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All about TAXAll about TAXinin

Financial Year Financial Year

20092009 ± ± 20102010

FromFrom -- WWW.SQUAMBLE.COMWWW.SQUAMBLE.COM



Tax Slab for F.Y. 2009 - 2010

Taxable Income of Men Taxable Income of Women

Taxable Income of Senior

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 :Following things will be discussed :

1. Tax Slab in 2009 for salaried employees1. Tax Slab in 2009 for salaried employees

2. How much will you save and2. How much will you save and

3. How to Save Tax3. How to Save Tax



The following incomes are completely exempt from IncomeThe following incomes are completely exempt from IncomeTax Without any upper limit.Tax Without any upper limit.

1. Interest on PPF/ GPF / EPF.1. Interest on PPF/ GPF / EPF.

2. Interest on GOI Tax Free Bonds.2. Interest on GOI Tax Free Bonds.3. Dividends on Shares and on Mutual Funds.3. Dividends on Shares and on Mutual Funds.

4. Any Capital Receipt from Life Insurance Policies. i.e.4. Any Capital Receipt from Life Insurance Policies. i.e.

sums received either on death of the insured or on Maturitysums received either on death of the insured or on Maturityof Life Insurance Plans. However, in case of Life Insuranceof Life Insurance Plans. However, in case of Life Insurance

Policies issued after March 31, 2004, exemption on MaturityPolicies issued after March 31, 2004, exemption on Maturity

payment u/s.10(10)D is available only if premium paid onpayment u/s.10(10)D is available only if premium paid on

any year does not exceeds 20% of the Sum Assured.any year does not exceeds 20% of the Sum Assured.

Tax Free Incomes :Tax Free Incomes :



5. Interest on Saving Bank Account in Post Office.5. Interest on Saving Bank Account in Post Office.

6. Long term Capital Gain on sale of shares and equity MF6. Long term Capital Gain on sale of shares and equity MF

Dividend Income :Dividend Income :

Dividend income from companies / equityDividend income from companies / equity ± ± oriented Mutualoriented Mutual

Funds is Completely Exempt in the hands of investors.Funds is Completely Exempt in the hands of investors.

Dividend is also Tax Free in the hands of investors in caseDividend is also Tax Free in the hands of investors in case

of debtof debt ± ± oriented Mutual Funds Schemesoriented Mutual Funds Schemes

Tax Free Incomes :Tax Free Incomes :



Gift Tax was abolished with effect fromGift Tax was abolished with effect fromOctober 1, 1998.October 1, 1998.

The gifts are no longer taxable in the handsThe gifts are no longer taxable in the handsof donor or of donor or doneedonee..

However, with effect from September 1,However, with effect from September 1,

2004, any gift received by an individual or 2004, any gift received by an individual or HUF will be included in taxable income,HUF will be included in taxable income,

provided the amount of gift exceedsprovided the amount of gift exceeds

Rs.50000/Rs.50000/--..

t axt ax



1.1. SpouseSpouse2.2. Brother or Sister.Brother or Sister.

3.3. Brother or Sister of Spouse.Brother or Sister of Spouse.

4.4. Brother or Sister of either of parents of the individual.Brother or Sister of either of parents of the individual.

5.5. Any lineal ascendant or descendant of the individual. Any lineal ascendant or descendant of the individual.6.6. Any lineal ascendant or descendant of the spouse of the Any lineal ascendant or descendant of the spouse of the

individual.individual.

7.7. Spouse of the persons referred to in (2) or (6)Spouse of the persons referred to in (2) or (6)

8.8. Gifts received on the occasion of marriageGifts received on the occasion of marriage

9.9. Gift received under a WILL by way of inheritance areGift received under a WILL by way of inheritance are

also tax free.also tax free.

Gifts received from following is Tax Free.Gifts received from following is Tax Free.



1. Filing of income Tax Return is Compulsory1. Filing of income Tax Return is Compulsoryfor all individuals whose Gross Annualfor all individuals whose Gross Annual

Income exceeds the Maximum Amount whichIncome exceeds the Maximum Amount which

is not chargeable to income tax i.e.is not chargeable to income tax i.e.Rs.1,80,000 for Resident Women, Rs.Rs.1,80,000 for Resident Women, Rs.

2,25,000 for Senior Citizens and Rs.2,25,000 for Senior Citizens and Rs.

1,50,000 for other individuals and HUFs.1,50,000 for other individuals and HUFs.

2. The last date of filing income tax return is2. The last date of filing income tax return is

July 31, in case of individuals who are notJuly 31, in case of individuals who are not

covered in point 3 below.covered in point 3 below.

Filing of Income Tax Return :Filing of Income Tax Return :



3. If the income includes business or 3. If the income includes business or professional income requiring tax auditprofessional income requiring tax audit

(turn over Rs.40(turn over Rs.40 LakhsLakhs), the last date for ), the last date for

filing the return is September 30.filing the return is September 30.

4. The penalty for Non4. The penalty for Non-- Filing of IncomeFiling of Income

Tax Return is Rs.5000 (after Tax Return is Rs.5000 (after

Assessment Year). Assessment Year).

Filing of Income Tax Return :Filing of Income Tax Return :



Income is Computed under theIncome is Computed under the follfoll. 5 Heads:. 5 Heads:

1. Income from salaries1. Income from salaries2. Income from House Properties2. Income from House Properties

3. Profit & Gains of Business & Profession3. Profit & Gains of Business & Profession

4. Capital Gains4. Capital Gains

5. Income from Other Sources5. Income from Other Sources

Computation of GrossComputation of Gross

Taxable IncomeTaxable Income



Salary or Pension IncomeSalary or Pension Income

The pay which you get has many components ,The pay which you get has many components ,like HRA , conveyance allowance and others.like HRA , conveyance allowance and others.

Out of this income some things are deductibleOut of this income some things are deductibleon your hand and after deducting you arrive at aon your hand and after deducting you arrive at aamount called Taxable income , on which youamount called Taxable income , on which you

have to pay tax.have to pay tax.



Income from House PropertyIncome from House Property

If the property is self occupied then the IncomeIf the property is self occupied then the Incomefrom House Property is treated as NIL.from House Property is treated as NIL.

If any loan is taken for the purchase of theIf any loan is taken for the purchase of theproperty then the amount paid towards interestproperty then the amount paid towards interest

up to a maximum of Rs. 1,50,000/up to a maximum of Rs. 1,50,000/-- is deductedis deductedfrom taxable income.from taxable income.



Income from House PropertyIncome from House Property

In case Property is given on rent, then we haveIn case Property is given on rent, then we haveto find out the :to find out the :

Annual Rental Income Annual Rental Income

From this deduct Property Tax paid if anyFrom this deduct Property Tax paid if any

From balance amountFrom balance amount--deduct30% towardsdeduct30% towards

repairs & maintenancerepairs & maintenance

From the residual figureFrom the residual figure-- deduct the amount of deduct the amount of interest paid on loan taken for the purchase of interest paid on loan taken for the purchase of

the property.the property.

The resultant figure is the Income from HouseThe resultant figure is the Income from House

PropertyProperty



Profit from Business / professionProfit from Business / profession

Income as arrived on theIncome as arrived on thebasis of Profit & Loss A/cbasis of Profit & Loss A/c



Income from InterestIncome from Interest

Interest Income from the followingInterest Income from the followingsources to be included in Grosssources to be included in GrossTaxable Income:Taxable Income:

Interest on company deposits.Interest on company deposits.

Interest on debentures/bonds.Interest on debentures/bonds.

Interest on savings bank account/ fixedInterest on savings bank account/ fixed

deposits with banks.deposits with banks.



Income from InterestIncome from Interest

Interest on post office savings schemesInterest on post office savings schemes

like MIS, NSC, KVP etc.like MIS, NSC, KVP etc.

Interest on private loans given to relatives,Interest on private loans given to relatives,friends or any other entity.friends or any other entity.

Interest on government securities.Interest on government securities.

Note: Deduction u/s 80 L has been omittedNote: Deduction u/s 80 L has been omittednow andnow and accordingly,interestaccordingly,interest income fromincome fromthe above sources is Fully Taxable now.the above sources is Fully Taxable now.



Capital GainsCapital Gains Capital gain arises when certain assetsCapital gain arises when certain assets

like property (plot or a built up commerciallike property (plot or a built up commercial

/ residential unit) or shares / mutual fund/ residential unit) or shares / mutual fund

units / bonds etc are sold for a profit.units / bonds etc are sold for a profit.

The treatment of capital gains is slightlyThe treatment of capital gains is slightly

different.different.

It mainly depends upon whether theIt mainly depends upon whether the

capital gain (profit on sale) is Short Termcapital gain (profit on sale) is Short Term

or Long Term.or Long Term.



Short Term Capital GainShort Term Capital Gain

Capital gain is considered to be short termCapital gain is considered to be short term

if immovable property is sold / transferredif immovable property is sold / transferred

within THREE years of acquisition.within THREE years of acquisition.

Similarly, if shares or other financialSimilarly, if shares or other financial

securities such as mutual fund units aresecurities such as mutual fund units are

sold within ONE year of purchase, thesold within ONE year of purchase, the

profit earned is treated as short termprofit earned is treated as short term

capital gain.capital gain.



Tax Treatment on Short TermTax Treatment on Short Term

CapitalG

ainCapitalG

ain It is included in the gross taxableIt is included in the gross taxable

income like other sources of income like other sources of

income and normal rates of taxincome and normal rates of taxapply, which depend on the grossapply, which depend on the gross

taxable income from all sourcestaxable income from all sources

including short term capital gains.including short term capital gains.



Tax Treatment on Short TermTax Treatment on Short Term

CapitalG

ainCapitalG

ain In case of Sale of equity shares or In case of Sale of equity shares or

units of equity oriented Mutualunits of equity oriented Mutual

Fund schemes, short term capitalFund schemes, short term capitalgains are taxed at a Flat Rate of gains are taxed at a Flat Rate of

15%, irrespective of the tax slab15%, irrespective of the tax slab

on other sources of income,on other sources of income,

provided securities Transactionprovided securities Transaction

Tax is paid on such sale.Tax is paid on such sale.



Long Term Capital GainLong Term Capital Gain

If Immovable Property is sold after THREEIf Immovable Property is sold after THREE

years of purchase, Or years of purchase, Or

Financial securities such as shares, deepFinancial securities such as shares, deep

discount bonds, units of opendiscount bonds, units of open -- ended or ended or

closeclose ± ± ended schemes of mutual fundsended schemes of mutual funds

are sold/redeemed/transferred after are sold/redeemed/transferred after

holding the same for more than Twelveholding the same for more than Twelve

Months, then the gain is considered to beMonths, then the gain is considered to be

long term capital gain.long term capital gain.



Tax Treatment on Long TermTax Treatment on Long Term

CapitalG

ainCapitalG

ainWith effect from October 1, 2004,With effect from October 1, 2004,

long term capital gain on transfer long term capital gain on transfer

of listed shares/units of equityof listed shares/units of equityoriented mutual funds schemesoriented mutual funds schemes

has been exempted from tax,has been exempted from tax,

provided securities transaction taxprovided securities transaction tax

has been paid on such sale.has been paid on such sale.



Long Term Capital GainLong Term Capital Gain

Non listed shares/units of equityNon listed shares/units of equity

oriented mutual fund schemes,oriented mutual fund schemes,

tax is payable in respect of longtax is payable in respect of longterm capital gains at a flat rateterm capital gains at a flat rate

20% and the amount of gain has20% and the amount of gain has

to be adjusted for inflation. Thisto be adjusted for inflation. This

inflation adjustment is known asinflation adjustment is known as

indexation benefit.indexation benefit.



Section 54 ECSection 54 EC LongLong--Term Capital Gain Tax (after availingTerm Capital Gain Tax (after availing

indexation benefit ) can be saved by investingindexation benefit ) can be saved by investing

amount within 6amount within 6thth months in any of the followingmonths in any of the following

two schemes specified under section 54 EC (two schemes specified under section 54 EC (uptoupto Rs. 50Rs. 50 LakhsLakhs only):only):

1 Bonds issued by Rural Electrification1 Bonds issued by Rural Electrification

Corporation ( REC )Corporation ( REC )

2 Bonds issued by NHAI (National Highways2 Bonds issued by NHAI (National Highways

Authority of India) Authority of India)



There are various Tax SavingThere are various Tax Saving

Schemes:Schemes: Life Insurance Premium.Life Insurance Premium.

Contributions to Employees ProvidentContributions to Employees Provident

Fund/ GPFFund/ GPF UnitUnit--Linked Insurance PlanLinked Insurance Plan

Contribution to Public Provident FundContribution to Public Provident Fund

Scheme (Max. Rs.70,000).Scheme (Max. Rs.70,000). National Savings Certificates VIIINational Savings Certificates VIII

Tuition FeesTuition Fees UptoUpto Two Children.Two Children.

Repayment of Housing Loan ( Principal)Repayment of Housing Loan ( Principal)



Pension scheme of LIC of India or any other Pension scheme of LIC of India or any other

insurance company.insurance company.

Subscription to eligible issue of units of Subscription to eligible issue of units of

Mutual Fund (ELSS).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 lockFixed Deposit with Banks having a lock ± ± inin

period of 5 Yearsperiod of 5 Years

Premium onPremium on MediclaimMediclaim Policy.Policy.



Life insurance Premium:Life insurance Premium:

Life insurance is a Very Good Investment.Life insurance is a Very Good Investment.

It gives Risk Cover, Tax Saving and GoodIt gives Risk Cover, Tax Saving and Good

returns.returns.

It is a contract that pledges payment of anIt is a contract that pledges payment of an

amount to the person assured (or hisamount to the person assured (or his

nominee) on the death of insured person.nominee) on the death of insured person.



Savings through life insurance guaranteeSavings through life insurance guaranteefull protection against risk of death of thefull protection against risk of death of thesaver.saver.

Also, in case of demise, life insurance Also, in case of demise, life insuranceassures payment of the entire amount assures payment of the entire amount assured (with bonuses whereverassured (with bonuses wherever

applicable)applicable)

whereas in other savings schemes,whereas in other savings schemes,only the amount saved (withonly the amount saved (with

interest) is payable.interest) is payable.



LongLong--term savingsterm savings

³EASY³EASY InstalmentInstalment´ facility.´ facility.

Premium payment for insurance is either Premium payment for insurance is either monthly, quarterly, half yearly or yearly.monthly, quarterly, half yearly or yearly.



LO AN Facility Available.LO AN Facility Available.

Also generally accepted as security, even Also generally accepted as security, evenfor a commercial loan.for a commercial loan.



A policy that has a suitable insurance plan A policy that has a suitable insurance planor a combination of different plans can beor a combination of different plans can beeffectively used to meet certain monetaryeffectively used to meet certain monetaryneeds that may arise from timeneeds that may arise from time--toto--time.time.

Children's education, start Children's education, start--inin--life orlife ormarriage provision or even periodicalmarriage provision or even periodicalneeds for cash over a stretch of time canneeds for cash over a stretch of time canbe less stressful with the help of thesebe less stressful with the help of these

policies.policies.



Alternatively, policy money can be made Alternatively, policy money can be madeavailable at the time of one's retirement available at the time of one's retirement from service and used for any specificfrom service and used for any specificpurpose, such as, purchase of a house orpurpose, such as, purchase of a house orfor other investments.for other investments.

Loans are granted to policyholders forLoans are granted to policyholders forhouse building or for purchase of flatshouse building or for purchase of flats(subject to certain conditions).(subject to certain conditions).



National Savings CertificatesNational Savings Certificates

(NSC) :(NSC) : National Saving Schemes (NSC) is used to beNational Saving Schemes (NSC) is used to beone of the popular Income Tax Savingone of the popular Income Tax Savingschemes. But nowadays it is not so lucrative.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 aIt can be operated singly, jointly, or by aminor with his/her parent or guardian.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 theThe minimum investment limitation of thescheme is Rs.100/scheme is Rs.100/-- and with no upperand with no upperlimit.limit.

This scheme has a maturity period of 6This scheme has a maturity period of 6years.years.

There is a provision of loan on the basis of There is a provision of loan on the basis of this scheme.this scheme.



Working on NSC InterestWorking on NSC Interest

Amt Invested Rs. 100.00 Amt Invested Rs. 100.00

Interest Earned @ 8% P.A. Rs. 8.00Interest Earned @ 8% P.A. Rs. 8.00 Tax @ 30% on Rs.8/Tax @ 30% on Rs.8/-- Rs. 2.40Rs. 2.40

Net Interest ReceivedNet Interest Received Rs. 5.60Rs. 5.60



Public Provident Fund (PPF) :Public Provident Fund (PPF) :

Under this scheme, there is a return at theUnder this scheme, there is a return at theinterest rate of 8% p.a.interest rate of 8% p.a.

The minimum investment limit is Rs. 500/The minimum investment limit is Rs. 500/--and maximum limitation is Rs. 70,000/and maximum limitation is Rs. 70,000/--..

It can be opened any time throughout theIt can be opened any time throughout theyear. It can be operated either singly oryear. It can be operated either singly or

jointly. In case of minor, with parent / jointly. In case of minor, with parent /

uardian.uardian.



ThisThis scheme has a maturity period of 15scheme has a maturity period of 15

years.years.

Loan Facility is available.Loan Facility is available.



Loan amount can be returned in maximumLoan amount can be returned in maximumof 36 installments.of 36 installments.

A person can withdraw an amount (not A person can withdraw an amount (not more than 50% of themore than 50% of the balance).balance).

Tax Benefit Under Section 80C of IncomeTax Benefit Under Section 80C of IncomeTax Act, 1961 is available.Tax Act, 1961 is available.



Mutual Fund (ELSS) / ULIP PLANSMutual Fund (ELSS) / ULIP PLANS

yy

An ELSS (Equity Linked Savings Scheme) is a An ELSS (Equity Linked Savings Scheme) is amutual fund scheme that invests in equity &mutual fund scheme that invests in equity &equityequity--related securities.related securities.

ULIP Plans (ULIP Plans (Unit Linked Insurance Plan) is aUnit Linked Insurance Plan) is aPlan that offers Tripple Benefit Plan that offers Tripple Benefit

Tax Benefit Tax Benefit

Insurance CoverInsurance Cover

Benefit from the long term growth potential of Benefit from the long term growth potential of equities.equities.



yy ULIP & ELSS are also eligible investmentsULIP & ELSS are also eligible investmentsunder section 80Cunder section 80C of Income Tax Act 1961.of Income Tax Act 1961.

yy ELSS have a lockELSS have a lock--in period of three years.in period of three years.This allows the investors to benefit from theThis allows the investors to benefit from thelong term growth potential of equities.long term growth potential of equities.



ELSS / ULIPELSS / ULIP ± ± Key DifferentiationKey Differentiation

ELSS is the only investment product that offers .

Twin Advantages

Equity Returns Tax Benefits



ELSS / ULIPELSS / ULIP ± ± A Comparison 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 80DDeduction u/s 80D

MediclaimMediclaim PolicyPolicy

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/additional for parent Rs. 15,000/-- andand

in case of senior citizen Rs. 20,000/in case of senior citizen Rs. 20,000/--



I hope this information was helpful. If

you need any further help you can getin touch with me via my email id

[email protected]

You can also get in touch with me on

www.squamble.com

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