The data on day two of Q1 advance tax numbers is declared and is quite similar to what we saw yesterday. Big company Reliance disappointed, while oil marketing companies (OMCs) and banking sector reported strong numbers.

Oil Marketing Companies:

Today’s numbers seem relatively on the same page as the numbers which came out yesterday. All this is source-based data but one interesting trend to be pointed out is that the oil-marketing companies are back with retaliation this quarter. BPCL reported good numbers, it paid Rs 40 crore versus nil last year and HPCL paid Rs 15 crore versus nil last year. So there was a great deal of advancement in the oil-marketing company sector.

Auto Sector:

As per auto sector is considered, we didn’t have any auto numbers yesterday but we have two fresh auto numbers for you today. The numbers were flattish in the auto sector––M&M Rs 22 crore versus Rs 23 crore, Bajaj Auto paid Rs 50 crore versus Rs 50 crore last year. So there are unchanged and flattish numbers in the auto sector over there.

Banking Sector:

Of course, banks yet again were the redeemers as far as the revenue department is concerned. We had a bunch of handsome numbers yesterday in the banking sector led by State Bank of India. We have two fresh banking numbers today––Standard Chartered paying rupees Rs 250 crore versus Rs 210 crore and we have Citi Bank paying Rs 180 crore versus Rs 172 crore.

Pharma:

Also pharma seems to have had disappointing Q1. GSK Pharma reported Rs 35 crore versus Rs 55 crore.

In an visible attempt to put money into the pockets of the salaried class, finance Minister Pranab Mukherjee may bring back standard deduction on income tax rather than increasing income tax slabs when he presents the Budget. The provision of standard deduction, which was given to employees to compensate for the expenses incurred by them under heads such as conveyance, was discontinued by former finance minister P Chidambaram with effect from April 1, 2006.

The Budget would definitely bring relief to the salaried class though it would finally depend on the finance minister whether he would like tax slabs to be increased or restore standard deduction, both of which will help consumers.

In fact, a large section of the salaried class, including central government employees, supported the Congress despite BJP’s poll promise of exempting individuals with an annual income of up to Rs 3 lakh from income tax. In fact, standard deduction of 40% of employee’s salary or Rs 30,000, whichever was less, was allowed for those employees whose salary was Rs 5 lakh or less. For those with salary of more than Rs 5 lakh, a deduction of Rs 20,000 was allowed.

We are regularly getting queries regarding tax to be paid on trading or investments in share market on profits or loss booked. We found that many people have wrong conceptions. EquityPandit.com decided to publish the following post to enlighten our readers with the clear cut funda of Tax Payment and Tax Savings.

Short term capital Gain/Loss

Mr. Jain purchased some securities on April 17, 2008 at a total cost of Rs 1,10,000. On July 3, 2008, he sold these securities for Rs 1,40,000. Here the Short Term Capital Gain, STCG (gain arising from sale of securities which is less than 12 months old) was Rs 30,000 {“a”} and STCG Tax (15% as per current laws) for the gain calculated to Rs 4500.

But Mr. Jain had also purchased securities worth Rs 85,000 on July 22, 2008 and had sold them at Rs 35,000 on March 20, 2009, hence there his Short Term Capital Loss ( loss arising from sale of securities which is less than 12 months old) was equal to Rs 50,000 (“b”).

Now as per the tax laws Mr. Jain’s Short Term Capital Gain {“a”} is offset by an equivalent Short Term Capital Loss {“b”}, hence there is no Short Term Capital Gains tax payable by Mr. Jain for the financial year 2008-09! Also he carried forward Rs 20,000 loss for offsetting any short term capital gains he makes in the next 8 years.

Long Term Capital Gain/Loss

Mr. Jain purchased securities on March 23, 2007 at Rs. 1,00,000 and sold them on March 14, 2009 at Rs 1, 35,000. The Long Term Capital Gain ( gain arising from sale of securities which are more than 12 months old) from this transaction was Rs. 35,000.

 

Here the entire amount of Rs 35,000 is not taxable for Mr. Jain (as Long Term Capital Gains are exempt from Tax)

Here at EquityPandit.com we will discuss complete tax saving plan. But before proceeding further about Tax saving, lets see how much tax you will have to pay !

There are 5 types of relief available:

§         Section 80 C

§         Section 80 CCC

§         Section 80 CCD

§         Section 80 D

§         Section 80 E

Section 80 C:

• Cannot exceed Rs.1,00,000
• Sum may be paid or deposited at any time during the year
• No limits for various items specified u/s. 80C. Therefore, an assessee may opt to invest even in only one item say insurance premium
• Premium or other payment made on insurance policy not in excess of 20% of actual capital sum assured
• Tuition Fee for any two children of the assessee
• Principal repayment on loan borrowed for acquiring commercial property is not eligible
• Residential property under construction for which principal has been repaid does not qualify for deduction
• Repayment of principal on loan borrowed for residential house (whether let-out or self occupied) only is entitled for deduction.
• Where the loan is availed for any addition, alteration, repair or renovation no deduction can be claimed for principal repayment
• Repayment of loan borrowed for housing from relatives, friends, non-specified employer / institution are not eligible for deduction.
• However, any interest paid on such loan borrowed is deductible under section 24, while computing income under the head “House Property”
• Fixed Deposit in Banks must be for 5 years
• Five year time deposit in an account under Post Office Time Deposit Rules, 1981.
• Deposit in an account under the Senior Citizens Savings Scheme Rules, 2004

Section 80c popular choices:

§         Mutual Funds

§         Insurance

§         ULIP

§         Principal repayment of Housing Loan

§         Tuition fee – paid for children (own, adopted, step) for full time education in India.

                               [Note: Tuition fee paid for grandchildren is eligible for deduction for the HUF]

§         Fixed Deposits in Banks (5 years)

§         NSC – National Savings Certificate

§         PF – Provident Fund [SPF, PPF, RPF]

§         10 year Post Office Savings Bank (CTD)

§         Stamp Duty and Registration Charges

Section 80CCC and Section 80CCD - Pension-No Tension!

80CCC-Contribution to pension scheme

• Rs.1,00,000 (outer limit)
• Disallowance on cancellation or lapse
• All withdrawals are taxable on surrender / maturity

80CCD-Contribution to CG pension scheme

• 10% of Salary (Basic + DA)
• All withdrawals are taxable on surrender / maturity

Section 80D - Health is wealth (literally)!

80 D – Contribution to Medical Insurance Schemes

• Rs: 15,000
• Self + Spouse + Dependent Children + Dependent Parents
• Rs: 20,000 for senior citizens
• Now, an additional deduction of Rs: 15,000 (Rs: 20,000 if parents are senior citizens) is available to an individual for payment of medical insurance premium for parents.

Section 80E - It’s good to study!

80 E – Repayment of Education Loans

• Only Interest is eligible for deduction
• No Limit
• Deduction eligible for initial year and immediately succeeding seven years
• Deduction eligible for repayment of education loans made for spouse or children

Its always good to consult with an accountant with a traditional or online accounting degree if you have questions about filing your taxes.

As the Indian government has changed Income tax structure in India, here you can find what amount of tax you will have to pay.

Now to learn about tax saving plan. Kindly visit understanding tax.