Section 80 Deduction Table

Allowed Limit
(maximum) FY 2018-
Section Deduction on 19

80C Investment in PPF Rs. 1,50,000

– Employee’s share of PF contribution
– NSCs
– Life Insurance Premium payment
– Children’s Tuition Fee
– Principal Repayment of home loan
– Investment in Sukanya Samridhi Account
– ULIPS
– ELSS
– Sum paid to purchase deferred annuity
– Five year deposit scheme
– Senior Citizens savings scheme
– Subscription to notified securities/notified
deposits scheme
– Contribution to notified Pension Fund set up
by Mutual Fund or UTI.
– Subscription to Home Loan Account scheme
of the National Housing Bank
– Subscription to deposit scheme of a public
sector or company engaged in providing housing
finance
– Contribution to notified annuity Plan of LIC
– Subscription to equity shares/ debentures of an
approved eligible issue
– Subscription to notified bonds of NABARD

80CCC For amount deposited in annuity plan of LIC or -

any other insurer for a pension from a fund
referred to in Section 10(23AAB)

80CCD(1) Employee’s contribution to NPS account -

(maximum up to Rs 1,50,000)

80CCD(2) Employer’s contribution to NPS account Maximum up to 10%

of salary
 Allowed Limit
(maximum) FY 2018-
Section Deduction on 19

80CCD(1B) Additional contribution to NPS Rs. 50,000

80TTA(1) Interest Income from Savings account Maximum up to 10,000

80TTB Exemption of interest from banks, post office, Maximum up to 50,000

etc. Applicable only to senior citizens

80GG For rent paid when HRA is not received from Least of :
employer – Rent paid minus 10%
of total income
– Rs. 5000/- per month
– 25% of total income

80E Interest on education loan Interest paid for a

period of 8 years

80EE Interest on home loan for first time home owners Rs 50,000

80CCG Rajiv Gandhi Equity Scheme for investments in Lower of

Equities – 50% of amount
invested in equity
shares; or
– Rs 25,000

80D Medical Insurance – Self, spouse, children – Rs. 25,000

Medical Insurance – Parents more than 60 years – Rs. 50,000
old or (from FY 2015-16) uninsured parents
more than 80 years old

80DD Medical treatment for handicapped dependent or – Rs. 75,000

payment to specified scheme for maintenance of – Rs. 1,25,000
handicapped dependent
– Disability is 40% or more but less than 80%
– Disability is 80% or more
 Allowed Limit
(maximum) FY 2018-
Section Deduction on 19

80DDB Medical Expenditure on Self or Dependent – Lower of Rs 40,000

Relative for diseases specified in Rule 11DD or the amount actually
– For less than 60 years old paid
– For more than 60 years old – Lower of Rs 1,00,000
or the amount actually
paid

80U Self-suffering from disability : – Rs. 75,000

– An individual suffering from a physical – Rs. 1,25,000
disability (including blindness) or mental
retardation.
– An individual suffering from severe disability

80GGB Contribution by companies to political parties Amount contributed

(not allowed if paid in
cash)

80GGC Contribution by individuals to political parties Amount contributed

(not allowed if paid in
cash)

80RRB Deductions on Income by way of Royalty of a Lower of Rs 3,00,000

Patent or income received
nscc
1. How can I claim payment of deceased account / certificate holder?

The claimant may be the nominee or legal heir.

If there is nomination, the nominee can prefer the claim in the prescribed form along with death
certificate.
If there is no nomination, any one of the legal heirs can prefer the claim in the prescribed form
 [SB84]. For this death certificate and consent statements of all legal heirs are required. Claim up to
one lakh can be settled.
If the claim is exceeding one lakh, claims can be settled by legal evidence ie, by probate of will or
succession certificate.

2. How to transfer accounts and certificate?

For transfer of accounts- the depositor should apply in the prescribed form SB10(b) or manual
application. The application can be given either in transferring office or transferee office.
For transfer of certificates- the investor should apply in the prescribed form[NC32]. The application
may be given in either of the offices.

3. How to open an account in post office and its requirements?

To open an account [Savings Bank(SB), Recurring Deposit(RD), Time Deposit(TD), Monthly

Income Scheme(MIS) SB3, SB103 (pay-in-slip) and specimen signature slip for SB and TD are
required.
For senior citizen accounts, separate forms are to be used. For SB account introduction is
compulsory.

4. What is silent account and how to revive it?

When there is no transaction in an SB account continuously for 3 financial years, the account will
be treated as silent account.
For revival, one application from the customer is required. LSG/HSG offices can revive the
accounts independently. Remaining offices, HO will revive the accounts.
If the balance in the silent account is less than minimum, then INR. 20/- will be debited towards
service charges.

5. What are late payment fees for recurring deposits?

The monthly deposits should be credited on any day of the month. If the monthly installment is not
credited for any particular month, then it becomes a default. The defaulted months can be credited
subsequently (for INR. 10/- denomination, 0.020 rs for each month of default) maximum 4 defaults
are allowed.

6. What is the procedure for the issue of duplicate certificates?

The investor should apply in the prescribed form for duplicate certificate in respect of lost, stolen,
destroyed, mutilated or defaced certificates (NC29).
The application shall be accompanied by a statement showing particulars of certificates and
furnish an indemnity bond in the prescribed form with one or more sureties or with a bank
guarantee is required.
In case of mutilated or defaced certificates, no indemnity bond is required.

7. How I get duplicate passbook?

Application in the prescribed form or manuscript application may be given by affixing prescribed
fee in the form of postage stamp. New duplicated Passbook will be issued by sub post offices only.

8. What are the norms for issuing a Cheque Books?

 Cheque books are issued in respect of Cheque accounts.
In a Cheque account, minimum balance should be INR. 500/-

9. What are the service charges for outstations Cheque?

Cheque realization charges for outstation Cheque.

INR. 30/- for first thousand or part
INR. 31/- for each additional thousand or part
In case of bouncing of Cheque INR. 50/- is charges as service charge.

10. Can Monthly Income Scheme (MIS) interest be credited to RecurringDeposit (RD) account?

No. There is no provision. Interest amount can be credited to SB account and after that from SB to
RD is permissible.

11. What is the minimum balance required for an account?

Minimum balances in respect of different types of account is given below.

Minimum balances in respect of different types of account

SB(Cheque account)
INR. 500/-

SB(non Cheque account)

INR. 50/-

MIS
INR. 1500/-

TD
INR. 200/-

PPF
INR. 500/-

Senior Citizen
INR. 1000/-

12. How I can get encashment of certificates / account before maturity?

encashment of certificates / account before maturity for different account

NSCs (VIII Issue) Maturity period 5 years (for certificates issued on or after .01.11.2011). No premature encasement possible.

Different Savings Accounts

SB Can be closed at any time

RD Premature closure permissible after 3 years - only SB rate is permissible

TD Premature closure permissible after 6 months

MIS Premature closure permissible after 1 year

Senior Citizen Premature closure after 1 year

13.
13. Are there any charges for the use of ATM Card ?
 Charges in respect of different types of ATM transactions are given below.

ATM transaction / charge details

Daily ATM cash withdrawal limit

INR. 25000/-

Cash withdrawal limit per transaction

INR. 10000/-

Charges for transactions done at DOP ATMs

Free (Both Financial & Non Financial) with a limit o
transactions per day

Permissible free transactions at other Bank ATMs (per month)

Metro Cities - 3 free transactions (Both Financial &
Non Metro Cities - 5 free transactions (Both Financ

Charges after exceeding permissible free transaction limit at other

Financial & Non Financial Transactions - Rs 20 + A
Bank ATMs

1. What is a HUF?
HUF means Hindu Undivided Family. You can save taxes by creating a family unit and
pooling in assets to form a HUF. HUF is taxed separately from its members. A Hindu family
can come together and form a HUF. Buddhists, Jains, and Sikhs can also form a HUF. HUF
has its own PAN and files tax returns independent of its members.
Let’s understand in detail.

How is HUF taxed?

 HUF has its own PAN and files a separate tax return. A separate joint Hindu family business
is created since it has an entity separate from its members.

 Deductions under section 80 and other exemptions can be claimed by the HUF in its
income tax return.

 HUF can take an insurance policy on the life of its members.

 HUF can pay a salary to its members if they contribute to its functioning of the HUF. This
salary expense can be deducted from the income of HUF.

 Investments can be made from HUF’s income. Any returns from these investments are
taxable in the hands of the HUF.

 A HUF is taxed at the same rates as an individual.

  Let’s understand a HUF is taxed with an example – After the death of his father, Mr Rajesh
Chopra decides to start a HUF with his wife, son, and daughter as members. Since Mr
Chopra had no siblings, the property held by his father was transferred in the name of the
HUF. The property held by late Mr Chopra earns an annual rent of Rs 7.5 lakhs. Mr Rajesh
Chopra has an income from salary of Rs 20 lakh. By creating a HUF, Mr Chopra can save
tax, see below.

Due to this tax arrangement, Mr Chopra saved tax of Rs 1,54,500. Both HUF and Mr Chopra
(as well as other members of the HUF) can claim a deduction under section 80C.
Furthermore, the income of the HUF can be invested by the HUF and will continue to be
taxed in the hands of the HUF.
Need help with estimating your taxes as an HUF? Our CAs can help you

3. How to form an HUF?

While there are tax advantages of forming an HUF, you must also meet some conditions –

 One person cannot form HUF, it can only be formed by a family.

  A HUF is automatically created at the time of marriage.

 HUF consists of a common ancestor and all of his lineal descendants, including their wives
and unmarried daughters.

 Hindus, Buddhists, Jains and Sikhs can form HUFs.

 HUF usually has assets which come as a gift, a will, or ancestral property, or property
acquired from the sale of joint family property or property contributed to the common
pool by members of HUF.

 Once a HUF is formed it must be formally registered in its name. A HUF should have a legal
deed. The deed shall contain details of HUF members and the business of the HUF. A PAN
number and a bank account should be opened in the name of the HUF.

4. Disadvantage of forming an HUF

Though HUF seems like the perfect way to save tax as a family, it comes with its own
drawbacks.
Equal rights of members: The greatest disadvantage of opening a HUF is that its members
have equal rights on the property. The common property cannot be sold without the
concurrence of all the members. Any additions to the family, by way of birth or marriage,
become a member of the HUF and get equal rights. A HUF can get too large to manage.
Partition: Perhaps the worst nightmare of opening a HUF is closing it down. The only way
a HUF can be dissolved is by a partition. All members have to agree to dissolve the HUF.
Under a partition, assets are distributed to members which can lead to a lot of disputes
and can be a lot of legal hassle.
Joint family system losing relevance: HUF was recognised as a separate taxable entity by
the income tax department. However, in today’s times, where nuclear families are the
norm, HUF is losing relevance. Several cases have come to fore where couples or families
are fighting it out on common household expenses, forget to pool in of assets. Divorce
rates are rising and therefore, HUF as a tax vehicle is losing importance.
HUF continues to be assessed as such till partition: Once a HUF is formed, you must
continue to file its tax returns, unless a partition takes place. Any claim for partition is
made to the assessing officer. The assessing officer, on receiving such a claim, must make
an enquiry after giving due notice to the members. Income from the property which was
partitioned is taxed as individual income of the member. If the member forms another
HUF with his wife and children, the income of the property which was transferred from the
original HUF is taxed in the hands of new HUF.

5. Frequently Asked Questions

 Who is the Karta of an HUF?

The head of a HUF is called the Karta, he is the senior-most male member of the
family.

 Can a Woman be HUF Karta?

Yes! Until January 2016, a woman could not be the HUF Karta. But in a landmark
case, the Delhi High Court ruled in favour of a female being the Karta of a HUF.
However, the same has not been incorporated in the Income Tax Act as yet.

 Who are HUF Coparceners?

All the members of the Karta’s family can be members of the HUF. The male
members are called coparceners, while the females are referred to as just
members. The difference between the two is that any of the coparceners can
demand partition of the HUF.

The female members do not have this right in most parts of the country, except for
some states like Maharashtra and Tamil Nadu that have allowed unmarried
daughters to function as coparceners.

The Hindu Succession (Amendment) Act, 2005 which came into force from
September 9th September 2005 removed this gender discrimination by giving
equal rights to daughters as sons.

The daughters become the coparceners of their father’s families on birth in the
same manner as sons and have the same rights as sons in the family properties.

 Can a daughter claim a share in her father’s property where her father had passed
away before the amendment made in 2005, giving equal rights to daughters and
sons?

No. Both the daughter and the father has to be alive on the date of the amendment
for the daughter to get the benefit, irrespective of whether she has been married or
not on that date. If the father has passed away before the amendment date, then
she wouldn’t have been a daughter on the date of the amendment. Hence she
cannot claim a share in father’s property.

a. Are there any incomes which are not taxed as income of HUF?

b. The following incomes are not taxed as income of HUF

c. If a member transfers his self-acquired property to the HUF without receiving

proper sale consideration, income from such property is not taxable in the hands
 of the HUF. It will continue to be taxed in the hands of the member.

d. Personal income of the members cannot be treated as income of HUF.

“Stridhan” is an absolute property of a woman, hence income from it is not taxable

as income of HUF.

e. Income from an individual property of the daughter is not taxable in the hands of
HUF even if such property is vested into HUF by the daughter.

 Are there any minimum number of coparceners required for an entity to be taxed
as HUF?

A HUF can be formed with just two members one of whom is a coparcener. But for
an entity to be taxed as a HUF, it should have at least two coparceners. For
instance, if HUF consists of only the husband and wife, then there is only one
coparcener. So it will not be taxed in the hands of HUF except in the case where the
funds are received on the partition of larger HUF. It will be taxed in the hands of a
sole coparcener.

 Should a HUF always be a resident of India

It is not necessary that a HUF must always be a resident of India. In case the control
and management of the HUF are situated outside India, the HUF would be a non-
resident. Where the affairs of the HUF are managed from outside India, the HUF
would be a non-resident.

 Karta of HUF sits outside India. HUF is managed by the other members residing in
India. Will HUF be a non-resident?

The residential status of a HUF is determined not on the basis of where the Karta
resides but on the basis of where the HUF is managed from. In this case, though the
Karta resides outside India, the HUF is managed by members from India and hence
the HUF will be a resident of India.

 Can the members of the HUF and the HUF separately claim deduction under
Section 80C?

The HUF being a separate taxable assessee, can claim a deduction under section
80C. However, the member and the HUF cannot claim a deduction in respect of the
same investment made or expense incurred.

 Upon the demise of the Karta, who takes over the title ‘Karta’?
 Upon the demise of Karta, the eldest male member of the family becomes the
Karta of the family. Even when the deceased Karta’s wife is alive, the eldest son or
any other eldest male member of the family will take over that position.

 What happens if the eldest male member of the family is an NRI?

A HUF is considered to be a resident of India if the control and management of its

affairs happen wholly or partly in India. In some cases, the Karta of the family may
be non-resident. The resident status of the family will not change to be non-
resident only because the Karta is a non-resident unless the decisions concerning
the family are made outside India.

Equitable mortgage means a mortgage which does not satisfy the all the
requirements of legal mortgage as per the law in force but is nevertheless entered
into as per agreement. It gives the necessary right to the mortgagee to file suit for
non-payment.

Equitable mortgage means mortgage by deposit of title deeds. Such mortgage had
been customary in India for hundreds of years. English jurisprudence does not
recognise this mortgage but English judges sitting in Indian courts recognised it
under the principle of equity. Hence the name equitable mortgage. It appears in
Transfer of Properties Act as mortgage by deposit of title deeds. It is now actually
legal mortgage but such is the force of habit / custom etc. that it is still called
equitable mortgage.

It is as legal as any other mortgage described in TPA.

In English mortgage the mortgagor sells the property to the mortgagee but
mortgagee has the obligation to sell the property back to the mortgagor if the debt
secured by the mortgagee is discharged as per its terms. In equitable mortgage
ownership is not transferred but just a property interest is transferred to the
mortgagor and hence the mortgagee cannot sell the property for realisation of
unpaid dues without obtaining court's order.

Usufructuary mortgage

In case of an usufructuary mortgage, the mortgagor delivers possession, or expressly or by

implication binds himself to deliver possession, of the mortgaged property to the
mortgagee. He further authorises him to retain such possession until payment of the
mortgage money. The mortgagee is also authorised to receive the rent and profits accruing
from the property a .. from the property and to appropriate them in lieu of interest or in payment of the
mortgage money. No such transaction will be deemed to be a mortgage, unless the condition is embodied in the
document which effects the sale.

Scheme can help employees get guaranteed pension throughout retired life

How do I secure a regular monthly income after retirement? That’s a vexing financial problem that
most Indians of our generation face, after the phasing out of guaranteed pension from the
Government. But one guaranteed option that remains and usually flies under the radar, is the
Employees’ Pension Scheme 1995. This scheme can help employees with long years of service
receive a modest but guaranteed pension throughout their retired life.

Enrolment

All organised sector employees in India who are enrolled with the Employees Provident Fund
Organisation (EPFO) automatically become members of the Employees’ Pension Scheme (EPS) as
well. Once you enrol in the EPF, your employer deducts 12% of your basic pay plus dearness
allowance every month towards your retirement corpus, with your employer making a matching
contribution.

While your 12% contribution goes entirely into the EPF account which gives you a lump sum on
retirement, 8.33% of your employer’s contribution goes into the EPS to fund your pension payouts
post-retirement. The government also adds 1.16% of your pay to the EPS kitty every month.

However, both the employer’s and the government’s EPS contribution on your behalf are subject to
a pay cap. The maximum pay on which the EPS used to accept employers’ contributions used to be
₹6,500 per month until September 2014. In a sweeping amendment to the EPS rules in September
2014, this pay cap was revised upwards to ₹15,000 per month. This effectively means that whatever
your pay, the money flowing into the EPS kitty every month on your behalf is capped at ₹1,250 per
month (8.33% of ₹15,000).

The September 2014 amendment made another critical change as well. It decreed that new
employees who enrolled with the EPFO from that month, who earned a basic pay plus DA of over
₹15,000 per month, would not be eligible for EPS benefits. So if you’ve joined the workforce only in
the last five years, you are likely to be enrolled only in the EPF and not EPS. This may change after a
recent Supreme Court ruling as we’ll see later in this article.

Eligibility

Under the EPF, the government credits interest at a specified rate on your accumulated balance at
the end of each financial year. At the time of retirement, your maturity amount from the EPF will be
equal to the contributions made by you and your employer plus the annual interest earned. In
contrast, there is no annual interest credit to your EPS account. If you have been a regular
contributor, the government simply promises to pay a fixed monthly pension to you after
retirement.

Pension payouts under EPS are only available for employees who have put in a minimum 10 years of
service with an organisation that offers EPF benefits (doesn’t matter if you’ve jumped jobs). If you
choose to quit all employment without completing 10 years of service, you are not eligible to receive
any pension and you can apply to withdraw your accumulated EPS contributions.

When you switch jobs and transfer your EPF account from one organisation to another, your old
organisation is expected to provide a Scheme Certificate detailing your length of service, pay, non-
contributing period and so on.
The PF Commissioner records this information over the years to compute your final pension payout.
Don’t worry if your online accounts statement from the EPFO does not reflect your EPS balance; it
only needs to capture your service details for you to get pension benefits.

What you get

Under the EPS, the government promises to pay you a monthly pension calculated using a specified
formula from the age of 58 until your death. Though you can opt for early pension from the age of
50, this requires a steep sacrifice on the amount of monthly pension. The monthly pension payable
to you is calculated based on the formula — pensionable salary multiplied by pensionable service
divided by 70.

Pensionable salary, for the purpose of this calculation, is your monthly basic pay plus DA averaged
over the last 60 months of your service. (This was 12 months before the September 2014
amendment). The pensionable salary is, however, subject to a ₹15,000 per month cap. Pensionable
service is the number of years you have been employed until you retire, with the number capped at
35 years. For determining it, periods of over six months are rounded off to one year and those less
than six months are ignored. To illustrate, if your basic pay plus DA averaged ₹40,000 a month in the
60 months before retirement and you retire at 58 after working for a total of 20 years and five
months, your monthly pension will amount to ₹4,285 per month (₹15,000*20/70).

Court ruling

As you can gauge from the above example, the monthly cap on pensionable salary leads to a very
modest pension payout from the scheme. In October 2018, the Kerala High Court, in response to a
petition, struck down the amendments to the EPS made in September 2014. This judgment was
upheld by the Supreme Court in April 2019.

This judgment is expected to affect subscribers in three ways. One, employees who joined service
after September 2014 and are now contributing to EPF alone, may become eligible for EPS benefits
that were so far barred to them. Two, if the salary cap of ₹15,000 on EPS contributions and
pensionable salary goes, employees may be able to bump up their pension by asking their employer
to contribute a higher sum to the EPS, rather than EPF. Three, they may also get a higher pension
because the pensionable salary will then be based on the last 12 months’ average pay rather than
the last 60 months.

While all this is good news for employees, they mustn’t count their chickens before they hatch.

The SC ruling is yet to be given effect as the EPFO is unsure how it can implement them. As things
stand, the fund may be unable to meet a sudden spike in pension demands from many of its
subscribers. The EPFO is reportedly planning to seek a review of this decision.
 Gift Tax Act
Tax was levied on gifts in the hands of the person who receives it by enacting the Gift Act, 1958.
However, it was later abolished in the year 1988. And six years later it was re-introduced under
section 56(2) (V) of the Income-tax Act, 1961, for taxing gifts in the hands of the recipient. So, as
per the law amended in the year 2017, ‘‘gifts received by any person are taxed in the hands of
recipient under the head ‘Income from other sources’ at normal tax rates”.

New ULIP guidelines- how do

they impact insurance buying?
The central idea behind the change in unit linked insurance plan (ULIP) guidelines
is to improve the returns by reducing charges and promote ULIP as long-term
product. The revision in minimum sum assured focusses on the insurance
component of ULIP, while the increase in lock-in period enhances the investment
component of these products.

What are the new ULIP guidelines?

• Lock in of five years: Minimum lock-in period and term is five years, excluding
single premium policies.
Benefit – This will encourage long term behavior and investments in ULIPs. This
will allow time for the funds to accumulate and grow and will not drive short term
benefit seekers into these insurance products. Often such short term oriented
behavior leads to disappointment as the fund value does not show any substantial
gain in the short period. If the policy is surrendered before five years the funds
will be moved to policy discontinuance fund after deducting surrender charges
and surrender value will paid only after five years. This will ensure that the
insurance buyer serves the lock-in period.

• Increase in minimum sum assured: The minimum sum assured multiple is 10

times for age at entry below 45 years and 7 times for age at entry above 45 years.
Sum assured cannot be less than 105 per cent of total premium paid including top
ups.
Benefit –This will result in an increase in life cover available with the insurance
plan. In case of demise of policyholder, the beneficiary will get good amount of
sum assured.

• Net reduction in yield for every year from year five: This guideline states the
impact of charges on the investment over the period of five years. At maturity of
the policy, this reduction will be maximum 3% for policies with term less than or
equal to 10 years and 2.25% for policies with term above 10 years.
Benefit – policyholder if surrenders the policy after 10th year, the charges are
very minimal, i.e. 2.25% only, there will not be much impact on surrender value
and she can certainly expect good amount of payout. This ensures a good payout
for the customers in the long run.

• Cap on discontinuance charge: IRDA has introduced a cap on surrender charge,

termed as policy discontinuance charge, basis the year of discontinuance and
annual premium. This allows life insurers to charge only a small penalty on early
surrender of policy. The cap on discontinuance charge illustrated below:
Benefit – By keeping a cap on the surrender charges, the new rules ensures that
even those who have to discontinue the policy because of some financial crunch
don’t have to be unduly penalized. The charges are nominal and the loss would
not be much. When compared to other traditional insurance plans, this is a
phenomenal saving point.

• Modifications in unit linked pension products: Partial withdrawals in unit linked

pension products will not be allowed. On maturity, one third of the amount could
be taken as lump sum and rest must be used for buying annuities.
Benefits - This will ensure a larger amount is accumulated in the policy account
and it gets used for retirement planning and not for other life stage needs.

The new ULIP guidelines provide superior customer value proposition and ensure
that life insurance is promoted as long-term protection and savings tool.

For unlisted shares: In case the shares are unlisted, please note the following:
Vide the Finance Act 2017, (Union Budget 2017), the Cost of Inflation Index (CII)
used for adjusting the cost of acquisition of long-term capital assets for inflation
was pegged to 1 April 2001 (instead of 1 April 1981) and revised CII tables were
published.
Presently, where a capital asset is acquired prior to 1 April 2001, the cost of the
capital asset for the purpose of calculating LTCG on the sale of such capital asset
can be substituted with the fair market value (FMV) of the asset as on 1 April
2001, at the option of the assessee. You should, therefore, obtain a valuation of
the shares as on 1 April 2001 and use either such FMV or the actual purchase
cost, as per your discretion.

As you have held the shares for more than 24 months prior to the sale, the gains
would qualify as LTCG. The indexed cost of acquisition of the shares in your case
would be calculated as the cost of acquisition (i.e. ₹100 and ₹150, respectively,
for the initially allotted shares and shares acquired under the rights issue) or FMV
for the respective category of shares as on 1 April 2001/CII of FY 2001-02 (i.e. 100)
x CII of FY 2018-19 (i.e. 280).
Assuming that FMV as on 1 April 2001 is ₹250, LTCG would be ₹60,000 [{ ₹850 – (
₹250/100x280)} x 400]. Further, assuming that the surcharge is not applicable to
you, the said LTCG shall be taxable at 20% plus 4% health and education cess.
Accordingly, tax of ₹12,480 would be levied.

Tax exemptions as available under the Income-tax Act, 1961 against such LTCG,
may be separately evaluated.

For listed shares: In case the shares are listed, please note the following:

With effect from 1 April 2018, LTCG arising on the sale of listed shares in India
that are held for more than 12 months before sale, are taxable, to the extent such
LTCG exceeds ₹1 lakh in the given FY, provided securities transaction tax (STT) has
been paid both at the time of purchase and sale of the shares. Tax at 10% (plus
applicable surcharge and cess) is payable on such LTCG exceeding ₹1 lakh.
You can consider the highest listed price of the shares as on 31 January 2018 in
place of the actual cost of purchase, provided the listed price is lesser than the
actual sales value. The resultant LTCG, if any, to the extent it exceeds ₹1 lakh
would need to be taxed at 10% plus applicable surcharge and cess.
Assuming that the highest listed price of the shares as on 31 January 2018 is ₹500,
LTCG would be ₹1.40 lakh [( ₹850 – ₹500) x 400]. Assuming this is the only sale of
listed shares during FY2018-19 and that surcharge is not applicable to you, the
said LTCG in excess of ₹1 lakh i.e. ₹40,000 shall be taxable at 10% plus 4% health
and education cess. Accordingly, income tax on the same would come to ₹4,160.
Exemptions available under the Act against such LTCG may be separately
evaluated.

Introduction

FPSB India adopted the Code of Ethics to establish the highest principles and standards. These
Principles are general statements expressing the ethical and professional ideals CFPCM Certificants
are expected to display in their professional activities. As such, the Principles are aspirational in
character and provide a source of guidance for Certificants. The Principles form the basis of FPSB
India's Model Rules of Conduct, Practice Guidelines and Disciplinary Rules and these together reflect
FPSB India's recognition of Certificants' responsibilities to the public, clients, colleagues and
employers.

Code of Ethic 1 – Client First

Place the client’s interests first

Placing the client’s interests first is a hallmark of professionalism, requiring the Financial Planning
professional to act honestly and not place personal gain or advantage before the client’s interests.

Code of Ethic 2 - Integrity

Provide professional services with integrity

Integrity requires honesty and candor in all professional matters. Financial Planning professionals are
placed in positions of trust by clients, and the ultimate source of that trust is the Financial Planning
professional’s personal integrity. Allowance can be made for legitimate differences of opinion, but
integrity cannot co-exist with deceit or subordination of one’s principles. Integrity requires the
Financial Planning professional to observe both the letter and the spirit of the Code of Ethics.

Code of Ethic 3 - Objectivity

Provide professional services objectively

Objectivity requires intellectual honesty and impartiality. Regardless of the services delivered or the
capacity in which a Financial Planning professional functions, objectivity requires Financial Planning
professionals to ensure the integrity of their work, manage conflicts and exercise sound professional
judgment.

Code of Ethic 4 - Fairness

Be fair and reasonable in all professional relationships. Disclose and manage conflicts of interest
Fairness requires providing clients what they are due, owed or should expect from a professional
relationship, and includes honesty and disclosure of material conflicts of interest. It involves
managing one’s own feelings, prejudices and desires to achieve a proper balance of interests.
Fairness is treating others in the same manner that you would want to be treated.

Code of Ethic 5 – Professionalism

Act in a manner that demonstrates exemplary professional conduct

Professionalism requires behaving with dignity and showing respect and courtesy to clients, fellow
professionals, and others in business-related activities, and complying with appropriate rules,
regulations and professional requirements. Professionalism requires the Financial Planning
professional, individually and in cooperation with peers, to enhance and maintain the profession’s
public image and its ability to serve the public interest.

Code of Ethic 6 - Competence

Maintain the abilities, skills and knowledge necessary to provide professional services competently

Competence requires attaining and maintaining an adequate level of abilities, skills and knowledge
in the provision of professional services. Competence also includes the wisdom to recognize one’s
own limitations and when consultation with other professionals is appropriate or referral to other
professionals necessary. Competence requires the Financial Planning professional to make a
continuing commitment to learning and professional improvement.

Code of Ethic 7 - Confidentiality

Protect the confidentiality of all client information

Confidentiality requires client information to be protected and maintained in such a manner that
allows access only to those who are authorized. A relationship of trust and confidence with the client
can only be built on the understanding that the client’s information will not be disclosed
inappropriately.

Code of Ethic 8 - Diligence

Provide professional services diligently

Diligence requires fulfilling professional commitments in a timely and thorough manner, and taking
due care in planning, supervising and delivering professional services.

What is the Married Women's Property Act, 1874?

The Married Women's Property Act, 1874 (“MWPA”) was created to secure the assets owned by a
woman against her husband, his creditors and relatives. Section 6 of the MWPA covers any
insurance policy taken out by a man on his own life in favour of his wife and children. So, if you’re
buying a life insurance policy under the MWPA for the benefit of your wife and children, the sum
assured will always be their property. It cannot be claimed by your lenders nor will it be considered a
part of your business assets (or estate).

Section 5 of the MWPA states “Any married woman may effect a policy of insurance on her own
behalf and independently of her husband; and the same and all benefit, thereof, if expressed on the
face of it to be so effected, shall ensure as her separate property, and the contract evidenced by
such policy shall be valid as if made with an unmarried woman.”

As per MWPA, every insurance policy that’s covered under the MWPA is automatically considered
as an individual trust with the beneficiaries as trustees. There is no need to formally create a trust or
even a settlement deed for the benefit of your dependent(s) named in the policy.

Who can opt for insurance under MWPA?

If you are a resident of India and a married man, you can take an insurance policy under the MWPA.
You can also purchase the policy if you are a widower or a divorcee—in such a scenario, you may
name your children as beneficiaries. However, the benefit can only be availed while taking the
policy, and that too if you buy the policy in your own name.

Whom can you name as beneficiaries?

The beneficiaries defined in a policy that is covered under the MWPA can be your wife alone, just
your child or children, or your wife and children together. As a policyholder, you can assign specific
percentages of the sum assured to each beneficiary or divide it in equal amounts. However, once the
policy has been issued, you cannot change the beneficiaries. So when you appoint your wife as the
beneficiary and in case you both divorce, your beneficiary (wife) will remain the same.

What else does the MWPA do?

As a policyholder, you cannot take a loan against the policies that are endorsed under MWPA. In
case you’re surrendering a cash-value policy, the proceeds due upon surrendering will go to the
beneficiaries. Also, if you survive the policy term, the maturity proceeds would still be paid to your
beneficiaries.

How to take an insurance policy under the MWPA?

The process of getting an insurance plan endorsed under the MWPA is very simple. All you need to
do is fill up an addendum along with your insurance application at the time of taking the policy.

What is Householder Insurance Policy ?

Householder insurance policies are policies, which protects the home-owners against
damage and losses that affect their property and belongings. The exact terms of
coverage varies from policy to policy; however, most insurance policies cover perils
like hail, thunderstorms, fire, and theft.

Many policies also offer financial assistance if a homeowner must be temporarily

displaced because their home has been damaged. Look at this video below which
explains it in a crisp way!

What all is covered under these policies?

The insurance for your home can be broadly divided into 2 parts :

1. Structure Cover – This is for the structure of your home. The compensation under
this cover will be paid to repair damages to the structure caused by specified natural
and man-made calamities.
2. Contents Cover – This is for the possessions you have inside your home. If these
are damaged or burgled, then the insurance covers the loss you incur for the same.
You can take either one of these covers individually or opt for both to make sure you
are covered comprehensively.
The Property Market Value refers to the amount you will receive if you sell your property, whereas,
the Reinstatement Value relates to the demolition and rebuilding costs of your property. If you rely
only on your property’s market value and an expert reinstatement valuation is not carried out, you
cannot be sure that the correct sums insured are in place – you could end up under insured.

Professional indemnity insurance, often referred to as professional liability insurance or PI insurance,

covers legal costs and expenses incurred in your defence, as well as any damages or costs that may
be awarded, if you are alleged to have provided inadequate advice, services or designs that cause
your client to lose money.

What Is Modern Portfolio Theory (MPT)?

Modern portfolio theory (MPT) is a theory on how risk-averse investors can construct portfolios to
optimize or maximize expected return based on a given level of market risk, emphasizing that risk is
an inherent part of higher reward. According to the theory, it's possible to construct an "efficient
frontier" of optimal portfolios offering the maximum possible expected return for a given level of
risk. This theory was pioneered by Harry Markowitz in his paper "Portfolio Selection," published in
1952 by the Journal of Finance. He was later awarded a Nobel prize for developing the MPT.

No Claim Bonus Transfer

A No Claim Bonus is a discount offered by the insurance company on own damage premiums to the
policyholder. NCB belongs to the policyholder/car owner and not to the car. So, No Claim Bonus
transfer means, when you buy or sell an old car or renew your car insurance from another insurance
provider, you are still eligible to avail this discount provided you haven't made any claims in the
previous policy year.

NCB is cumulative in nature. And almost all the car insurance companies allow No Claim Bonus
transfer, when you renew car insurance from them instead of your previous insurer.

How is No Claim Bonus Calculated?

Vehicles of over and above 5 years of age are eligible for up to 50% discount on the premium as long
as the owner does not make a claim.

These discounts are availed under “No Claim Bonus” when you opt a comprehensive car insurance
policy.

But, remember your NCB immediately drops down to zero, if you file a claim during any policy
period.

Let’s say for example, Priya and Mala both purchased a Hyundai Car with the same vehicle model.
They also buy a same comprehensive policy from the same insurer. Priya doesn't make any claim in
the 1st policy period, for which she gets rewarded a 20% NCB. Mala however, makes a claim in the
1st year and is not eligible for the NCB.
 PRIYA MALA

1st year premium Rs.12,000 Rs.12,000

2nd year Premium Rs.10,000 Rs.10,000

After applying (20% NCB) for NCB is 0 and so the total premium payable would
Rs.8,000
2nd year be Rs.10,000

Section 80GG Deduction

Section 80GG Deduction is available for taxpayers on rent paid on a residence used for his own
purposes. The maximum deduction allowed under Section 80GG is Rs.60,000. Deduction under
Section 80GG can be claimed only if the taxpayer has not received HRA from the employer.

The taxpayer must file a declaration in Form 10BA that he/she has taken a residence on rent in the
previous year and that he/she has no other residence.

Maximum deduction under Section 80GG is capped at Rs.60,000. Normally, the deduction under
Section 80GG is the lower of the following three amounts:

25% of Adjusted Total Income

Rent Paid minus 10% of Adjusted Total Income

Rs.5000 per Month

Amount of Deduction under Section 80GG

Amount qualifying for deduction shall be the amount spent on rent in excess of ten percent of the
assessee’s total income before allowing deduction for any expenditure under this section. Deduction
shall be restricted to lower of the following amounts:

15% of the total income of the assessee before allowing deduction for any expenditure under this
section; or

Amount calculated at five thousand rupees per month.

Risk measures are statistical measures that are historical predictors of investment risk and volatility,
and they are also major components in modern portfolio theory (MPT). MPT is a standard financial
and academic methodology for assessing the performance of a stock or a stock fund as compared to
its benchmark index.
Breaking Down Risk Measures

There are five principal risk measures, and each measure provides a unique way to assess the risk
present in investments that are under consideration. The five measures include the alpha, beta, R-
squared, standard deviation, and Sharpe ratio. Risk measures can be used individually or together to
perform a risk assessment. When comparing two potential investments, it is wise to compare like for
like to determine which investment holds the most risk.

Alpha

Alpha measures risk relative to the market or a selected benchmark index. For example, if the S&P
500 has been deemed the benchmark for a particular fund, the activity of the fund would be
compared to that experienced by the selected index. If the fund outperforms the benchmark, it is
said to have a positive alpha. If the fund falls below the performance of the benchmark, it is
considered to have a negative alpha.

Beta

Beta measures the volatility or systemic risk of a fund in comparison to the market or the selected
benchmark index. A beta of one indicates the fund is expected to move in conjunction with the
benchmark. Betas below one are considered less volatile than the benchmark, while those over one
are considered more volatile than the benchmark.

R-Squared

R-Squared measures the percentage of an investment's movement that is attributable to

movements in its benchmark index. An R-squared value represents the correlation between the
examined investment and its associated benchmark. For example, an R-squared value of 95 would
be considered to have a high correlation, while an R-squared value of 50 may be considered low. The
U.S. Treasury Bill functions as a benchmark for fixed-income securities, while the S&P 500 Index
functions as a benchmark for equities.

Standard Deviation

Standard deviation is a method of measuring data dispersion in regards to the mean value of the
dataset and provides a measurement regarding an investment’s volatility. As it relates to
investments, the standard deviation measures how much return on investment is deviating from the
expected normal or average returns.

Sharpe Ratio

The Sharpe ratio measures performance as adjusted by the associated risks. This is done by
removing the rate of return on a risk-free investment, such as a U.S. Treasury Bond, from the
experienced rate of return. This is then divided by the associated investment’s standard deviation
and serves as an indicator of whether an investment's return is due to wise investing or due to the
assumption of excess risk.

Example of Risk Measures

Most mutual funds will calculate the risk measures for investors. A conservative fund, the T. Rowe
Price Capital Appreciation Fund offers investors a beta of 0.62 as of March 31, 2018, meaning it is
significantly less volatile than the benchmark S&P 500 index. Its R-squared value is 0.90, which
indicates close correlation with the benchmark. The fund lists a standard deviation of 6.60. This
means investors can expect the returns of the fund to vary 6.6% from its average return of 11.29%.

Compare this large-cap fund to a high-risk small-cap fund, the HSBC Small-Cap Equity Fund. Its risk
measures indicate high volatility, with a beta of 1.17, R-squared of 85.56, Sharpe ratio of 0.65, and a
standard deviation of 19.88%.

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Related Terms

Risk-Adjusted Return

A risk-adjusted return takes into account the amount of risk required to achieve a return and is
typically calculated using one of several formulas. more

R-Squared

R-squared is a statistical measure that represents the proportion of the variance for a dependent
variable that's explained by an independent variable. more

Dispersion

Dispersion is a statistical term that describes the size of the range of values expected for a particular
variable. More

There are certain EPF withdrawal rules and regulations involved in the withdrawal of the EPF corpus.

EPF in India is administered by a statutory body called the Employees’ Provident Fund Organisation
(EPFO). 12 % of the salary (basic + dearness allowance) is contributed by the employee towards the
Employees’ Provident Fund. Equal contribution is made by the employer as well. However, it’s
important to note that only 3.67% of employer’s contribution goes towards Employees’ Provident
Fund (EPF) account and rest 8.33% gets deposited in the Employees’ Pension Scheme (EPS).
Employees’ Provident Fund can be withdrawn in below three cases:

At the time of retirement (On or after 58 years of age)

If unemployed for two months of time

Death before the specified retirement age

Important Points to Remember before Withdrawing Provident Fund

Employees’ Provident Fund is an investment scheme created for the retirement purpose.
Withdrawal should be prevented until and unless it is an emergency. However, in case a member
wants to withdraw funds from his EPF account, he should keep the following EPF withdrawal rules in
mind:

Provident Fund withdrawn within 5 years of account opening is taxable

It’s not necessary to withdraw provident fund when you change your employer as PF can easily be
transferred to a new account through the online process

As per the rules, one cannot withdraw Provident Fund balance of a job where you are currently
employed

Loan (Partial withdrawal) can be availed on employee provident fund

EPF Withdrawal Rules for withdrawal based on purposes

For Medical Purposes:

An employee is allowed to withdraw employee’s share with interest or six times the monthly salary

EPF Withdrawal Rules for withdrawal based on purposes

For Medical Purposes:

An employee is allowed to withdraw employee’s share with interest or six times the monthly salary
(whichever is lower) from the provident fund for the medical treatment purpose.

It is applicable for medical treatments of self, spouse, children, and parents.

There is no lock-in period or minimum service period for this type of withdrawal.

For Repaying Home Loan:

For the purpose of repaying the home loan outstanding, the member is allowed to withdraw up to
90% of the corpus if the house is registered in his or her name or held jointly.

However, to withdraw the amount, at least 3 years of service completion is required

For Wedding :

At least 7 years of service is required to be completed to be eligible for withdrawal

50% of the employee’s contribution with interest can be withdrawn.

An employee can withdraw funds for his own, siblings or child’s marriage
For Renovating and Reconstructing a House :

The employee can withdraw funds from his EPF account for the purpose of renovation and
reconstruction.

he house should be held in his/her name or held jointly with the spouse

The employee must complete at least 5 years of total service

The member can withdraw 12 times his monthly salary from his Provident fund account

For Purchasing or constructing a House :

The member can withdraw from his employee provident fund for the purpose of purchasing a plot
and constructing it.

The property should be registered in his or her name or held jointly with spouse.

An employee should complete a minimum of 5 years of total service

24 times of the monthly salary for purchasing a plot/36 times of the monthly salary for purchasing or
constructing a house or the cost of the property or the total of employee’s and his employer’s share
along with the interest amount (whichever is less) can be withdrawn.

Withdrawal is allowed only after completing 5 years of service

Withdrawal for the purpose of purchasing a plot and constructing it can be done only once in the
entire service tenure.

Retirement :

A person can withdraw his or her entire provident fund corpus after completing 58 years of age.

The employee is allowed to withdraw up to 90% of the provident fund balance.

Unemployment :

A person can withdraw 75% of his or her provident fund if he/she is unemployed for more than a
month.

For unemployment of more than 2 months, remaining 25% of the corpus can be withdrawn.

EPF Withdrawal Rules before 5 years of Service

EPF withdrawal before 5 years of continuous service attracts TDS on the withdrawal amount.
However, if the withdrawal amount is less than ₹ 50,000, no TDS is deducted. In case you want to
withdraw your funds before 5 years of service, you should keep the following EPF withdrawal rules
in mind:

As per the latest modification in ITR Forms 2 and 3, the assessee has to provide a detailed breakup of
the entire amount deposited in PF account every year.

This will help the Income Tax Department to assess whether the withdrawal made by you is taxable
or not.

The department will also check whether additional tax has to be paid by you after revaluation.
EPF contribution is done in four parts – Employee’s contribution, employer’s contribution and
interest on each deposit.

If the employee has claimed exemption on EPF contribution for previous years as per Section 80-C,
all four parts will be taxable.

If the employee has not claimed exemption in the previous year on EPF, the employee’s contribution
part will be exempted from tax at the time of withdrawal.

The tax will depend on the income slab in which the employee fell for that year.

The tax will be applicable in the year of withdrawal but the consideration will be done for each year.

EPF Withdrawal Rules after Retirement

As per the EPF Act, when a member retires at the age of 58 years, he has to claim for the final
settlement.

The total PF balance consists of both employee’s as well as the employer’s contribution.

The member also becomes eligible for the EPS amount if he has served for a period of more than 10
years in continuation.

In case the member has not completed 10 years of service at the time of retirement, he can
withdraw the complete EPS amount along with his EPF.

If he completes 10 years of service, the employee gets pension benefits after retirement.

The withdrawal of corpus accumulated in the EPF account after retirement is completely tax-free.

The interest earned on the EPF corpus after retirement is taxable.

An employee who has registered at the EPF member portal can fill the form and claim his funds
online.

If the member does not withdraw funds for three years after retirement, he will have to pay tax on
the interest earned.

ax on Employees’ Provident Fund Withdrawal

TDS is deducted on withdrawal before completing 5 years of service.

TDS is deducted at a rate of 10% on withdrawal if PAN is furnished and 34.608% if PAN is not
furnished.

However, if the withdrawal amount is less than ₹ 50,000, no TDS is deducted.

However, TDS is not applicable to some of the below cases.

TDS rule is not applied when termination of your service is out of your control. Company lockouts,
retrenchments and employee layoffs etc. could be some of the reasons.

TDS is not applicable when the service cannot be continued due to some serious medical condition
such as physical disability or mental disability.

EPF Withdrawal Rules for Home Loans

EPF members can utilize the fund accumulated in their EPF account to facilitate their housing needs
after three years of account opening. As per the newly added Para 68-BD in the EPF Scheme, 1952,
EPF members can apply for a withdrawal of up to 90% of the accumulated corpus for either making
the down payment of the house or for the payment of EMIs or for the construction of a new house.

Earlier, the maximum withdrawal amount was limited to total employee’s and employer’s
contribution with interest of 36 months or the cost of the property, whichever was less. The
member was also not required to be a member of the housing scheme to avail this facility. He just
had to be a member of the EPFO for five years.

After the insertion of Para 68-BD in the EPF Scheme, 1952, members get more options to utilize their
funds. The time limit (from account opening) has also been reduced to 3 years. The minimum PF
balance of the member should be more than ₹ 20,000 either individually or including that of the
spouse in case he/she is also a member of the EPFO. However, a member can withdraw the PF
balance only once in a lifetime to pay for the property.

Some important features of home loans on EPF are as follows :

The applicant should be a member of a registered housing society having at least 10 members.

The bank can use the Commissioner’s certificate of PF contributions to calculate EMIs for
withdrawal.

Composite claim forms can be used to avail this facility.

The member has to provide the letter of authorization for paying EMI from PF.

The facility can be clubbed with Pradhan Mantri Awas Yojana (PMAY) to avail subsidy on housing.

How to Apply for Home Loans on EPF

Follow these simple steps to utilize your EPF for repaying your home loan as per the updated EPF
withdrawal rules:

The member can apply for the loan through the housing society to the EPF Commissioner in the
format prescribed in Annexure 1

The Commissioner issues a certificate specifying the monthly contribution of the last 3 months.

PF members can also get the EPF passbook printed to show the EPF contribution for last 3 months.

EPFO makes the payment directly to the agency (government or private)

Members can opt for lump sum withdrawal or EMIs.

In some cases, when you sell Agricultural Land – it may be entirely exempt from income tax or it may
not be taxed under the head Capital Gains –

Agricultural land in Rural Area in India is not considered a capital asset. Therefore any gains from its
sale are not taxable under the head Capital Gains. For details on what defines an agricultural land in
a rural area, see details of capital assets here.
Do you hold agricultural land as stock-in-trade? If you are into buying and selling land regularly or in
the course of your business, in such a case, any gains from its sale are taxable under the head
Business & Profession.

Under Section 10(37) of the Income Tax Act, Capital Gains on compensation received on compulsory
acquisition of urban agricultural land is exempt from tax.

If you want to know how to compute your gains – read here. If you have inherited this land, your
capital gains will be calculated like this. Don’t forget to reduce these expenses from the sale price.

When you have sold an agricultural land which does not meet any of the above exemption criteria,
here are the

1. Conditions you need to meet Under Section 54B for claiming exemption from Capital Gains

The exemption is available to an Individual or a HUF.

The land which is being sold must have been used for agricultural purposes by the individual or his
parents or by the HUF for a period of 2 years immediately before the date of transfer.

Another land for the agricultural purpose should be purchased within a period of 2 years from the
date of transfer of this land.

The new agricultural land which is purchased to claim capital gains exemption should not be sold
within a period of 3 years from the date of its purchase.

In case you are not able to purchase agricultural land before the date of furnishing of your Income
Tax Return – the amount of capital gains must be deposited before the date of filing of return in the
deposit account in any branch (except rural branch) of a public sector bank or IDBI Bank according to
the Capital Gains Account Scheme, 1988. The exemption can be claimed for the amount which is
deposited.

If the amount which was deposited as per Capital Gains Account Scheme was not used for the
purchase of agricultural land – it shall be treated as the capital gain of the year in which the period
of 2 years from the date of sale of land expires. Of course, in this case, you can withdraw these
amounts for any use you may want.

3. Amount of Exemption

If the cost of the new agricultural land purchased is more than the number of capital gains, entire
capital gains are exempt.

If the cost of the new agricultural land purchased is less than the number of capital gains, Capital
Gains less cost of the new agricultural land = capital gains chargeable to tax

It is important to know how gold is taxed at the time of selling. In India, you can buy gold in different
forms such as physical form like jewellery and coins and other forms like gold mutual fund, gold
exchange-traded funds (ETFs), sovereign gold bonds (SGB) and digital gold. It should be noted that
when you purchase gold, you are charged Goods and Service Tax (GST) at 3% on the value of gold
plus making charges, if any. Since India imports much of its gold, the domestic gold price tracks the
dollar-denominated international gold prices closely.

According to income tax laws, capital gains on selling gold is taxed and is dependent on the form it is
purchased.

Income tax on selling of physical gold

Income tax on gains is based on whether it is short term or long term. If the gold is being sold within
three years from the date of purchase then it is considered as short-term, while gold sold after three
years is considered as long term. Short-term capital gains on sale of gold is added to your gross total
income and taxed at the income tax rates applicable to your income slab.

On the other hand, long-terms gains are taxed 20.8% (including cess) with indexation benefits. Or in
other words, adjust the purchase price of gold after factoring in inflation.

Tax on gains from gold MF, gold ETFs

Gold ETF invests its corpus in physical gold, aiming to track the price of the metal passively. Gold
mutual funds in turn invest in gold ETFs. The expense ratio is higher in gold mutual fund, compared
with gold ETFs. Basically, the gold funds add the gold ETF expense ratio to the overall cost. So, if gold
prices go up, the gold ETF’s net asset value (NAV) goes up, and vice versa.

Gains from sale of gold ETFs or gold mutual funds are taxed similarly as that of the physical gold.
Short-term capital gains on units held for less than 36 months is added to investor's income and
taxed according to the applicable slab rate. Long-term capital gains on units held for more than 36
months are taxed 20.8% (including cess) with indexation benefits.

Sovereign gold bonds

These are government securities denominated in grams of gold. Or in other words, they are
substitutes for holding physical gold. Investors pay the issue price and the bonds are redeemed in
cash on maturity. The bond is issued by Reserve Bank of India on behalf of the Government of India
from time to time.
Sovereign gold bonds come with a maturity period of 8 years, with an exit option from the fifth year.
Sovereign gold bonds are also traded on stock exchanges within a fortnight of issuance, offering an
early exit option for investors.

Capital gains arising from redemption of sovereign gold bonds have been exempted from tax. Also,
indexation benefit is provided to LTCG arising to any person on transfer of bonds.

Gold bonds pay interest at the rate of 2.50% per annum on the amount of initial investment. Interest
is credited semi-annually to the bank account of the investor. The interest on gold bonds is taxable
according to provisions of the Income Tax Act but TDS is not applicable.

Tax on digital gold

Many banks, fintech and brokerage companies, in partnership with MMTC, offer digital gold through
their apps. Investors can invest very small amount of money in gold through this route. Income tax
on digital form of gold is similar to what is applicable to the physical form of gold or gold ETFs or gold
mutual funds.

Private trusts are formed for estate planning and succession of property. They are often seen as a
mode for protection of wealth and welfare of those dependent on the owner or settlor. Across India
(except Jammu & Kashmir and Andaman and Nicobar Islands), private trusts are governed by the
Indian Trust Act, 1882. The law, however, is not applicable on Waqf, Hindu Undivided Family or
charitable endowments.What is a private trust?

According to the legal definition, a trust is an obligation annexed to the ownership of property and
arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him,
for the benefit of another or of another and the owner. In simpler terms, a trust facilitates transfer
of property or assets by the settlor to another party (trustee) for the benefit of the third party
(beneficiaries).Trusts are of two kinds - Public Trust (where the number of beneficiaries is uncertain)
and Private Trust (where the beneficiaries are definite).Taxation of a private trust

The beneficiaries of a trust enjoy the rights to the rents and profits of the trust property (subject to
the trust deed). The income generated out of a private trust is available only to the beneficiaries and
the taxability of that income varies on the basis of the structure adopted. The structures can be of
two kinds based on the shares of a beneficiary:Specific trust: In this case, the income is received by
the trustee as a representative assesse on behalf of a beneficiary. The share received by a
beneficiary should be clearly stated. For instance, if an X beneficiary receives 50 per cent of the total
income of the trust, the tax is recovered as per the rate applicable to the total income of the
beneficiary. As income-tax rules mandate the liability to pay tax on trustees, the tax can be levied
and recovered from the representative assesse.Discretionary trust: In this case, the individual shares
of the beneficiaries are not known, and the trustees decide the distribution of the income among
the beneficiaries. The income of such a trust is assessed in the hand of the trustees as per the tax
bracket under which they fall.Taxability of business incomeThe above stated rule is applicable only
when the income source of the private trust is obtained from its assets. When the income of the
trust consists of profits and gains of business, the taxation is different. If the private trust is involved
in a business, the proceeds of the business form the property of the trust and the trustees (or author
of the trust) cannot stake a claim. The entire income of the private (specific) trust is then charged on
the maximum marginal rate. That is, the income will be charged at the same rate and in a manner as
it would be taxed in the hands of the beneficiary.The above tax rule does not apply if:

The private trust is created by a will from which business income is obtained.

It is created exclusively for the benefit of certain relatives of the settlor for support and
maintenance.

It is the only trust declared by the settlor.

Tips when forming a private trust

Trust of a personal property can be formed by the settlor's spoken statements. It is then referred to
as Oral Trust. It should be avoided as the tax on the income of an Oral Trust is charged on the
maximum marginal rate.

Refrain from carrying out any business activity from the private trust.

Beneficiaries of a private trust should not be the beneficiaries of any other trust, as the tax is again
charged at the maximum marginal rate.

A private trust should be made 100 per cent specific beneficiary for major son or daughter. It will
ensure that money is not misused by the son in future or relatives of the daughter when she gets
married.

If the beneficiary is your minor child or spouse, the capital of the trust should not be through the
parent or father-in-law or husband of the beneficiary. In such a case, the income will get clubbed
with them, as per the Clubbing Provision under Section 64 of the Income Tax Act.

Last Updated: Fri Jul 13 2018

Section 24 of the Income Tax Act lets homeowners claim a deduction of up to Rs. 2 lakhs (Rs.
1,50,000 if you are filing returns for last financial year) on their home loan interest if the owner or
his family reside in the house property. The entire interest is waived off as a deduction when the
house is on rent.

Income Tax Slab Update : Budget 2019-20

No Income tax for individuals with Annual Taxable Income of upto Rs. 5 lakh. No change in Income
Tax Slabs.

Surcharge increased by 3% for individuals with Income of Rs. 2-5 crores and by 7% for income more
than Rs. 5 crores.

Aadhaar card can now be used interchangeably for PAN card. Thus, you no longer need PAN to file
income tax returns.

Additional deduction of Rs. 1.5 lakhs for interest on home loan availed for purchase of Affordable
houses of up to Rs. 40 lakh till March 2020.
 Income tax deduction of Rs. 1.5 lakhs for interest on loan taken to buy an electric vehicle.

The annual turnover limit for corporate tax of 25% increased to Rs. 400 crores.

TDS of 2% on cash withdrawal of more than Rs. 1 crore in a year from a bank account to discourage
business payments in cash.

Excise Duty on fuel hiked by Re. 1.

Tax Benefits On Principal Repaid On Interest Paid

First Home – Self Actual principal repaid subject to a  Actual home loan interest paid subject to
Occupied maximum of Rs. 1,50,000 (Rs. 2 lakh a maximum of Rs. 2 lakh (Rs. 3 lakh for
for senior citizens) can be claimed as senior citizens) if house construction
investment eligible for tax deduction completed within 5 years from the end of
under section 80C. the financial year in which loan is taken
 If construction of house not completed
within five years then Rs. 30,000 is tax
exempt
 Additional deduction of Rs. 1.5 lakhs for
interest on home loan availed for
purchase of Affordable houses of up to Rs.
40 lakh till March 2020.

First Home – Upto Rs. 1,50,000 (Rs. 2 lakh for  Exemption on interest is capped at lower
Rented/ Vacant senior citizens) eligible for tax of two, a) Rs. 2,00,000 or b) actual
(deemed to be let deduction under Section 80 C. The interest paid for all properties owned by
out property) deduction is available only if the a taxpayer.
property owner is staying in a
different city for work.

Second Home or None  Exemption on interest is capped at lower

Additional Property of two, a) Rs. 2,00,000 or b) actual
interest paid for all properties owned by
a taxpayer

Under Construction None  The interest paid can be claimed in equal

Property parts in five financial years post
completion or handing over of property
within the overall annual limit of Rs. 2
lakh.

For first residential property which is self-occupied, rented or vacant

How to avail home loan tax deduction

Principal repayment of up to Rs. 1.5 lakh (Rs. 2 lakh for senior citizens) can be clubbed under the
overall limit for tax saving instruments eligible under Section 80C to claim tax benefit of upto Rs.
50,985 per annum

Deduction available for purchase or construction of first residential property which is self-occupied
or is rented as the taxpayer has to live in a different city due to his work
Any amount paid towards partial or full prepayment of home loan is also eligible for tax benefit

Read All You Need to Know About Tax

For first self-occupied home

How to avail home loan tax exemption

Annual interest component of up to Rs. 2 lakh (Rs. 3 lakh for senior citizens) can be claimed as
deduction against income under section 24

Tax liability can be reduced by upto Rs. 67,980 depending upon your tax slab

Additional deduction of Rs. 1.5 lakhs for interest on home loan availed for purchase of Affordable
houses of up to Rs. 40 lakh till March 2020.

Available for purchase/ construction/ repair/ renewal/ reconstruction of a residential house

property

Benefit available only for self-occupied property

Deduction is available on an accrual basis and not on a payment basis. Hence, deduction under
Section 24 can be claimed on a yearly basis even if no payment has been made during the year but
interest has accrued

10 Best Ways to Earn Tax Free Income in India 2018

For under construction property before possession

According to Section 24 of Income Tax Act, you can claim deduction against the interest amount that
you have paid on your residential property during the pre-construction period.

Similar Deduction not available on principal repayment under Section 80C, for payments done
during pre-construction period

Total interest paid during the pre-construction period can be claimed as tax deductible in five equal
installments during five successive years from the year in which construction is completed and
property is handed over to you.

Total allowable deduction stands capped at Rs. 2 lakh per year for self-occupied house.

Starting from current AY 2018-19 and as applicable for FY18-19(AY19-20), a limit of Rs 2 lakh has
been placed on amount of total interest that can be claimed against income from let out or deemed
to be let out property. Prior to this, there was no limit on interest that can be claimed as tax
deductible in case of let out property and deemed to be let out property.

Tax deduction during construction period is not allowed for loan taken for repair or renewal of a
residential property.

Can I Claim Both HRA and Interest on Home Loan Deduction?

For rented or vacant property

Tax treatment on vacant property

Vacant property - As per Income Tax rule (Section 24), you will be required to account for deemed
rent on the property as taxable income. Deemed rent is notional rent based on market rental values
in the vicinity. Interest paid on loan taken to buy the property can be set off from the taxable
income. In FY16-17 (AY 17-18), 100% of the interest is eligible for deduction on such properties.
Starting from current FY17-18 (AY18-19) and as applicable for FY18-19(AY19-20), the interest benefit
cannot exceed Rs. 200,000 per individual.

Property is not self-occupied for reason of employment, business or profession in different place or
other city - As per Income Tax Rule (Section 24) tax deduction allowed is capped at Rs. 2 Lakh.

Property is part self-occupied and part is rented out - The interest must be split in proportion of the
size of the two parts and tax benefit shall be split proportionately.

Income tax deductions, exemptions available in India

How to avail tax exemption

In case you own more than 1 property, one of which is self-occupied and others are rented out or
lying vacant, till Assessment Year 2016-17, entire interest paid on such property can be set it off
from rent received or deemed rent on such properties

In case the interest on home loan together with other deductible expenses (such as repairs, house
tax, standard deduction of 30% on rented property etc) is higher than rental income/ deemed rental
income, the loss can be adjusted against other income heads including salary income, business
income, interest income; thus reducing the overall tax liability.

In case there is unabsorbed loss even after these adjustments, same can be carried forward for up to
8 years to be adjusted against taxable income in future years.

Starting from current FY2017-18 (AY 2018-19) and as applicable for FY18-19(AY19-20) - the
maximum set off for interest paid on all properties, including self-occupied, rented and vacant
properties has been capped at Rs. 200,000 per taxpayer, irrespective of the number of properties
owned by the individual.

Joint home loan tax benefit: for co-applicant, co-borrower and joint owner

If the home loan that you have taken is in joint names then you can save more tax as compared to
when you have taken home loan individually.

Each applicant and the co-applicants (any number) can avail tax benefit individually for a property in
which they are joint owners

Each applicant and co-applicant can separately claim a maximum tax deduction of Rs. 1.50 lakh per
annum for principal repayment under Section 80C and Rs. 2 lakh per annum for interest payment,
under Section 24. However, the total tax benefit by all joint owners cannot exceed the total principal
repayment and interest payment during the year.

Budget announcements on Home Loan Tax Benefits: FY2017-18 (AY2018-19) and FY2018-19(AY2019-
20)
In the Union Budget 2018, there are no changes announced in provisions of tax benefit on home
loan and capital gains on sale of housing property. In the previous union budget 2017, three
significant changes with respect to income tax benefit on home loan and capital gains on sale of
house property were introduced. To recap, these changes that were introduced in FY2017-18
(AY2018-19) and continue to be applicable in FY2018-19 (AY2019-20) are:

Change in long term capital gains definition - Upto 31st Mar 2017, any property sold within 3 years
of purchase used to attract short term capital gains tax at marginal tax rate (30%). Starting FY 2017-
18, a house property sale will qualify under long term capital gains if it is held for a minimum period
of 2 years instead of 3 years and hence, be eligible for concessional tax rate of 20% with indexation
benefit or 10% without indexation benefit. Further, the long term capital gains so accrued shall
continue to be eligible for tax exemption by way of investment under capital gains bonds under
section 54E. For more, refer to

Apply for Home Loan

Maximum interest exemption for tax benefit on home loan capped at Rs 2 lakh including that on
rented property - Earlier, interest paid on capital borrowed to purchase a house or any other
property for investment purpose (property that was not self occupied but was let out or lying
vacant) was eligible to be set off from rental income without any limit. Further, loss from house
property as a result of interest expense is more than the rental income was eligible to be set off
from income under any head such as salary, business or interest. From FY 2017-18 and AY 2018-19,
the maximum allowable deduction for interest on house property has been capped at Rs. 200,000
(Rs. 2 lakh only). This limit of Rs. 2 lakh is applicable to each taxpayer and is the maximum deduction
available for interest paid on all properties owned by the taxpayer. However, this provision is not
applicable for entities that are in the business of owning real estate.

For more details, refer to the latter part of this page under the heading "Deduction of interest paid
on home loan taken to purchase a property that is either rented out or not self-occupied ."

TDS on rent paid by individuals – So far, only the corporate entities were required to deduct TDS at
10% on rent paid in excess of Rs. 2 lakh per annum. As per Budget 2017, effective 1st June 2017,
individuals, professionals and businessmen will also be required to deduct TDS at the rate of 5% on
rent paid in excess of Rs. 50,000 per month. You can use tax calculator online to identify the tax
amount you have to pay on housing loan.

MyLoanCare TDS Guide 2018

GST cut from 12% to 8% on houses under PMAY Pradhan Mantri Awas Yojana

The GST council has decided to reduce GST rates from 12% to 8% for homes purchased under the
PMAY (Pradhan Mantri Awas Yojana) or Credit Linked Subsidy Scheme (CLSS), starting January 25.
Under-construction homes that are a part of CLSS will now be charged GST at 8 percent, down from
12 percent. Those eligible for CLSS under PMAY, will be eligible for this tax benefit.

The lower rates of 8% will be applicable on houses constructed or acquired under the CLSS for
Economically Weaker Sections (EWS) / Lower Income Group (LIG) / Middle Income Group-1 (MlG-1)
/ Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission/Pradhan Mantri Awas
Yojana (PMAY Urban).
The inputs and the capital goods used in the construction of houses attract a GST of 18% or 28%. As
opposed to this, the affordable housing projects will now be charged 8% after deducting one-third of
the amount charged for the house towards the cost of land. The lowering of GST will help both
builders and buyers. The builders or developers now have enough incentive to comply with the
system, while the tax burden on borrowers stands reduced.