Saturday, August 16, 2014

Prajna Capital

Prajna Capital

Tax Saving after Budget 2014

Posted: 16 Aug 2014 06:24 AM PDT

 

Tax Saving after Budget 2014

Section 80C of Income Tax Act allows tax payers to claim deductions from their taxable income (up to Rs 1 Lakh) by investing in certain instruments. However, many tax payers are not aware that, there are other sections of the Income Tax Act that allows tax payers to claim further deductions from their taxable income, beyond the 80C limit of Rs 1 lakh. In this article, we will discuss ways to save taxes beyond the Rs 1 lakh of Section 80C.

  • Interest Paid on Home Loan: Under Section 24, up to Rs 1.5 lakhs per annum can be claimed as deduction from your taxable income, on account of interest paid on home loan, for a self occupied property. If the property is rented out, then there is no limit and the total interest paid can be claimed as deduction. However the rental income will be added to the "Income from other sources" in your Income Tax return, for the purpose of tax calculations. To illustrate this with an example, let us assume Sunil and Kapil have both bought identical apartments on loans. Annual interest on home loan, for both, is Rs 120,000. Sunil occupies the apartment, while Kapil has rented it out at Rs 15,000 per month. Sunil pays municipal taxes of Rs 15,000 per annum, while Kapil pays municipal taxes of Rs 40,000. Let us now examine the tax consequence for Sunil and Kapil

We should reiterate that, the deduction for interest paid on home loan is over and above the deduction claimed for principal payment under 80C provisions.

 

  • Premium paid for Medical Insurance: Medical insurance premium for self, spouse, dependent children and parents are eligible for deduction under Section 80D of the Income Tax Act. The maximum allowable deduction is Rs 15,000 for self, spouse and dependent children. The applicable deduction for senior citizens is Rs 20,000. If an individual pays for medical insurance of parents who are senior citizens, then he or she can claim an "additional" maximum deduction of Rs 20,000. However, if the parents are not senior citizens, then a maximum of Rs 15,000 can be claimed as additional deduction. Therefore the total amount of the deduction the individual claim for medical insurance for self, spouse, dependent children and senior citizen parents is Rs 35,000.

 

  • Treatment of specified diseases: Medical treatments for specified serious diseases, like cancer, AIDS, Parkinson's disease, chronic kidney failure etc, either for self or dependents are eligible for deduction under Section 80DDB. For clarification on specified diseases, you should refer to the relevant section (80DDB) of the Income Tax Act or consult your tax consultant. Actual expenses or Rs 40,000, whichever is lower, is eligible for deduction under this section. For senior citizens the upper limit is Rs 60,000.

 

  • House Rent Allowance: If you are paying rent for your accommodation, you should claim house rent allowance from your employer, if allowed under your company's policy. This will reduce your taxable income and your tax obligation. If you are self employed or a salaried individual who does not receive House Rent Allowance (HRA) from the employer, do not despair. You can still claim deduction for rent paid in respect of the property occupied for residential use, under Section 80GG of the Income Tax Act. Maximum allowable deduction is the least of the following:-


·        25% of your total income

 

·        Rs 2,000 per month

 

·        Rent paid in excess of 10% of total your income

However in order to avail of this benefit, the tax payer should satisfy three conditions:-

4.                  The tax payer must pay the rent for the house he or she lives in

 

5.                  He or she should not own or occupy any other residential accommodation

 

6.                  The tax payer's spouse or children should not own any residential accommodation in the city where the tax payer resides

 

 

  • Leave Travel Allowance: If allowed within your company's policies, use your Leave Travel Allowance for your holidays, which is available twice in a block of four years. If you do not avail of the Leave Travel Allowance, your employer will be pay it to you in your monthly pay cheque as part of your salary, after deducting tax at source at your applicable income tax slab rate. To claim deduction on taxes, you will be required to furnish copies of tickets as proof to claim the tax deduction. If you are been unable to claim the benefit in a particular four year block, you could carry forward one trip to the succeeding block of 4 years, but make sure you claim it in the first calendar year of that block.

 

  • Repayment of Loan taken for higher education: Interest paid on educational loan for higher studies qualifies as deduction under Section 80E of the Income Tax Act. The entire amount of interest paid in the year is eligible for deduction. There is no upper limit. However, there is no tax benefit for principal repayment. One should note that this benefit not only extends to the loan taken by the tax assessee, but also towards loans for higher education of spouse and children. Higher education is defined as means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so. The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier.

 

  • Deduction for Charitable Donations: Section 80G of the Income Tax Act, allows 50% or 100% of donations, depending on the clauses specified in this section, for deduction from taxable income. For details you should refer to the relevant section of Income Tax Act or consult your tax consultant. Please note that donation made in kind is not eligible for deduction under Section 80G. In order to claim this deduction, the donor needs to furnish stamped receipt issued by the trust, mentioning the name of the donor, name and address of the trust, the amount donated (in figures and words) and the registration number of the trust.

 

  • Wait for a few more days: This is a special year. The Union Budget is just around the corner. The Government may announce new tax amendments, new tax deductions and exemptions. You should plan your tax savings after the Budget is presented in the Parliament, to take advantage of any new tax benefit announced by the Government

Conclusion

In this article, we have discussed various tax-saving opportunities beyond the 80C limit of Rs 1 lakh. You should ensure that you understand the different provisions of tax saving in the Income Tax Act, and see if these provisions apply to you. If the Government announces new tax benefits in the upcoming Budget, you should go through them carefully, so that you can maximize your tax savings. Maximising tax savings puts more cash in our hands that we can use to invest in our future. However, we should be careful in interpreting the various provisions under the different sections of the Income Tax Act and in case of any confusion consult a chartered accountant or tax consultant.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

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 Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

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

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. 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
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund
      2. Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF



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

Tata Dividend Yield Fund - Invest Online

Posted: 16 Aug 2014 02:00 AM PDT

 

Tata Dividend Yield Fund

 

Investment Objective

The scheme aims to provide income distribution or medium to long term capital gains by investing predominantly in high dividend yield stocks.

Analysis

This fund has leaned towards the smaller end of our multi-cap range and done rather well. Whether it's in comparison to the rest of the multi-cap category, or its CNX 500 benchmark, it shines out. Moreover, it's most productive periods have consisted of out performance both in rising and falling equity markets.

In the last seven years, the fund has underperformed the benchmark only twice. Both were by small margins and in other years when there were large returns. Relative to the benchmark, 2007, 2010 and 2011 have been exceptional years. Cumulatively, the fund has outperformed by 50 per cent over this period, for total returns of 129 per cent. By any measure, these are excellent numbers.

The fund outperformed the benchmark almost continuously from early 2007 to mid 2012, through ups and downs. Effectively, it gained more during the bull phases and lost less during the downturns. This makes for excellent risk-adjusted returns, something that is amply reflected in its Value Research Star Rating. Over the last three years, it's average rating is 4.2. With the exception of one month, it has been a 4 or 5 star fund throughout this time. The lifetime average rating too is a high 3.8.

Tata Dividend Yield has exploited the low end of capitalisation weights better than most of its peers. This bias has narrowed in the last two years, staying within a few percentage points. However, during 2009-11, the fund was routinely more than 10 percentage points more into small-caps than the category average.

 

According to fund manager Rupesh Patel, "The approach to managing this fund is primarily bottom up with a focus on buying businesses with superior growth characteristics, quality management and generating high returns on capital. At the same time the fund is not agnostic to investing in opportunities where the underlying value of the business is higher than as reflected by the market." Taking a holistic view, this is a highly investment-worthy fund.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

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 Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

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

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. 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
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund
      2. Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF



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

Budget 2014 Tax Incentives for Home Buyers

Posted: 15 Aug 2014 09:44 PM PDT

 

Tax incentives for home buyers

 

 





The raising of deduction limit on principal and interest repayment will encourage home buying, while the green signal to REITs is a positive for investors.

 

The corporate executive, who recently bought a flat in Greater Noida West, will now be able to avail of a deduction of `2 lakh on interest repayment under Section 24 of the Income Tax Act, instead of the earlier limit of `1.5 lakh.

The enhancement of the Section 80C limit is another positive for home loan borrowers, who will be able to use the increased limit--from `1 lakh to `1.5 lakh--to get deduction on principal repayment. Such borrow ers earlier paid huge EMIs but were unable to take advantage of the deduction on principal repayment as their Section 80C limit would be used up by a number of other instruments: insurance premium, PPF, ELSS, and so on. The increase in these two deduction limits by `50,000 each will act as an incentive for home buyers.

The exact benefit that borrowers avail of will depend on their tax bracket. According to calculations from EY, the total tax saving for home loan borrowers due to these two changes, if their gross total income ranges from `9-15 lakh, will be from `20,60030,900 (see table). Couples can enhance their benefit by buying the house in joint names, taking the loan jointly, and making the down payment contribution and EMI re payments jointly. REITs to become a reality

Another benefit for retail investors was the granting of pass through status to REITs. This is the single most consequential reform witnessed by the real estate sector in recent times." In October 2013, Sebi had issued draft norms for the introduction of REITs. Since then they had remained stuck due to the lack of pass-through status. In this Budget, the finance minister has assured that REITs will not be doubly taxed. REITs allow investors with only a small amount of money to invest in real estate. Investing in REITs is less risky than in under-construction properties.

Fund flow to realty may improve

The economic slowdown has led to severe fund crunch within the realty sector, leading to stalled projects and delays in possession.


The Budget has tried to facilitate the flow of funds to the sector. An important measure was the easing of FDI norms. The minimum built-up requirement for FDI in the real estate sector was reduced from 50,000 sq m to 20,000 sq m. "This lowering of the threshold size of development may encourage FDI investment in smaller inner city developments

 The lowering of the threshold level of FDI from $10 million to $5 million may also lead to more investments.

Finally, REITs are set to emerge as an important new source of funding. These will provide access to developers to a major source of funding and also offer them an avenue to exit from their investments in commercial offices.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

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 Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

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

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. 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
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund
      2. Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF



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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