Taxably Strong

Tuesday, January 17, 2006

Hot news| Finance | Stock Market | Reliance Demerger-Price fixed at 714.90

{This article is specially for those who are interested in stock markets, but surely will be gain for others}

Hello people,
The demerger of Reliance Industries {referred here-after as RIL} has finally taken place.The final price of Reliance Industries (details at http://economictimes.indiatimes.com/currentquote.cms?ticker=ril&ticker1=Searching&exchange=B&Submit=Go%20target= ) stock has been fixed at 714.90 after the special trading session that was conducted between 8-9 am today, taking it down by 23% from yesterday's close of 928.15 (which was 55.05 higher from Monday's close of 873.10).
To understand this better, following is what is going on...and what are the implications
1. Each RIL shareholder will get 5 shares for each share he holds in the ratio specified by the company.
In stock market terms, each RIL shareholder will get one share of Reliance Energy Ventures, Reliance Capital Ventures with a face value of Rs 10 each and Reliance Communication Ventures and Global Fuel Management Services with a face value of Rs 5 each.
Here, taking an example of a share purchased for Rs 890 to see how this has to be split.
The main Reliance share will have a cost price of 52per cent of the total which, in this case, works out to Rs 462.8. The share of Reliance Communication Ventures will be valued at Rs 344.4 (38.7per cent), Reliance Energy Ventures Rs 64.9 (7.3per cent), Reliance Capital Ventures and Reliance Natural Resources shares will cost Rs 11.5 (1.3per cent) and Rs 6.2 (0.7per cent), respectively.

2. This meant that whoever has a share of RIL is in profit. No doubt, as expected, the demerged share has been taken to trade at a lower price, but still the extra shares that one gets, put him still in profitable position. RIL has been seeing news in the stock markets taking the SENSEX to a swing, moving from high to low. Day before yesterday the stock went down to 873.10 and then yesterday to a high of 937.5 before closing at 928.15 (though market closed flat at +2.94). It made news by being the stock to be the traded in largest volumes.
Reason : Investors who bought a Reliance share on January 17 will be eligible for the four additional shares. This benefit won’t extend to investors if they buy the share on January 18.

3. Tax Implication : Since the demerged share is expected to trade at a lower price, the question that many have is whether the resulting difference would be considered as a short-term capital loss.

Expectation : Market price of RIL to go even higher today.
Reason: The original shareholder would still get the shares of the holding company even if he sells his RIL share on or after 18th.

....................

Just wanted to share this great piece of news which is making waves everywhere and is surely going to affect the Indian economy.

For more news check Google news at :
http://news.google.com/news?hl=en&lr=&rls=GGLM%2CGGLM%3A2005-52%2CGGLM%3Aen&amp;amp;amp;amp;tab=nn&ie=UTF-8&q=RIL+demerger&btnG=Search+News

Articles used as input :
RIL demerger: What goes where {Times News Network} :

http://economictimes.indiatimes.com/articleshow/1372297.cms
Buying RIL share: Know its tax implications {Times News Network} :

http://economictimes.indiatimes.com/articleshow/1375858.cms

Regards
Kanuj

For more posts on finance, market, or tax please check the blogs :
My finance : http://financially-strong.blogspot.com/
My market : http://marketty-strong.blogspot.com/
My tax : http://taxably-strong.blogspot.com/

Disclaimer : This article contain personnal views expressed by the author with inputs from news articles and have no legal validation.

Tuesday, December 27, 2005

Finance | Tax | PAN

PAN Related links

What is PAN?

Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department.

A typical PAN is AABPS1205E.

Read much more at < http://incometaxindia.gov.in/PAN/Overview.asp>

How to get the new PAN card?

The Unit Trust of India Investor Services Limited (UTI-ISL) has started despatching Income Tax Permanent Account Number (PAN) cards from Friday.
Getting the new PAN card
Application for PAN should be made in prescribed form (Form 49A) and submitted in any of the I-T PAN Service Centres set up and managed by UTIISL across the country.
I-T PAN Service Centres
From July 1, 2003, I-T PAN Service Centres have been set up in all cities or towns where I-T offices are located.
For further convenience of PAN applicants in major cities there will be more than one I-T PAN Service Centre.
Location and other details about I-T PAN Service Centres in any city can be obtained from local Income Tax Office or offices of UTI or UTIISL in that city or from Web site of the Income Tax department (http://http://www.incometaxindia.gov.in/) or of UTIISL (http://www.utiisl.co.in/).
These I-T PAN Service Centres shall supply and receive PAN applications on behalf of all Assessing Officers, assist PAN applicants to correctly fill up the applications, check documents to be submitted as proof of 'identity' and 'address' by the applicant and issue acknowledgment for correct and complete applications

Read More at http://www.rediff.com/money/2003/jul/11pan.htm

Remember PAN is required for transactions at various institutions, eg. for a deposit of Rs 50K and above cash, you have to give your PAN number, your credit card companies (atleast HSBC does) will ask you for PAN, your demat/share broker will ask you for a PAN.

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Finance | Tax Rebates

Hello

Everyone of us would like to pay the least tax. So the IT deptt has some rebates listed.

Deductions/Rebate

Interest earned on notified bonds/debentures of any public sector company is eligible for deduction u/s 80L of the IT act.
In case you are planning to get a loan for pursuing higher studies, it would be better to get the loan yourself rather than your parents.Section 80E envisages deduction of any amount paid by an assessee out of his income, by way of repayment of loan for this purpose subject to an outer limit of Rs 25,000 (Increased To Rs.40,000 from F/Y 2000-01). This facility is not allowed for parents financing their children's education.
Inspite of one per cent cut in the PPF rates, it still is the best tax saving investment option. As this tax-free return of 11 per cent is equivalent to a taxable return of 14.16 per cent and 16.41 per cent for those in the 22 and 33 per cent tax bracket respectively.
It is wiser to avail deductions under sections 80CCC to 80U as regards rebate under section 88, in case the taxable income is marginally over Rs. 60,000, as surcharge is levied if the taxable income exceeds Rs. 60,000.
Makes full use of Rebates: Don’t under invest. Just look at the returns. The normal return on an investment is about 11 per cent. Add your tax rebate of 20 per cent and that is a whopping 31 per cent!
Employee's contribution to approved superannuation fund is eligible for tax rebate at 20 per cent of the total amount invested u/s 88 of the IT act.
Monetary donations made to approved institutions established in India for charitable purposes are eligible for deduction u/s 80 G of the I.T Act.
Senior citizens rejoice, tax relief available to them has been increased from Rs 10,000 to Rs 15,000. This means senior citizens can annually earn Rs 1,30,000 and still pay not a penny to the government.

Complete info can be had from the official website :

http://incometaxindia.gov.in/FileYourReturn/Rebate.asp

Regards

Kanuj

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Finance / Investment | Equity-linked Savings Schemes

Hello

Equity-linked Savings Schemes are a smart way to save tax.
The following links will be helpful for you.

Equity-Linked Savings Schemes are by far the most exciting of all the tax-saving schemes: the returns offered by some of the mutual fund schemes over the past 12 months have been more than 100 per cent. But be warned: if the returns are high, so are the risks..... Read more at http://in.taxes.yahoo.com/taxelss.html

Statistics have proved that over the long term, equities are known to have outperformed other forms of investment.

Some other tax savings instruments like PPF, NSC, NSS, bonds etc do offer tax benefits but now at lower returns. Hence ELSS is an attractive investment avenue for those who seek tax savings coupled with the potential of high returns.

One interesting investment option that emerges for the great Indian middle class salaried Indian in these resurgent times are the Equity Linked Saving Schemes (ELSS) of Mutual Funds. ELS schemes offer tax rebate under Section 88 for an investment upto a maximum of Rs. 10,000. These schemes typically bestow on their investors two distinct advantages namely – tax exemptions under Section 88 and capital appreciation due to investment of at least 80 per cent of their corpus in the equities markets. An investment that could reap rich dividends in resurgent times!.................. Read more at http://www.indiainfoline.com/mufu/feat/idb1.html

One technical term used in these is "Lock in period-which means the minimum time the shares/stocks/mutual fund units have to be kept. If sold before that period, tax will be calculated . Some complications abt which rates will be taken (but the second link should help in this too)"

Regards

Kanuj

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Finance | Tax

Hello

Most of you might have got mails from the finance (payroll) people to submit investment details.
You can check the details of your tax-tax calculation at your personnal manager> Fianance > Income tax calculation. It is very clearly explained there.
I am sending some links which will be helpful.

One tip I got from elders:
Better not to pay tax than to expect a "timely" return of excess tax paid. (For those who didnt get this, whatever tax you overpay will be returned back to you but it takes a long time-sometimes 1-2 years for it to come back . e.g. for the last financial year, most of us might have paid some tax, but it was wrongly calculated by the payroll as we were not liable to pay any tax as our taxable income was less than the limit. So that extra tax will come back...but when..dont know)

........................
1. Cut your tax liability by 20%, invest in the following schemes : http://www.myiris.com/tax/section88.php3

2. http://www.taxmann.com/TaxmannDit/DisplayPage/dpage1.aspx ; Search for '80C'

I hope this helps

Regards
Kanuj

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Finance | Tax Saving Schemes

Tax Saving Schemes

After assessing your tax liability, the next step is tax planning. It involves selecting the right tax saving instruments and making investments accordingly.

Deductions from Taxable Income:

Deduction under section 80C
This new section has been introduced from the Financial Year 2005-06.
Under this section, a deduction of up to Rs. 1,00,000 is allowed from Taxable Income in respect of investments made in some specified schemes. The specified schemes are the same which were there in section 88 but without any sectoral caps (except in PPF).

Specified Investment Schemes u/s 80C-

Life insurance Premiums
Contributions to Employees Provident Fund/GPF
Public Provident Fund (maximum Rs 70,000 in a year)
NSC
Unit Linked Insurance Plan (ULIP)
Repayment of Housing Loan (Principal)
Equity Linked Savings Scheme (ELSS)
Tuition Fees including admission fees or college fees paid for Full-time education of any two children of the assessee (Any Development fees or donation or payment of similar nature shall not be eligible for deduction).
Infrastructure Bonds issued by Institutions/ Banks such as IDBI, ICICI, REC, PFC etc.
Interest accrued in respect of NSC VIII issue.

Notes:
1. There are no sectoral caps (except in PPF) on investment in the new section and the assessee is free to invest Rs. 1,00,000 in any one or more of the specified instruments.
2. Amount invested in these instruments would be allowed as deduction irrespective of the fact whether (or not) such investment is made out of income chargeable to tax.
3. Section 80C deduction is allowed irrespective of assessee's income level. Even persons with taxable income above Rs. 10,00,000 can avail benefit of section 80C.

Please note that because the deduction is allowed from taxable income, the exact savings in tax will depend upon the tax slab of the individual. Thus, a person in 30% tax stab can save income tax up to Rs. 30,600 (or Rs. 33,660 if annual income exceeds Rs. 10,00,000) by investing Rs. 1,00,000 in the specified schemes u/s 80C.

Deduction under section 80 CCC(1)
This section allows a deduction of up to Rs. 10,000 to an individual in respect of contribution to 'Pension' scheme of LIC of India or any other Insurance Co. Accordingly, a person who is in 30% tax bracket can save income tax of Rs 3,060 (or Rs. 3366 if annual income exceeds Rs 10,00,000) by contributing Rs 10,000 towards Pension plan in a year .
Some of the popular pension plans are Jeevan Suraksha by LIC, Life Time Pension By ICICI Prudential Life Insurance, Aviva Life - Pension Plus by Aviva Life Insurance, Max-Easy Life policy by Max New York Life, Nirvana Plus by Tata AIG Insurance Etc.

Section 80 CCE
Aggregate deduction u/s 80 C, u/s 80 CCC and 80 CCD can not exceed Rs. 1,00,000.

Deduction under section 80D.
Under This section, a deduction up to Rs 10,000 (Rs 15,000 in case of senior citizens) is allowed in respect of premium paid by cheque towards health insurance policy, like "Mediclaim". Such premium can be paid towards health insurance of spouse, dependent parents as well as dependent children.

Accordingly a person who is under/in 30% tax bracket can save income tax up to Rs 3,060 (or Rs. 3366 if annual income exceeds Rs 10,00,000) by paying Rs 10,000 as premium in "Mediclaim" policy in a year.

Deduction under section 24(b)
Under this section, Interest on borrowed capital for the purpose of house purchase or construction is deductible from taxable income up to Rs. 1,50,000 with some conditions to be fulfilled.

Source : http://www.bajajcapital.com/taxplanning/taxsavingschemes.html

Courtesty : http://www.bajajcapital.com

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