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  Tax Planning 2011
  Tax Planning 2011-NRI
 
Tax Planning 2011
Investment Checklist
  Options Reasons Returns Liquidity Taxability
1 EPF Compulsory deductions from salary 8.5% Very Low (One time partial withdrawal allowed for major goals) Amount you get on retirement is completely tax free
2 PPF,NSC, 5 Year Fixed Deposit Assured returns for risk averse 8-9% Low (Withdrawal allowed after six years) PPF is tax free others are taxable
3 Senior Citizen’s Saving Scheme Tax Saving Options for Senior Citizen 9% Low (Interest paid per Quarter) Taxable
4 Endowment and money-back Insurance Buy Life Cover and Save Tax 5-7% Low (Possible to take loan against policy) Tax-free
5 New Pension Scheme Pension after retirement and Save Tax 7-10% Very Low (No withdrawal before retirement) Tax free withdrawals after retirement
6 Pension Plans Pension after retirement and Save Tax 7-10% Low (Partial withdrawal allowed) DTC proposals to make taxfree withdrawal
7 Ulips Buy Life Cover and Save Tax 7-10% Less Moderate (Partial withdrawal allowed) Taxfree
8 ELSS Potential to give highest return among all. 10-25%(Totally market linked) High Moderate (Lock- in for 3 years) Taxfree
9 Infrastructure bonds Additional Deduction Under80CCF 7-8% Low (Lock- in for 5-7 years) Interest taxable
 
Expenses to get tax benefits
No. Option Deductable Limit Specification
1 School Fees Tution fees of two children 1 Lakh Rs. Both parents can’t claim for the same expenses
2 Housing Loan Repayment The Principle repaid of a housing loan 1 Lakh Rs. Useful in case big EMI
3 Housing Loan Interest Interest on loan is deductible under sec 24(b) Upto 1.5 lakh Rs. A year Useful
4 Medical Insurance Premium for self, family and parents is deductible under sec 80(d) 15000 for self and family 15000 for parents and 20000 in case of senior citizen
 
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Tax Planning 2011 - NRI
   
1. Is the indexation benefit available to NRIs?
  Yes, in case units are held for more than twelve months
   
2. What is the tax rate on short-term capital gain?
  In case of non-resident non-corporates - 30% plus
In case of foreign companies - 40% plus 
   
4. Tax slab on capital gain
 
  Tax Rates* under the Act TDS Rate* under the Act
  Residents NRIs / PIOs FIIs Residents NRIs / PIOs / other Non FII non-residents FIIs
Short Term Capital Gain Units of a non equity oriented fund Taxable at normal rates of tax applicable to the assessee 30% without indexation benefit NIL 30% for non residents non corporate, NIL
(u/s 115AD) 40% for non resident corporate,
(u/s 195)
units of an equity oriented fund 10% on redemption of units where STT is payable on redemption (u/s 111A)     NIL
Long Term Capital Gain ** units of a non equity oriented fund 10% without indexation, or 20% with indexation, whichever is lower 10% with no indexation benefit NIL 20% for non residents (u/s 195) NIL
(u/s 112) (u/s 115AD)
units of an equity oriented fund Exempt in case of redemption of units where   NIL NIL
STT is payable on redemption [u/s 10(38) ]
   
  *Plus surcharge as applicable: corporate, co-operative societies, firms and local authorities: 10%; Individuals/HUFs/BOIs/AOPs, with total income exceeding Rs.10, 00,000: 10%; Artificial juridical person: 10%.
** Capital Gains on redemption of units held for a period of more than 12 months 
from the date of allotment.
*** As per section 111A of the Act, effective from 1/10/2004 short-term capital 
gains on equity oriented fund is chargeable to tax at a Lower rate of 10 percent.
• Long Term Capital Gains arising from redemption of unit of a non equity oriented fund are exempt from tax, if gains are invested in specified bonds within 6 months from the date of redemption, under Section 54EC of the Act or if gains are invested in eligible equity issues within 6 months from the date of redemption, under Section 54ED of the Act.
  In order for the unit holder to obtain the benefit of a lower rate under the DTAA, an eligibility certificate from unit holder’s Assessing Officer should be provided to the Fund.
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