TAX SAVING INVESTMENTS IN THE NEW DIRECT TAX CODE

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NEW DIRECT TAX CODE

Query 1]

I had applied for Permanent Account Number (PAN) 6 years back. I got the number as ARGPS 5586E. However the PAN Card is yet not received by me. Please guide as to the procedure for getting the Pan Card with the same PAN number. [Chandra Shekhar Soni]

Opinion :

You can make an application in Form  “Request for New PAN Card Or/And Changes or Correction in Pan Data” quoting your existing Permanent Account Number in the form.

The form can be downloaded from the website of NSDL at www.tin.nsdl.com or UTI at www.utitsl.co.in or from the website of income tax department at www.incometaxindia.gov.in. The form is also available at IT PAN Service centers and TIN Facilitation centers.

 

Query 2]

On 1st March, 2004, I had purchased a commercial property worth Rs. 3,44,000/- plus stamp duty of Rs. 33,380/-. I have sold this property on 11th Jan, 2010 for Rs. 6,21,000/-. Please advise me on the following points:

  1. The amount of capital gain on sale and the amount of income tax payable thereon?
  2. In order to save tax, the amount of capital gain needs to be deposited in which bonds?  What is the time frame for such deposit?
  3. Where I could get application forms for the bonds?
  4. I am a retired person and if my net taxable income after availing deductions under Sec 80C and 80D is below taxable limit or taxable at the lowest slab of 10%, whether the LT capital gains on this sale would also be TAXFREE or would it be taxable at the lower rate of 10%?
  5. Please give Cost Inflation Index for the current year and also for Year 2004.

[apteashok@gmail.com]

OPINION:

  1. The Long Term Capital Gain (LTCG) is  required to be calculated after deducting Indexed Cost of Acquisition i.e. purchase price plus stamp duty from the amount of sale consideration
  2. In your case, the LTCG is as under: –
    a) Cost of Acquisition                         = Rs. 3,77,380/- [3,44,000/- + 33,380/-] b) Year of Acquisition                        = 2003-2004
    c) Cost Inflation index for the F.Y. 2003-04 = 463
    d) Sale consideration                          = Rs. 6,21,000/-
    (Sale consideration is to be taken as higher of the sale price as mentioned in the sale deed or the value adopted by the Registrar for the purpose of levy of stamp duty)
    e) Year of Sale/Transfer                      = 2009-2010
    f) Cost Inflation index for the F.Y. 2009-10  = 632
    g) Indexed cost of Acquisition is Rs. 5,15,127/-  (3,77,380/- * 632/463)
    h) Long term capital gain = Rs. 6,21,000/- – 5,15,127/- = 1,05,873/-.
  3. LTCG tax can be saved u/s. 54EC if it is deposit in the bonds issued by;
    1. National Highway Authority of India, or
    2. Rural Electrification Corporation Ltd.
  1. LTCG need to be investe within 6 months from the date of transfer of the property.
  2. The LTCG is taxable u/s 112 at a special rate of 20% even though your other taxable income may be in the tax bracket of 10%. However, if your other income is below the basic exemption limit, the unutilized basic exemption limit (i.e., the basic exemption limit less other taxable income) can be reduced from the amount of LTCG and the balance LTCG shall be taxable @ 20%.
  3. The application form for subscription is available at www.recindia.nic.in or at www.nhai.org .

 

Query 3]       

  1. As per new Direct Tax Code, limit of savings has been increase from present limit of Rs. 1,00,000/- to Rs. 3,00,000/-. What types of savings/ expenditure will fall under this category?
  2. Are there any other tax saving incentives (like 80G, 80D etc) other than Rs 3,00,000/-?
  3. Will long term capital gain arising out of sale of shares/ mutual funds/ house property/ land property be taxed separately at a special rate or such capital gain will be included in the gross total income and taxed as per tax slab?
  4. What are the provision regarding wealth tax in the New Direct Tax code? [Col(Retd) S K Misra]

Opinion:

  1. Specified saving/Investment/ Expenditure for the purpose of claiming deduction of Rs. 3 Lacs under the New Direct Tax Code (DTC) are:
    a) Approved Provided Fund.
    b) Approved Superannuation Fund.
    c) Life Insurer, &
    d) New Pension System Trust.
    f) Tuition fees paid in respect of Children Education.
  2. Apart from deduction of Rs. 3 Lacs as mentioned above, the new Direct Tax code proposes other deductions as well like deduction in respect of loan taken for higher education, deduction in respect of health insurance premium, deduction in respect of medical treatment, etc.
  1. The distinction between the long term and short term capital gain has be do away with in the New Direct Tax code. The capital gain is proposed to be taxed at a regular rate as per income slab in the New DTC & not at a special rate.
  2. The broad provision with respect to wealth tax in the new Direct Tax code is as under:
    a) Wealth-tax will be payable by an individual, HUF and private discretionary trusts.
    b) Wealth-tax will be levied on net wealth on the valuation date i.e. the last day of the financial year.
    c) Net wealth will be define as assets chargeable to wealth-tax as reduce by the debt owed in respect of such assets.
    d) Assets chargeable to wealth-tax will mean all assets, including financial assets and deemed assets, as reduced by exempted assets.
    e)The exempted assets will be restrict to the following: –
  • Assets used as stock-in-trade.
  • Any one house or part of a house or a plot of land belonging to an individual or a Hindu undivid family which is acquire or construct before 1st day of April, 2000;
  • The interest of the person in the coparcenary property of any Hindu undivided family of which he is member;
  • The value of any one building used for the residence by a former ruler of a princely state.
  • Jewellery in possession of a former ruler of a princely state, not being his personal property, which has been recognised as a heirloom by the Central Government before 1st April, 1957 or by the Board after that date.
  • Any property held by the personal under trust, or other legal obligation, for carrying out any permitted welfare activity in India.
  1. f) The valuation of financial assets will be at cost or market price, whichever is lower.
    g) The net wealth of an individual or HUF in excess of rupees fifty crore will be chargeable to wealth-tax at the rate of 0.25 per cent.
    e) The threshold limit of rupees fifty crore will not apply to a private discretionary trust.

NEW DIRECT TAX CODE

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