Budget
2019 has put an estimated three crore taxpayers out of tax net this year. According
to various articles and analyses on TV, individuals earning around 8- 9 lakhs
will also be exempted from taxation if they claim deductions by investing in
various specified instruments.
However,
these numbers do not reflect reality as these deductions will be difficult to
claim without drastic cuts in the lifestyle of the individual. There are
misconceptions among taxpayers about what constitute their total income and a
rough estimation is done based on Cost-To-Company (CTC), which can be different
from what an employee actually earns.
Moreover,
increment in the TDS threshold limit from Rs. 10000 to Rs. 40000 is also
wrongly construed as an opportunity by the investors. Interest on bank deposits
is still taxable even if there is no TDS charged on it. To prevent interest
from increasing your taxable income, an investor can opt for investment in tax
friendly instruments like Debt Funds and Fixed Maturity Plans (FMPs). Tax on
these instruments is payable only on realisation of gains or when an investor
sells these funds.
If
the investor is planning to sell these instruments within 3 years then any gain
from selling will be treated as short term gain and will be taxable at marginal
rate. But if he holds for more than 3 years it will be treated as long term
capital gain (LTCG) and due to indexation on LTCG, purchase price will rise
bringing down the tax liability.
As
it was wrongly interpreted by taxpayers about the tax slabs but in actual the
budget made tax compliance easier for taxpayers.
Thank You
Regards
Author: Rohan Singhal
Kautilya
IBS Mumbai
Comments
Post a Comment