May 31, 2017

Tax News - Taxation on capital gain of property if property sold less than stamp duty value

Taxation on capital gain of property if property sold less than stamp duty value

if sale consideration of Property is less then stamp duty valuation, then at the time of calculation of capital gain on such transaction, As per provision of Income tax under section 50C, the stamp valuation shall be deemed to be sale consideration of the property..

Refer full article here:

http://economictimes.indiatimes.com/wealth/tax/tax-queries-how-to-calculate-capital-gains-tax-on-property-sold-at-less-than-stamp-value/articleshow/58820046.cms



FundsIndiaAdvisor Views: What to expect from GST – the ‘One India tax’

FundsIndiaAdvisor Views:  What to expect from GST - the 'One India tax'
Vidya Bala, Head - Mutual Fund Research

The Goods and Services Tax (GST) will be a reality in India from July 1. GST can be a gamechanger in the way India does business in the long term. But it may be writ with chaos in the way it is implemented in the short term.

Will GST really impact sectors, markets and the economy and if so what should you do about it? Read on.

GST and its intent

Before we move on to the possible impacts of GST, what exactly is GST and what does it set out to do? GST is a comprehensive tax system the on manufacture, sale and consumption of goods and services in the country. That means it is a single tax system within the Indian boundaries. It is passed on till the last stage when the consumer consumes the product or service.

GST was proposed with the idea of:

  • simplifying tax structures and reducing the multiplicity of taxes
  • integrating state economies by providing tax credit for inter-state movement of goods
  • improving tax compliance and tax revenue
  • Improving overall efficiency in the use of resources to produce goods and deliver services

In its present form, GST does not check all the points above. Its tax structure with 4 rate slabs cannot boast of simplicity. However, on the other points, GST can, if implemented and followed up well, deliver in the long term.

Rate change largely sector neutral

According to the government, nearly 81% of items fall below the 18% slab and only the remaining are taxed above this slab. Since the average current rates of most goods were slightly lower or around the GST rate and service tax rates were marginally lower than the GST rate, it is not expected to be inflationary in nature nor is it expected to negatively impact companies. And remember, companies could not earlier take credit for many of the services they paid and could not offset it against what they produced. It would now be possible to do that as there is one tax for goods and services.

The slab rates for different sectors have largely remained close to their earlier rates or gone up/gone down marginally. When you read reports that GST is positive for pharma, or media distribution or somewhat positive for cement, consumer goods (partly) and auto and auto ancillaries and industrials, it means that these sectors will now enjoy lower taxes from the unification. On the other hand, the slab rate goes up for sectors such as telecom, agri-inputs and chemicals, consumer electricals and build materials (partly) and real estate (impact varies across states). The change does not impact sectors such as infrastructure, utilities, oil & gas and metals. That basically means a few positive, a few negative and then a largely neutral tax stance.

That said, we do not think sector impacts based on rates really matter. This is because, GST is a consumption tax; the end consumer will mostly bear the impact of the hike or the fall. The anti-profiteering clause (whether for good or bad) is likely to ensure that lower rates are mostly passed on to consumers.

This is one reason why we say it is sector neutral to the extent of the slab  rate change. And since most GST rates of goods hover around their current level of taxes, it is now being widely accepted that GST is unlikely to be inflationary in nature. One quick move of the market on this is the smart 20 basis point rally (fall in yields) in 10-year gilts. Fear of inflationary pressure from GST was one of the reasons that had kept yields at higher levels since February 2017.

Then how are companies and the economy as whole likely to benefit from GST? It will likely happen in the following ways:

  • GST, if implemented stringently and followed up relentlessly by the tax department, can result in the unorganised sector coming into the formal tax system. This means they lose their pricing edge and probably their market share to organised players (for our purpose, listed companies). It also means that the government gets an additional source of revenue that was hitherto outside its net.
  • Companies that were not able to take credit of many of the taxes they paid would now be able to; eventually leading to efficient outgo of cash flows on taxes for them. For example, a consumer company would be able to take credit on the tax they were paying on advertisement expenses (which was service tax earlier) – an expense that accounts for a chunk of their cost outgo.
  • Next, even while companies may not directly benefit from any lower slab rate, there can be efficiencies kicking in from a single tax regime – inter-state goods transfer may no longer be inefficient and the cost of logistics/transport can drop. This may provide indirect benefits to companies. We think it is this benefit that can have a lasting impact on companies. But this is not one to accrue in the short  term.

In the short to medium term though, there could be enough challenges:

  • There is confusion aplenty on the quantum of input credit on the goods lying in inventory in the supply chain during the period of transition. Reports state that this could lead to significant de-stocking by goods sold through intermediaries and result in lower sales for a month or so.
  • There would be a surge in working capital requirement especially by mid-sized companies for the following reasons: One, the entire tax is to be paid on manufacturing of goods, as opposed to just excise duty earlier. Two, transfer of goods (within company) between states will require tax payment and then claiming credit. Three, tax must be paid before exemption can be claimed in case of manufacturing units that enjoy exemption benefits.

What should you do?

While we will be watching fund managers take calls in sectors, there are unlikely to be sectors that a fund manager is positive on, merely on account of GST. For example, while pharma may benefit from GST, the current issues troubling the sector may leave very few stock choices for a fund manager to pick from. To this extent, we think investors too should avoid taking bets on sectors that they believe will simply benefit from GST. The right thing, in our view, is to stick to good quality funds that will invest in quality stocks that will, in addition, gain from economies of GST.

In the near term, one can expect some volatility especially in the mid-to small-cap space. Market has already been hitting at the heady valuations of this space for reasons more than GST in the past few weeks.

We think any market turbulence on account of sluggish quarterly numbers in the September and December quarter could be opportunities to average, other things remaining the same.

In the debt space, we will not be surprised if short-term debt funds offer superior yields for a while as the tight working capital requirement of  companies may be partly met by issue of bonds to mutual funds.

In all, we think GST should not be viewed in isolation in terms of its impact on the market. We had mentioned about a series of events that will impact the market in our outlook earlier this year and believe all of these have together been anchoring the market thus far

May 21, 2017

PNB Housing Finance Limited - Fixed Deposit - May 2017




PNB Housing Finance Ltd 

The deposit rate of interest is increased for tenures 24 months and above.
Please find below the revised Rates of Interest applicable with effect from 22nd May, 2017.

Regular Deposit upto ₹5 Crore
Tenure (Months)
Cumulative Option*
Non-Cumulative Option ROI  (p.a.)
ROI (p.a.)
Tentative yield to maturity
Monthly
Quarterly
Half Yearly
Annual
12
7.25%
7.25%
7.00%
7.05%
7.10%
7.25%
24
7.40%
7.67%
7.15%
7.20%
7.25%
7.40%
36
7.40%
7.96%
7.15%
7.20%
7.25%
7.40%
48
7.40%
8.26%
7.15%
7.20%
7.25%
7.40%
60
7.40%
8.58%
7.15%
7.20%
7.25%
7.40%
72
7.40%
8.91%
7.15%
7.20%
7.25%
7.40%
84
7.40%
9.26%
7.15%
7.20%
7.25%
7.40%
120
7.40%
10.42%
7.15%
7.20%
7.25%
7.40%

Special Deposit upto ₹5 Crore
Tenure (Months)
Cumulative Option* ROI (p.a.)
Non-Cumulative Option ROI  (p.a.)
ROI (p.a.)
Tentative yield to maturity
Monthly
Quarterly
Half Yearly
Annual
15
7.35%
7.44%
7.10%
7.15%
7.20%
7.35%
22
7.40%
7.61%
7.15%
7.20%
7.25%
7.40%
30
7.50%
7.94%
7.25%
7.30%
7.35%
7.50%
44
7.55%
8.34%
7.30%
7.35%
7.40%
7.55%
* For cumulative option, interest rate is compounded annually on March 31st

·         The new interest rates are applicable for all new deposit cheques and RTGS received from  22.05.2017.
·         All deposits with effective date 22nd May will be eligible for new rates.
·         For interest rates and brokerage on deposits above ₹ 5 crores please contact nearest PNB Housing branch.
·         Additional interest rate of 0.25% for Senior citizen deposits (applicable for deposits upto ₹ 1 crore).
·         Other terms and condition remains the same.



For inquiry call at Phone: 0-991-000-9312

May 17, 2017

Tax Update on Bitcoin


Here are tips to understand its taxation in India: Profit earned on Sale of Bitcoin is chargeable to tax under the head Capital Gains. The gains will be either Short Term Capital Gains or Long Term Capital Gains. There are no specific guidelines issued by CBDT, but still the same is chargeable to tax and to be reflected in return of income. Indexation benefit can be availed on long term capital gains and will be charged at 20%. Short term gains will be charged at slab rates. Refer full article here:



HUDCO IPO STATUS - NOW AVAILABLE

You can check the status of your IPO application of HUDCO here

May 16, 2017

Have errors in PAN Card or Aadhar Document..??



Here is the solution:


The Income Tax Department has launched an online facility to correct errors in names and other details in Permanent Account Number (PAN) and Aadhar Document. It is simple facility of uploading scanned documents for making corrections. This will be very useful in cases like change in address, change of name after marriage, typographical errors on Aadhar card, etc.

 

Refer full article here:

 

http://economictimes.indiatimes.com/news/economy/policy/income-tax-department-launches-facility-to-correct-errors-in-pan-aadhaar/articleshow/58667787.cms


May 12, 2017

"Spooked by inheritance tax fears, Indian high net worth individuals are opting for family trusts" - An interesting read


Many high net worth individuals (HNIs) fear that the government may reintroduce estate duty, or inheritance tax, and therefore they are rushing to insulate their assets.

Case 1: For a Delhi-based socialite, it was odd that her father — patriarch at the helm of a multimillion dollar empire — had called all family members for a meeting on a Monday morning. Her father announced formation of a new family trust and a set of rules for all members.

When she went through them, it did not take her long to realise that one of the rules was aimed at her. It stipulated that she would be allowed an allowance of Rs 15 lakh every month if she followed "drugs and alcohol" regulations laid down in the family trust.

Case 2: In Mumbai, an actor whose father boasts of about $500-million net worth, was shocked when he was handed a copy of the "family constitution" instead of Rs 10 crore he needed to make a film. The actor, whose three Hindi films had tanked on the box office, was told he could make four more films with the family money, but at a cost. As per the new family trust rules, the actor was required to pay an interest of about 10% on the money and share 50% of the profits with the family.

That's the new avatar of the Indian richie rich. They are laying down specific rules for the beneficiaries of the wealth — from annual holiday guidelines to drug and alcohol rules to monthly pocket money limits and even how extramarital affairs will be handled. Why so? Many high net worth individuals (HNIs) fear that the government may reintroduce estate duty, or inheritance tax, and therefore they are rushing to insulate their assets by transferring them to private family trusts.

Incidentally, such taxes existed till 1986. Sandeep Nerlekar, founder, Terentia Consultants, an estate planning firm, said: "We have seen a spurt in the number of HNIs who want to opt for family trusts as many of them fear that the government may introduce an inheritance tax. However, what is new in these family trusts is the constitution and rules that are being laid by the patriarchs or the promoters on how the beneficiaries must behave morally."

Currently, there is no tax in India if one were to bequeath assets. But if such a taxed is introduced, family trusts would be out of the taxation gamut since no ownership is transferred but only shareholding of the trust changes. That is why in the past two months, there has been a rise in the number of HNIs wanting to form a trust.

Ketan Dalal of Katalyst Advisors, a tax boutique firm, said: "The thinking about trusts is driven by a variety of reasons, including creating of a family constitution, succession planning and planning for potential estate duty, among others. The idea of business continuity and avoiding conflicts in succession has also been a trigger for several promoters thinking about forming trusts." Although most of these trusts are created by those with net worth of at least Rs 100 crore, even others with slightly lower net worth have taken a liking to the idea, say industry experts.

"Even middle-class families with assets worth Rs 10-25 crore are opting for family trusts," said Vishwas Pathak, director of Universal Trustees Group, which specialises in managing family trusts and corporate trusts businesses. According to Nerlekar of Terentia Consultants, fami l ies not only want to create the trusts but also want to define policies like do's and don'ts and family budget polices.

For instance, a Pune-based family, which is into real estate and could have total assets of anywhere around Rs 1,500 crore, formed a trust not only for succession planning, but also because there were fights between three sons of the patriarch on how much one could spend on holidays.

"One son had chartered a private jet to Europe, while another had booked a private island in Thailand. The third son now wants to take about 100 of his friends to Maldives," said a person in the know. The patriarch is on the verge of forming rules where annual holiday spending limits — to be borne by the trust — would be set.

In many cases, the promoters are creating family trusts as a way around the bankruptcy code or strict NPA guidelines by the government. "To insulate the assets against new legislations like the bankruptcy code and recent guidelines/ordinance on NPAs, a lot of businessmen/promoters and HNIs are planning to go for family trusts," said Pathak of Universal Trustees Group.

Some of the family trusts are also being formed outside India just to circumvent Indian taxation regulations. Jersey of Channel Islands is emerging as a favourite destination for many businessmen who want to take part of their family trust outside India, say industry trackers. In the past couple of months, many Indian families have sent at least one of the family members outside India and created a family trust registered in tax friendly destinations.

And for the record, the New Delhi socialite is sober for six months now and the struggling actor has shelved his plans to make films and is looking to invest in a startup.

 

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