse income is clubbed with transferor's income if directly transfer by assessee. E.g. If you transfer FD in your spouse name, the interest of the same is included in transferor's income.

10. Use judicial tax planning with the help of expert's advice. Use H.U.F., company, firm, spouse and children as a legitimate tax planning.

11. If income is above taxable limit you cannot submit Form 15G or 15H to bank, otherwise you may be penalise for wrong statement.

Wealth tax:-

1. Wealth tax is taxable @1%  if total wealth is above Rs. 30 lac, below Rs 30 lac there is no wealth tax. Assessee is also required to file return annually of an asset held on 31st march.

2.Certain movable and immovable properties are exempt. We are giving examples of exempt and non-exempt properties for the purpose of wealth tax which are common. Fixed deposit, shares, bank balance and business assets are exempt assets.

3. Farm house, motor car, jewellery, bullion of gold, etc., urban land are taxable assets.

4. Assets transfer to spouse, daughter in-law  and minor child will be the wealth of transferor.

5. One house of a choice is non taxable wealth. The other house is taxable wealth. The valuation of the same is as per valuation rule provided in the Act.

6. Valuation of assets of business, valuation of a interest in a firm / association of a person/ life interest is as per valuation rule provided in the Act.      

7. Cash above Rs 50,000/- is taxable.

Wealth planning:-

Wealth planning is a subject which is ignored knowingly or unknowingly. There is no rocket science. There are basic investment choices like Fixed income schemes (Bank/ Private / Bond / Rated companies) , Share investment ( Mutual fund/ PMS/ Listed company share), Immovable property (Land/ Building/ Shops). This investment needs to be made a choice qua risk, reward and return. There are materials, guidelines and consultancy available on this. Right choice with a relax state of mind will give a handsome return with least risk. I have consciously not given detail information, because it is needed according to individual perception. The information regarding choice of investment needs to be comprehensive, clear and without ambiguity.