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Income Tax

Tax Reckoner 2013-14

Snapshot of Tax rates specific to Mutual Funds

The rates are applicable for the financial year 2013-14 and are subject to enactment of the Finance Bill, 2013. Tax Implications on Dividend received by Unit holders

  Individual/ HUF Domestic Company NRI
    Dividend  
Equity oriented schemes Nil Nil Nil
Debt oriented schemes Nil Nil Nil
       
  Tax on distributed income (payable by the scheme) rates  

Equity oriented schemes*

Nil

Nil

Nil

Money market and Liquid schemes 25%+10% Surcharge**+3% Cess 30%+10% Surcharge**+3% Cess 25%+10% Surcharge**+3% Cess
  = 28.325% = 33.99% = 28.325%
Debt schemes 25%+10% Surcharge**+3% Cess 30%+10% Surcharge**+3% Cess 25%+10% Surcharge**+3% Cess
(other than infrastructure debt fund) = 28.325% = 33.99% = 28.325%
Infrastructure Debt Fund 25%+10% Surcharge**+3% Cess 30%+10% Surcharge**+3% Cess 5%+10% Surcharge**+3% Cess
  = 28.325% = 33.99% = 5.665%

*  Securities transaction tax (STT) will be deducted on equity funds at the time of redemption/ switch to the other schemes/ sale of units.

**  Effective from 1 June 2013.

Capital Gains Taxation

Individual/ HUF $

Domestic Company @

NRI $ / #

Long Term Capital Gains (units held for more than 12 months)

Equity oriented schemes Nil Nil Nil
Other than equity oriented schemes 10% without indexation or 20% 10% without indexation or 20% 10% without indexation or 20%
  with indexation whichever is lower with indexation whichever is lower with indexation whichever is lower
- Without indexation = 10% = 10% = 10%
- With indexation = 20% = 20% = 20%
     
       
  Short Term Capital Gains (units held for 12 months or less)  
Equity oriented schemes 15% 15% 15%
       
Other than equity oriented schemes 30% 30% 30%
       
     
  Tax Deducted at Source (Applicable only to NRI Investors)  
       
    Short term capital gains Long term capital gains
Equity oriented schemes   15% Nil
Other than equity oriented schemes   30% 20%##

$ - Surcharge at the rate of 10% is proposed to be levied in case of individual/ HUF unit holders where their income exceeds Rs 1 crore.

@ - Surcharge at the rate of @ 5% is proposed to be levied for domestic corporate unit holders where the income exceeds Rs 1 crore but less than 10 crores and at the rate of 10%, where income exceeds 10 crores.

# - Short term/ long term capital gain tax will be deducted at the time of redemption of units in case of NRI investors only.

## - After providing for indexation

Education Cess @3% will continue to apply on tax plus surcharge

Dividend Stripping: The loss due to sale of units in the schemes (where dividend is tax free) will not be available for setoff to the extent of the tax free dividend declared; if units are:(A)bought within three months prior to the record date fixed for dividend declaration; and (B) sold within nine months after the record date fixed for dividend declaration.

Bonus Stripping: The loss due to sale of original units in the schemes, where bonus units are issued, will not be available for set off; if original units are: (A) bought within threemonths prior to the record date fixed for allotment of bonus units; and (B) sold within nine months after the record date fixed for allotment of bonus units. However, the amount of loss so ignored shall be deemed to be the cost of purchase or acquisition of such unsold bonus units.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

1.     Income Tax Rates For Individuals, Hindu Undivided Family, Association of Persons, Body of Individuals and Artificial juridical persons

Total Income Tax Rates
Up to Rs. 200,000 (a) (b) NIL
Rs. 200,001 to Rs. 500,000 (f) 10%
Rs. 500,001 to Rs. 1,000,000 20%
Rs. 1,000,001 and above 30%
   

(a)     In the case of a resident individual of the age of 60 years or above but below 80 years, the basic exemption limit is Rs 250,000.

(b)    In case of a resident individual of age of 80 years or above, the basic exemption limit is Rs 500,000.

(d)   Surcharge @ 10% is applicable on income exceeding Rs. 1 crore; Marginal relief for such person is available.

(e)     Education cess is applicable @ 3% on income tax plus surcharge.

(f)     Finance Bill 2013 proposes a rebate of Rs 2,000 for individual having total income upto Rs 5 Lacs.

2.     Securities Transaction Tax (STT)

STT is levied on the value of taxable securities transactions as under.

Transaction Rates Payable By
     
Purchase/ Sale of equity shares 0.1% Purchaser/
    Seller
Purchase of units of equity oriented mutual Nil Purchaser
fund (delivery based) @    
Sale of units of equity oriented mutual fund 0.001% Seller
(delivery based) @    
Sale of equity shares, units of equity oriented 0.025% Seller
mutual fund (non-delivery based)    
Sale of an option in securities 0.017% Seller
Sale of an option in securities, where option 0.125% Purchaser
is exercised    
Sale of a futures in securities @ 0.010% Seller
Sale of unit of an equity oriented fund to the 0.001% Seller
Mutual Fund @    

@ effective 1 June 2013

3.     Special rates for non-residents

(1)      The  following  incomes  in  the  case  of  non-resident  are  taxed  at  special

rates on gross basis:

Transaction Rate (a)
Dividend (b) 20%
Interest received on loans given in foreign 20%
currency to Indian concern or Government  
of India.  
Income received in respect of units purchased 20%
in foreign currency of specifies Mutual Funds /  
UTI  
Royalty or fees for technical services 25%
   
Interest income from a notified infrastructure 5%
debt fund  
Interest on FCCB, FCEB / Dividend on GDRs(b) 10%

(a)    These rates will further increase by applicable surcharge and education cess.

(b)    Other than dividends on which DDT has been paid.

(c)     In case the non-resident has a Permanent Establishment (PE) in India and the royalty/ fees for technical services paid is effectively connected with such, the same could be taxed at 40% (plus applicable surcharge and education cess) on net basis.

 

(2)     Tax on non-resident sportsmen or sports association on specified income @ 10% plus applicable surcharge and education cess.

  1. 4.     Capital Gains
Transaction Short-term Long-term
  capital gains (a) capital gains (a)
     
Sale transactions of equity >15% Nil
shares/ unit of an equity    
oriented fund which attract STT    
     
Sale transaction other than    
mentioned above:    
     
Individuals (resident and >Progressive slab 20% with
non-residents) rates
indexation; 10%
   
Partnerships (resident and   without indexation
  (for units/ zero
non-residents)

30%

    coupon bonds)
Resident companies 30%
 
     
Overseas financial >40% (corporate) 10%
organizations specified in >30%  
section115AB >(non corporate)  
     
FIIs >30% 10%
     
Other Foreign companies >40% 20% / 10%
     
Local authority >30% 10% without
    indexation (for units/
Co-operative society rates Progressive slab
zero coupon bonds)
   
    / 20% (for others)
     

(a)These rates will further increase by applicable surcharge & education cess.

Personal Tax Scenarios (Amount in Rupees)

  Individual   Income Level  
         
    500,000 5,000,000 11,000,000
         
  Tax in FY 2012-13 30,900 1,369,900 3,223,900
  Tax in FY 2013-14 28,900 1,369,900 3,546,290
         
  Effective Tax Savings 2,000 Nil NA
         
  Effective Tax Savings 6.47% 0% NA
  Additional Tax Burden NA Nil 322,390
  Additional Tax Burden NA 0% 10%
         
  Resident senior citizen   Income Level  
         
  (age of 60 years but      
  below 80 years) 500,000 5,000,000 11,000,000
  Tax in FY 2012-13 25,750 1,364,750 3,218,750
  Tax in FY 2013-14 23,750 1,364,750 3,540,625
  Effective Tax Savings 2,000 Nil NA
  Effective Tax Savings 7.77% 0% NA
  Additional Tax Burden NA Nil 321,875
  Additional Tax Burden NA 0% 10%
         
  Resident very senior citizen   Income Level  
  at the age of 80 years and      
  above 500,000 5,000,000 11,000,000
  Tax in FY 2012-13 Nil 1,339,000 3,193,000
         
  Tax in FY 2013-14 Nil 1,339,000 3,512,300
         
  Effective Tax Savings NA Nil NA
  Effective Tax Savings NA 0% NA
  Additional Tax Burden NA Nil 319,300
  Additional Tax Burden NA 0% 10%
Marginal relief as applicable would be available    

Disclaimer : The information set out above is included for general information purposes only and does not constitute legal or tax advice. In view of the individual nature of the tax consequences, each investor isadvised to consult his or her own tax consultant with respect to specific tax implications arising out of their participation in the Scheme. Income Tax benefits to the mutual fund & to the unit holder is in accordance with the prevailing tax laws as certified by the mutual funds tax consultant. Any action taken by you on the basis of the information contained herein is your responsibility alone. Mutual Fund will not be liable in any manner for the consequences of such action taken by you. The information contained herein is not intended as an offer or solicitation for the purchase and sales of any schemes of Mutual Fund.

 

Income-tax, in India, is a tax payable, annually, at the rate enacted by the Indian Union Budget (Finance Act) for every Assessment Year, on the Total Income earned in the Previous Year by every Person.



The chargeability is based on the nature of income, i.e., whether it is revenue or capital. The principle of taxation of income is: - All revenue incomes are chargeable to tax unless it is specifically exempt (declared as not taxable)

All capital profits are not chargeable to tax unless specifically made chargeable.







The computation of the total income of any person depends on the Residential Status of such person.



The Residential Status of a person is of two categories, viz., Resident

Non Resident



However, in case of Individuals and Hindu Undivided Families (HUFs) the category Resident is divided into two, viz.,


Resident and Ordinarily Resident (also termed simply as Resident)

Resident but not Ordinarily Resident.






All Indian residents are taxable for all their income, including income outside India.

Non resident Indians are taxable only for income, Received in India or

Income accrued in India.






Not Ordinarily residents of India are taxable in relation to income, Received in India or

Income accrued in India or

Income from business or profession controlled from India.






Gross Total income is sum of Income under the following heads : - Salaries

Income from House Property

Business Income

Capital Gains

Other Sources






Total Income = Gross Total Income - Deduction Under Chapter VI-A

In computing the total income, the following related provisions should also be taken into consideration: -

Chapter III of the Indian Income-tax Act


Incomes, which do not form part of Total Income.

Chapter V of the Indian Income-tax Act


Income of other persons, included in the assessees total income.

Chapter VI of the Indian Income-tax Act


Aggregation of Income and Set-off and Carry Forward of Losses.

Chapter VII of the Indian Income-tax Act


Incomes forming part of Total Income on which no income-tax is payable.