Direct tax code impact on ELSS

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drsambu123

Active Member
#1
#1
On 3-6-10 From Economic times- DIRECT TAX CODE So now you can invest only in PPF, EPF, life insurance, superannuation funds and NPS. Besides you can also claim tax benefits on your children's education. But no more tax benefits for investing in NSCs, Senior Citizens Savings Scheme, tax-saving bank FDs and ELSS.
I read this news from economic times of india. So investing in tax saving funds(ELSS) may not be included as an tax saving option in future???? i want comment from all of u.....
 
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nikrod

Active Member
#2
#2
drsambu123 said:
On 3-6-10 From Economic times- DIRECT TAX CODE So now you can invest only in PPF, EPF, life insurance, superannuation funds and NPS. Besides you can also claim tax benefits on your children's education. But no more tax benefits for investing in NSCs, Senior Citizens Savings Scheme, tax-saving bank FDs and ELSS.
I read this news from economic times of india. So investing in tax saving funds(ELSS) may not be included as an tax saving option in future???? i want comment from all of u.....
Click to expand...


Yes, as of now it seems that ELSS will not be tax free in DTC. I think our ELSS investments that are made under current tax law will still be tax free after completion of 3 years.

Awaiting comments from tax experts.
 
D

drsambu123

Active Member
#3
#3
Thanks Nikrod. For this tax year anyhow i have started my SIP in Tax saver fund(HDFC tax saver). I dont know what to do for next year if tax saving funds were not included under 80 C.. basically i dont like PPF, NSC etc for their low return and long lock in...
i need comment from tax experts
 
A

arvindthakur79

New Member
#4
#4
New Tax Code recomentations will boost up the Mutual Funds Selling.
An investor must invest in dependable ELSS on basiss on past performance etc.

Arvind Thakur
ARN-49611
Mutual funds Advisor.
 
N

nikrod

Active Member
#5
#5
arvindthakur79 said:
New Tax Code recomentations will boost up the Mutual Funds Selling.
An investor must invest in dependable ELSS on basiss on past performance etc.

Arvind Thakur
ARN-49611
Mutual funds Advisor.
Click to expand...
Don't think DTC will boost MF sell. Long term capital gains will be taxable according to investor tax bracket. LTCG being nil for investments after 1 year, DTC poses huge setback to Equity investments.
 
M

magnet

Active Member
#7
#7
Yes ELSS stuff will go.....But what clarity came is those investments made prior too DTC in EEE system will remain same....Plus pf,ppf and nps will be under EEE

But ya LTCG will come in stocks and profit will be added to income and taxed as it comes under slab.But ya some standard deduction stuff being given some sort of stuff for old investments ..

Like say i had bought reliance share at 100 rs 1 share 10 years bak..And today that share is valuing 1100 per share.....Say a standard deduction of 50%(this is my assumption of 50 no such number have been given) will be given on gain...so 1100-100=1000 profit...50% deduction means 500...Now that 500 will be added to my income...And if i fall under 20 or 30% tax bracket it will be taxed accroding to that

Old ELSS will be tax free ..new elss will be taxed so no 3 years lock in as both short and long will be taxed so i guess the term will die down.....and for shares standard deduction and than taxed...Indexation term might go from code....
 
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nikrod

Active Member
#8
#8
magnet said:
Yes ELSS stuff will go.....But what clarity came is those investments made prior too DTC in EEE system will remain same....Plus pf,ppf and nps will be under EEE

But ya LTCG will come in stocks and profit will be added to income and taxed as it comes under slab.But ya some standard deduction stuff being given some sort of stuff for old investments ..

Like say i had bought reliance share at 100 rs 1 share 10 years bak..And today that share is valuing 1100 per share.....Say a standard deduction of 50%(this is my assumption of 50 no such number have been given) will be given on gain...so 1100-100=1000 profit...50% deduction means 500...Now that 500 will be added to my income...And if i fall under 20 or 30% tax bracket it will be taxed accroding to that

Old ELSS will be tax free ..new elss will be taxed so no 3 years lock in as both short and long will be taxed so i guess the term will die down.....and for shares standard deduction and than taxed...Indexation term might go from code....
Click to expand...
Yes Indexation is proposed to be done away with. I think the standard deduction in case of LTCG will be variable and change according to ones tax slab. Let's see what is final outcome.

The definition of LTCG is chaged from current one year. It would now be one year after the end of the financial year of investment. That means LTCG would be applicable after 2 years (730 days) for investments done on 1st April and 366 days for investments done on 31st march.

One cheerful note for MF investors would be that even debt fund investments are proposed to offer tax benefits. Still not clear on the same.
 
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drsambu123

Active Member
#9
#9
nikrod said:
Yes Indexation is proposed to be done away with. I think the standard deduction in case of LTCG will be variable and change according to ones tax slab. Let's see what is final outcome.

The definition of LTCG is chaged from current one year. It would now be one year after the end of the financial year of investment. That means LTCG would be applicable after 2 years (730 days) for investments done on 1st April and 366 days for investments done on 31st march.

One cheerful note for MF investors would be that even debt fund investments are proposed to offer tax benefits. Still not clear on the same.
Click to expand...
Anyhow if they still keep LTCG advantage for amounts invested for more than 2 years, it will not affect much since most of the time our investment horizon is long term( atleast 3-5 years)
We hope DTC should not bring drastic changes and affect the interst of long term mutual fund investors .
 
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drsambu123

Active Member
#10
#10
My question is if tax saving funds are not included under 80 c(as per dtc?) what is the best alternate to save tax ...
If one falls in 10 % slab we may pay the tax and use that 90 % of money to invest in equity diversified fund rather than puttting the money in ppf and wait for 20 years- it may be more beneficial than investing in ppf or other debt instruments [ just i am telling out of irritation]. But if we fall under 20 or 30 % slab no other go we have to buy some idiotic stuff or go for home loan if not obtained already
 
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