Friday, August 9, 2013

Prajna Capital

Prajna Capital

Save Taxes on your property sale

Posted: 09 Aug 2013 12:30 AM PDT

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 


Get a tax deduction on sale of commercial property. Here's how

 

Arun Kumar owns a residential property in his name which he uses as residence and also owns an office space which has been rented out. Along with this, he has also inherited a plot of land from his father.

Kumar works as a whole- time director with a private sector company.

As per the provisions of The Income- tax Act (' the Act'), the rental income earned by Kumar from the commercial property will be taxed under the head " Income from house property" and will be allowed all the prescribed deductions on the same.

Kumar has recently sold the inherited plot of land and wishes to reinvest the proceeds in another residential property, as advised by his tax consultant, in order to claim exemption under section 54F of the Act. However, Section 54F lays down a pre- condition that the taxpayer should not own more than one residential property ( whose income is chargeable under the head " Income from house property") at the time of the investment, as above, to claim exemption under this section. In Kumars case, the income from the office space is currently being offered under the head "income from house property" other than the residential property that is being claimed as a self- occupied property. Does this imply that Kumar will not be able to claim the exemption under section 54F? The Act does provides exemption on long term capital gains earned on sale of property. One of the provisions is Section 54F of the Act, which provides that if a taxpayer earns any long- term capital gains through sale of any capital asset, other than a house property, then exemption can be claimed by investing the sale proceeds in a house property within the prescribed time limit, that is, within two years from the date of sale of the property or within one year before the date of sale. The time limit is extended to three years, in case the individual were to construct a new house property.

In one of the recent cases that came up before the Chennai Income Tax Tribunal, a taxpayer had filed his return of income electronically and claimed deduction under section 54F of the Act in his computation of income. His case was selected for scrutiny by the tax officers. During the course of assessment, the taxpayer submitted that in addition to the new property bought, he owned one more residential property and one commercial property in Chennai. In view of the qualifying condition defined under section 54F, the tax officer rejected the taxpayer's exemption claim on the ground that he is the owner of two properties.

For claiming exemption, it is essential that on the date of sale, the taxpayer should not own more than one residential property other than the new property. The officer was also of the view that the term 'residential property' and 'commercial property' have not been defined separately under the Act. A residential property could be converted into commercial and vice versa by virtue of its use. With this view in mind, the officer rejected the taxpayer's claim. At the first appellate level, the appellate officer found merit in the officer's findings and did not grant any relief to the taxpayer.

The taxpayer preferred a second appeal with the Tribunal. During the course of the appellate proceedings, the taxpayer's representative submitted that the commercial property owned by the taxpayer has been let out and is being used exclusively for commercial purposes. The income received from letting out is assessed under the head of income "Income from house property". It was further submitted that under the existing provisions of the Act, there is no other head of income provided for assessing rental income received from letting out of commercial property.

The taxpayers' representative argued that the view taken by the officer, that rental income from letting out of commercial property being assessed under the head "Income from house property" leading to the conclusion that the owns another residential property, is misconceived. Supporting documents like water supply bills, planning permits issued by the town development authority, rent agreements, etc to show that the building where the property is owned by the taxpayer is a commercial property were not considered by the officers.

Thus, it was amply clear that the property is not being used for residential purposes.

In its decision, the honourable Tribunal observed that the officer and the first appellate authority have wrongly concluded that the taxpayer owns two residential properties.

The Tribunal held that the observation of the officer and first appellate authority, that the property is residential, is not correct. This observation was based on the fact that since the taxpayer has claimed various deductions from rental income, under the prescribed section 24 of the Act, the property should be qualified as a residential property The Tribunal observed that the Act does not differentiate between rental income from house property and a commercial building. Both these incomes are assessed under the head "Income from house property" subject to certain exceptions.

The relevant section under the Act prescribes three rules to be complied with for any income to be charged under the head 'House Property":

a. The property should consist of buildings;

b. The person should be the owner of the property;

c. The property should not be used for the purpose of his business / profession.

It relied on various judicial decisions in the past and held that the term "building" as used in the relevant sections of the Act is not qualified by the word 'residential'. There have been several decisions where the income from letting out of commercial buildings / warehouses / factory premises was held to be assessable under the head House property.

Based on the above, the honourable Tribunal held that the taxpayer is eligible to claim the deduction under section 54F of the Act.

In case the lower officer's view was further supported by the Tribunal, then it would have been difficult for individuals, like Kumar, owning one residential property and one or more than one commercial properties to claim capital gains exemption. With the favourable decision, Kumar can now reinvest the capital gains from sale of his plot into a second residential home.

|Sale proceeds from commercial property are eligible for tax exemption |Show proof that property is used solely for commercial purposes |Use documents like water supply bills, planning permits, rent agreements

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund


Invest in Tax Saving Mutual Funds Download Any Application Forms
Buy Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now

Differences between financial planners and agents

Posted: 08 Aug 2013 10:44 PM PDT

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

We all work hard to earn money, but when it comes to plan and grow your hard earned money; whom do you choose - Agent or Financial Planner? Even though financial literacy has been widely spread through electronic, print and television media, very few people are actually aware of existence of Financial Planners in the market.

 

Hence only few people must be approaching a Financial Planner for advice; and agents must be playing a major part in your financial lives for making investment decisions.


Financial Planner v/s Agent/Distributor

Financial Planner charges a fee which is in the range of Rs.15,000 Rs.25,000 (average) for preparing a goal based financial plan for your financial future and gives unbiased advice for a certain period (usually 1 year, later on the service has to be renewed).

 

While an agent / distributor does not charge any fee i.e. it is absolutely free. He is paid commission by the company whose products which he sells.

 

Difference in Investment and Insurance Advice

Mutual Fund Investment

Financial Planner will always give advice in your interest i.e. schemes which are suitable with respect to your goal, risk appetite and time horizon, since he has charged a fee from you for giving advice.

 

After the introduction of direct plans in Mutual Fund from January 1, 2013, most of the planners advice direct plans, since the expense ratio is lower under direct plans, and there is no intermediary involved.

This can save upto 0.40 percent - 0.60 percent per annum on your total investment. While the Mutual Fund Distributor will not even inform you that there are such kinds of direct plans available in the market.

They will sell (so called "advice") you the schemes, which will be beneficial for him, as these will pay him higher commission. Agents generally are not concerned with your financial goals.

 

Life Insurance

 

Financial Planners usually calculate your insurance need based on your financial needs (goals) and existing investments (called 'need based insurance'). Planner will review your existing insurance as well, and advice whether it should be continued or surrendered.

 

Planner will always recommend buying 'online term plan', since they are the cheapest and does not involve any intermediary. So you save a lot on your insurance premium by buying right policy and adequate cover at minimal amount.

 

If you already have sufficient assets and existing insurance incase of an uncertainty, which will be sufficient for your dependents then planner will advise not to buy additional life insurance. Also if you do not have any dependants, the planner will not recommend you to buy life insurance.

On the other hand, insurance agent will never consider/calculate your insurance need, never recommend you buying term insurance since the premiums are low and thus the commission he will earn on your policy.

Agent will sell traditional plans with high premiums and low insurance cover, which will earn him approximately 20 percent - 30 percent of regular annual premium. Also the agent will not bother whether you need insurance or review your existing insurance policies.

 

Health Insurance

 

Financial Planner will recommend adequate health insurance for you and your family with a mix of individual / floater health insurance plan and a top-up plan. Top-up plan is a plan, which will reimburse hospitalization expense over and above a specified amount (called deductible).

Thus the premium is low for top-up policies. So, you can get high health insurance cover at a lower premium. Agents generally do not promote top-up plans since the premiums are low and thus the commission they earn on it is low. Agent may advice you buy different policy or increase the sum assured instead of advising top-up plan.

 

Gold Investment



Financial Planner will recommend you to invest in gold via ETF (Exchange Traded Fund). The cost of investing in ETF is low compared to Gold Funds of mutual fund.

 

Expense ratio of Gold ETF is around 1 percent to 1.50 percent, whereas Gold Fund, which invests in Gold ETFs, bears the cost of Gold ETF as well as expense of Gold Fund of around 0.50 percent to 0.70 percent.

 

So the Gold Funds bear double cost and are thus expensive and this reduces the overall return of the fund. Mutual Fund distributors cannot sell ETFs, so they never recommend them.

 

This way you can see the quality of advice that you can get from a Financial Planner compared to any agent or distributor. The advice by a planner is totally unbiased and thoroughly researched and is in your interest.

 

There is no conflict of interest in the advice given by the Financial Planner. Also, the planner will present you a road map to your financial future. So, now it is time to find the right Financial Planner to plan your finances and say good bye to your agent.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund


Invest in Tax Saving Mutual Funds Download Any Application Forms
Buy Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now

BOI AXA Mutual Fund new Chief Investment officer

Posted: 08 Aug 2013 08:38 AM PDT

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

BOI AXA Mutual Fund has appointed David Pezarkar as Chief Investment officer- Equity, with effect from August 1, 2013. He will also manage BOI AXA Equity Fund and BOI AXA Focused Infrastructure Fund in place of Saurabh Kataria.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund


Invest in Tax Saving Mutual Funds Download Any Application Forms
Buy Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now

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