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| Home :: Sevices :: Taxation |
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| Under Section 80C of Income Tax Act 1961, an individual can claim deduction on premium paid for a maximum of Rs. 100,000 in each financial year. Amount deductible under Section 80C is equal to - |
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 | 100% of the "qualifying investment", which includes life insurance premium, or |
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| Rs. 100,000, whichever is lower. |
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| The tax benefits for premium paid per annum in case of pension plans are eligible for a maximum benefit of Rs. 100,000 under Section 80CCC. The said Section 80CCC limit also falls under the overall Section 80C limit of Rs. 100,000. The deduction aggregate, under Section 80C, 80CCC and 80CCD cannot exceed Rs. 100,000. |
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| Maturity proceeds on Life Insurance and Pension Policies |
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| The maturity proceeds of life insurance policies are exempt under section 10 (10D) of the Income Tax Act. Under pension plans, up to one-third of the maturity amount can be withdrawn in cash and the same is treated as tax-free. An annuity has to be purchased with the remaining two-third amount. Pension receipts from the same will be taxable in the hands of the assessee and taxed accordingly. |
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| Medical Insurance Premium |
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| The premium paid for medical insurance is eligible for deduction under Section 80D as follows- |
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| Premium paid or Rs. 15,000 whichever is lower. |
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| The aforesaid limit is Rs. 20,000 for senior citizens (i.e. one who is resident in India and who is at least 65 yrs of age at any time during the previous year). |
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| Tax Rules for Mutual Fund Investors* |
| As per the Finance Bill 2007 |
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Equity Schemes |
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Other Schemes |
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Short Term Capital Gains |
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Long Term Capital Gains |
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TDS |
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Short Term Capital Gains |
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Long Term Capital Gains |
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TDS |
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| Resident Individual / Individual / HUF |
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10% |
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Nil |
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Nil |
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As Per Slab |
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10% (20% with indexation) |
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Nil |
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| Partnership Firms |
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10% |
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Nil |
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Nil |
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30% |
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10% (20% with indexation) |
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Nil |
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| AOP / BOI |
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10% |
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Nil |
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Nil |
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As Per Slab |
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10% (20% with indexation) |
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Nil |
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| Domestic Companies |
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10% |
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Nil |
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Nil |
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30% |
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10% (20% with indexation) |
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Nil |
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| NRIs |
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10% |
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Nil |
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STCG 11.33% (10% + 10% Surcharge + 3% Education CESS); LTCG - Nil |
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As Per Slab |
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10% (20% with indexation) |
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STCG - 30% LTCG -20% (After providing for indexation) |
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Dividend Income |
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Dividend Distribution Tax |
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All Schemes |
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Equity Schemes |
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Liquid Schemes |
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Other Schemes |
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| Resident Individual / Individual / HUF |
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TAX FREE |
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Nil |
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28.33% (25% + 10% Surcharge + 3% Education CESS) |
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14.16% (12.5% + 10% Surcharge + 3% Education CESS) |
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| Partnership Firms |
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Tax Ffree |
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Nil |
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28.33% (25% + 10% Surcharge + 3% Education CESS) |
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22.66% (20% + 10% Surcharge + 3% Education CESS) |
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| AOP/BOI |
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Tax Free |
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Nil |
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28.33% (25% + 10% Surcharge + 3% Education CESS) |
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22.66% (20% + 10% Surcharge + 3% Education CESS) |
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| Domestic Companies |
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Tax Free |
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Nil |
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28.33% (25% + 10% Surcharge + 3% Education CESS) |
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22.66% (20% + 10% Surcharge + 3% Education CESS) |
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| NRIs |
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Tax Free |
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Nil |
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28.33% (25% + 10% Surcharge + 3% Education CESS) |
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14.16% (12.5% + 10% Surcharge + 3% Education CESS) |
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| Wealth Tax & Gift Tax for MF units |
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| Wealth Tax |
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MF units are exempt |
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| Gift Tax |
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MF units are exempt |
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| Income Tax provisions on clubbing for Gifts of Units |
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Dividend income |
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As dividend is tax free in hands of unit holders, hence no tax applicable on either Donee or Donor |
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ST / LT Capital Gain/ Loss |
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| If the transferee or donee is |
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| Spouse, Son's wife or minor son : gain/loss clubbed with that of the donor of units. |
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| Other independent donee : gain / loss treated as donee's gain/loss and not clubbed with that of donor. |
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| Securities Transaction Tax |
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Equity fund
0.25% of redemption value
Mutual Fund would also pay transaction tax wherever
applicable on the securities bought/sold |
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Other than Equity Fund
No STT on redemption value
exempt from transaction tax |
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| As per the provisions of section 94(7) of the Act, loss arising on transfer of units, which are acquired within a period of three months prior to the record date (date fixed by the fund for the purposes of entitlement of the unit holder to receive the income from units) and sold within a period of nine months after the record date, shall not be allowed to the extent of income distributed by the fund in respect of such units. |
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| As per the provisions of section 94(8) of the Act, where any units ("original unit") are acquired within a period of three months prior to the record date (date fixed by the fund for the purposes of entitlement of the unit holder to receive bonus units) and any bonus units are allotted (free of cost) based on the holding of the original units. The loss if any, on sale of the original units within a period of nine months after the record date, shall be ignored in the computation of the holder's taxable income. Such loss will however, be deemed to be the cost of acquisition of the bonus units. |
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