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All about taxation on Indian Financial Products for FY 2012 FY 2012 FY 2012 FY 2012 ---- 13131313

May 2012

ÉTICA WEALTH MANAGEMENT PVT LTD

INDEX

� Taxation System in India

� Total Income and Types of Assessee

� Income Tax Slab for FY 2012 - 13

� Capital Gains Taxation

� Intra-day Trading

� Taxation on Derivatives

� Dividend Distribution Tax (DDT)

� Securities Transaction Tax (STT)

� Tax Deducted at Source (TDS)

� Surcharge and Education Cess

� Mutual Fund Taxation

� Direct Equity Trading Taxation

� Debentures Taxation

� PMS Taxation

� Private Equity Taxation

� Gold Taxation

� Real Estate Taxation

� Insurance Taxation

� Section 80 C Investments

� Other Small Savings Taxation

� Wealth tax

� Sec 80 D - Health Insurance Premium

� Rajiv Gandhi Equity Savings Scheme

� Other Useful Sections

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TAXATION SYSTEM IN INDIA

Taxes Levied

Capital Gains TaxTax on Corporate IncomePersonal Income TaxTax IncentivesDouble Taxation Avoidance TreatyWealth Tax

Capital Gains TaxTax on Corporate IncomePersonal Income TaxTax IncentivesDouble Taxation Avoidance TreatyWealth Tax

Excise DutyService TaxCustom DutySecurities Transaction Tax

Excise DutyService TaxCustom DutySecurities Transaction Tax

Sales Tax / VATOther TaxesSales Tax / VATOther Taxes

Direct Taxes

Taxes Levied by State Governments and Local Bodies

India has a well-developed tax structure with clearly demarcated authority between Central and State Governments and local bodies.

Indirect Taxes

GROSS TOTAL INCOME:GROSS TOTAL INCOME:GROSS TOTAL INCOME:GROSS TOTAL INCOME:

As per the Income Tax Act Income is Chargeable to tax under five heads, those being:

1) Salaries

2) Income from House Property

3) Profits and Gains from Business or Profession

4) Capital Gains

5) Income from Other Sources

PERSON / TYPES OF ASSESSEE:PERSON / TYPES OF ASSESSEE:PERSON / TYPES OF ASSESSEE:PERSON / TYPES OF ASSESSEE:

1) An Individual. e.g. Mr. A or Mr. B.

2) A Hindu Undivided Family. e.g. Mr. A (HUF)

3) A Company. e.g. XYZ Pvt. Ltd. Or ABC Ltd.

4) A Partnership firm. e.g. M/s ABC or M/s XYZ and Co.

5) An Association of Persons or a Body of Individuals, whether incorporated or not. e.g. ABC Sangh or XYZ Dal.

6) A Local Authority. e.g. Pune Municipal Corporation

7) Every Artificial Juridical persons not falling within any of the above categories. (Residual Category).

TOTAL INCOME AND TYPES OF ASSESSEE

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AssesseeAssesseeAssesseeAssessee Total Income Total Income Total Income Total Income Tax rateTax rateTax rateTax rate

MenMenMenMen, , , , Women, HUF, Women, HUF, Women, HUF, Women, HUF, Association of Persons, Association of Persons, Association of Persons, Association of Persons, Body of IndividualsBody of IndividualsBody of IndividualsBody of Individuals

Rs. 0 - 2,00,000Rs. 2,00,001 - 5,00,000Rs. 5,00,001 - 10,00,000Rs. 10,00,001 or more

Nil10%20%30%

Senior CitizenSenior CitizenSenior CitizenSenior Citizen(60 years and above)(60 years and above)(60 years and above)(60 years and above)

Rs. 0 - 2,50,000Rs. 2,50,001- 5,00,000Rs. 5,00,001 - 10,00,000Rs. 10,00,001 or more

Nil10%20%30%

Very Senior CitizenVery Senior CitizenVery Senior CitizenVery Senior Citizen(80 years and above)(80 years and above)(80 years and above)(80 years and above)

Rs. 0 - 5,00,000Rs. 5,00,001 - 10,00,000Rs. 10,00,001 or more

Nil20%30%

INCOME-TAX SLAB FOR INDIVIDUALS FOR FY 12-13

Surcharge is not applicable

Education cess is applicable @ 3 percent on income-tax

CAPITAL GAINSA Capital Gain can be defined as any income generated by selling a capital investment . The 'gain' here is the difference between the price originally paid for the investment and money received upon selling it, and is taxable.

Nature of Asset (Capital Investment)Nature of Asset (Capital Investment)Nature of Asset (Capital Investment)Nature of Asset (Capital Investment) Short term capital assetsShort term capital assetsShort term capital assetsShort term capital assets Long term capital assetsLong term capital assetsLong term capital assetsLong term capital assets

Listed & Unlisted Shares, Securities (like Listed & Unlisted Shares, Securities (like Listed & Unlisted Shares, Securities (like Listed & Unlisted Shares, Securities (like Debentures, Govt.Debentures, Govt.Debentures, Govt.Debentures, Govt. securities) securities) securities) securities) listed on a listed on a listed on a listed on a recognized stock exchange in India, Mutual Funds recognized stock exchange in India, Mutual Funds recognized stock exchange in India, Mutual Funds recognized stock exchange in India, Mutual Funds andandandand Gold ETFGold ETFGold ETFGold ETF

Held Held Held Held lesslesslessless than 12monthsthan 12monthsthan 12monthsthan 12months Held Held Held Held more more more more than 12monthsthan 12monthsthan 12monthsthan 12months

Assets other than mentioned above i.e. sale of Assets other than mentioned above i.e. sale of Assets other than mentioned above i.e. sale of Assets other than mentioned above i.e. sale of property / Unlisted Debenturesproperty / Unlisted Debenturesproperty / Unlisted Debenturesproperty / Unlisted Debentures

Held Held Held Held lesslesslessless than 36 monthsthan 36 monthsthan 36 monthsthan 36 months Held Held Held Held more more more more than 36than 36than 36than 36 monthsmonthsmonthsmonths

Losses under the head “Capital Gains” cannot be set off against income under other heads of income whether salary, Business &profession, House Property or Income from other source.

Short-term capital loss can be set off against Short-term capital gain & long term capital gains. Long-term capital loss can be set off onlyagainst Long-term capital gain. If Long-term and short-term capital losses cannot be set off against the capital gain of that particular yearthen it can be carried forward for the next 8 consecutive years.

Loss from speculative business can be set off only against income from speculative business. In these cases, the net loss can be carriedforward for setoff against the profits and gains only from the respective business and the carry forward is allowed for only 4 years and not8 years.

Type of GainType of GainType of GainType of Gain Tax rate in case of transfer of Tax rate in case of transfer of Tax rate in case of transfer of Tax rate in case of transfer of assets subject to payment of assets subject to payment of assets subject to payment of assets subject to payment of STTSTTSTTSTT

Tax rate in case of transfer of Tax rate in case of transfer of Tax rate in case of transfer of Tax rate in case of transfer of other assetsother assetsother assetsother assets

LongLongLongLong----term capital gainsterm capital gainsterm capital gainsterm capital gains NILNILNILNIL 22.145 % with indexation22.145 % with indexation22.145 % with indexation22.145 % with indexation

ShortShortShortShort----term capital gainsterm capital gainsterm capital gainsterm capital gains 16.995 %16.995 %16.995 %16.995 % ProgressiveProgressiveProgressiveProgressive slab slab slab slab Rates Rates Rates Rates applicable to individualsapplicable to individualsapplicable to individualsapplicable to individuals

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INTRADAY TRADING

Profit/loss from Intra day day trading can be taxed either• Short term capital gain tax or • Speculative business income

Treatment of these type of transaction is depended on intention of the assesses ,quantum of transaction , frequency of transaction etc

Short term capital gain. Suppose if any individual’s intraday transaction is1-2 times in a week/month and that is also within his net worth value he can treat that income loss as short term capital gain.

Speculative Business IncomeIncase if he purchases in lots heavier than his net worth / volume of transaction is heavy then it can also be treated as speculative short selling

Profit from intraday trading

BusinessIncome

SpeculativeBusiness Incomei.e. Intraday TradingTax Rate: As per Tax Slab

Non – Speculativei.e. Derivatives (F&O) Tax Rate: As per Tax Slab

STCGTax Rate: 15%

Profit/Loss from Dealing in Shares (Intraday, contract settled without actual delivery of shares) is Speculation Profit/LossProfit/Loss from Dealing in Shares (Intraday, contract settled without actual delivery of shares) is Speculation Profit/LossProfit/Loss from Dealing in Shares (Intraday, contract settled without actual delivery of shares) is Speculation Profit/LossProfit/Loss from Dealing in Shares (Intraday, contract settled without actual delivery of shares) is Speculation Profit/LossProfit or loss from dealing in shares where contract settled otherwise than the actual delivery (Intraday) is speculation profit/loss. However if it is for hedging the existing position then it is not the speculation.

TAXATION ON DERIVATIVES

ProfitProfitProfitProfit orororor LossLossLossLoss fromfromfromfrom TradingTradingTradingTrading inininin DerivativesDerivativesDerivativesDerivatives (Stocks(Stocks(Stocks(Stocks &&&& Index)Index)Index)Index) isisisis treatedtreatedtreatedtreated asasasas businessbusinessbusinessbusiness profitprofitprofitprofit orororor loss,loss,loss,loss, notnotnotnot speculationspeculationspeculationspeculation eveneveneveneven thoughthoughthoughthough theretheretherethere isisisis nonononoactualactualactualactual deliverydeliverydeliverydelivery....

As per proviso (d) of section 43(5) profit or loss from a derivative transaction is treated as business profit or loss if following conditions aresatisfied:

a) It is carried out in a recognized stock exchange (as per section 2(f) of securities contract regulation Act 1956) and;b) It is carried out electronically on screen-based systems through a stock broker or sub-broker or such other intermediary;c) It is supported by the time stamped contract note issued by a broker, sub-broker or other intermediaryd) It is carried out in a notified stock exchange by the central government for this purpose (NSE & BSE is notified exchange)

Profit or loss from trading in currency future is business income/lossProfit or loss from trading in currency future is business income/lossProfit or loss from trading in currency future is business income/lossProfit or loss from trading in currency future is business income/loss

Profit or loss from trading in currency future is treated as business profit or loss if it satisfies the conditions (a) to (d) as discussed above.For the currency future NSE, BSE & MCX stock exchange ltd is the notified stock exchange.

Profit or loss from Commodity future is speculation profit/lossProfit or loss from Commodity future is speculation profit/lossProfit or loss from Commodity future is speculation profit/lossProfit or loss from Commodity future is speculation profit/loss

Profit or loss from trading in commodity future is treated as speculation profit or loss because it is not covered in the exceptions of thesection 43(5). Exceptions of section 43(5) covers only derivatives referred to in clause [(ac)] of section 2 of the Securities Contracts(Regulation) Act, 1956 (42 of 1956) while commodity future is regulated by Forward Market Commission (FMC) under Forward Contracts(Regulation) Act, 1952.

However if commodity future is booked by a person, to guard against loss through future price fluctuations in respect of his contracts foractual delivery of goods manufactured by him or merchandise sold by him, then it will not treated as speculation.

Stocks & Index FuturesStocks & Index FuturesStocks & Index FuturesStocks & Index Futures

Currency FuturesCurrency FuturesCurrency FuturesCurrency Futures

Commodity FuturesCommodity FuturesCommodity FuturesCommodity Futures

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DIVIDEND DISTRIBUTION TAX (DDT)

CategoriesCategoriesCategoriesCategories Equity Share Equity Share Equity Share Equity Share Equity Equity Equity Equity Funds Funds Funds Funds

Other Debt FundsOther Debt FundsOther Debt FundsOther Debt Funds Money Market / Money Market / Money Market / Money Market / Liquid FundsLiquid FundsLiquid FundsLiquid Funds

Individuals & HUFIndividuals & HUFIndividuals & HUFIndividuals & HUF 16.223%16.223%16.223%16.223% NilNilNilNil 13.52% * (12.5% + SC + Cess)13.52% * (12.5% + SC + Cess)13.52% * (12.5% + SC + Cess)13.52% * (12.5% + SC + Cess) 27.04% * (25% + SC + Cess)27.04% * (25% + SC + Cess)27.04% * (25% + SC + Cess)27.04% * (25% + SC + Cess)

Others / CorporatesOthers / CorporatesOthers / CorporatesOthers / Corporates 16.223%16.223%16.223%16.223% NilNilNilNil 32.45% * (30% + SC + Cess)32.45% * (30% + SC + Cess)32.45% * (30% + SC + Cess)32.45% * (30% + SC + Cess) 32.45% * (30% + SC + Cess)32.45% * (30% + SC + Cess)32.45% * (30% + SC + Cess)32.45% * (30% + SC + Cess)

NRIsNRIsNRIsNRIs 16.223%16.223%16.223%16.223% NilNilNilNil 13.52% * (12.5% + SC + Cess)13.52% * (12.5% + SC + Cess)13.52% * (12.5% + SC + Cess)13.52% * (12.5% + SC + Cess) 27.04% * (25% + SC + Cess)27.04% * (25% + SC + Cess)27.04% * (25% + SC + Cess)27.04% * (25% + SC + Cess)

* including a Surcharge of 5% and an additional education cess of 3% on the amount of tax

Dividends on shares or mutual fund received will not be taxable on the hands of theassessee. It is not a direct tax paid by the investor therefore, he cannot file forexemption from distribution tax. The dividend distribution tax will be payable bycompany / mutual fund.

SECURITY TRANSACTION TAX (STT)

Transaction in recognized stock exchangeTransaction in recognized stock exchangeTransaction in recognized stock exchangeTransaction in recognized stock exchange STT STT STT STT ---- RateRateRateRate Paid byPaid byPaid byPaid by

Sale of unit of an equity oriented fund to a Mutual FundSale of unit of an equity oriented fund to a Mutual FundSale of unit of an equity oriented fund to a Mutual FundSale of unit of an equity oriented fund to a Mutual Fund 0.25%0.25%0.25%0.25% SellerSellerSellerSeller

Delivery based transactions in equity shares or purchase and sell ofDelivery based transactions in equity shares or purchase and sell ofDelivery based transactions in equity shares or purchase and sell ofDelivery based transactions in equity shares or purchase and sell of units of an units of an units of an units of an equityequityequityequity----oriented fundoriented fundoriented fundoriented fund

0.10%0.10%0.10%0.10% Purchaser / SellerPurchaser / SellerPurchaser / SellerPurchaser / Seller

Non Non Non Non ---- delivery based transactions in equity shares delivery based transactions in equity shares delivery based transactions in equity shares delivery based transactions in equity shares 0.025%0.025%0.025%0.025% SellerSellerSellerSeller

Sale of an Futures in securities Sale of an Futures in securities Sale of an Futures in securities Sale of an Futures in securities 0.017%0.017%0.017%0.017% SellerSellerSellerSeller

Sale of an Option in SecuritiesSale of an Option in SecuritiesSale of an Option in SecuritiesSale of an Option in Securities 0.017%0.017%0.017%0.017% SellerSellerSellerSeller

Sale of anSale of anSale of anSale of an Option in Securities (Option in Securities (Option in Securities (Option in Securities (where the option is exercised)where the option is exercised)where the option is exercised)where the option is exercised) 0.125%0.125%0.125%0.125% PurchaserPurchaserPurchaserPurchaser

Gold ETF / Gold Bar / Gold FuturesGold ETF / Gold Bar / Gold FuturesGold ETF / Gold Bar / Gold FuturesGold ETF / Gold Bar / Gold Futures NilNilNilNil NANANANA

�STT is a tax being levied on all transactions done on the recognized stock exchanges. STT is applicable on purchase or sale of equity shares, derivatives, and equity oriented funds

�Switch and redemption of equity oriented mutual funds.

�It is not applicable in case of government securities, bonds, debentures and units of mutual fund other than equity oriented mutual fund.

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TAX DEDUCTED AT SOURCE (TDS)The tax deducted at the time of payment or redemption by the issuer of the security and deposited with theGovernment. This tax is deducted by the issuer from income payable to the investor and the investor getscredit of the same while filing his annual return of tax.

In cases where the Individual / HUF / AOP / BOI is not liable to pay tax on interest earned on FDs, he mayclaim an exemption from TDS by filing a Form 15H and 15AA for any other person with the issuing body ofthe security (whoever deducts TDS).

A TDS certificate is issued in the name of the investor mentioning the details of the transaction and the taxdeducted. The TDS certificate is commonly issued in Form16 A.

Categories of InvestorsCategories of InvestorsCategories of InvestorsCategories of Investors MF EquityMF EquityMF EquityMF Equity & Stocks & Stocks & Stocks & Stocks Listed on Listed on Listed on Listed on recognized stock exchangerecognized stock exchangerecognized stock exchangerecognized stock exchange

MF Debt and Unlisted stockMF Debt and Unlisted stockMF Debt and Unlisted stockMF Debt and Unlisted stock Interest on FDsInterest on FDsInterest on FDsInterest on FDs

Individuals & HUFIndividuals & HUFIndividuals & HUFIndividuals & HUF NilNilNilNil NilNilNilNil 10%*10%*10%*10%*

Domestic CompaniesDomestic CompaniesDomestic CompaniesDomestic Companies NilNilNilNil NilNilNilNil 20%*20%*20%*20%*

NRIsNRIsNRIsNRIs STCG STCG STCG STCG ---- 15%*15%*15%*15%*LTCG LTCG LTCG LTCG ---- NilNilNilNil

STCG STCG STCG STCG ---- 30%*30%*30%*30%*LTCG LTCG LTCG LTCG ---- 20%*20%*20%*20%*(After providing(After providing(After providing(After providing for indexation)for indexation)for indexation)for indexation)

30%* 30%* 30%* 30%*

*Additional education cess of 3% on the amount of tax

SURCHARGE AND EDUCATION TAXSurchargeSurchargeSurchargeSurcharge

�It is a charge in addition to a charge, or a tax added to the original tax.�Surcharge has been completely removed/abolished in case of individual and partnership firms.�Surcharge @ 5% is applicable only incase of Domestic Company (Any company registered in India –Private & Public) if total income exceeds Rs. 1 Cr

Investment CategoryInvestment CategoryInvestment CategoryInvestment Category SurchargeSurchargeSurchargeSurcharge raterateraterate Education CessEducation CessEducation CessEducation Cess

Individual/HUF/AOP/BOI Nil 3%

Domestic Company if total income is < 1 crore Nil 3%

Domestic Company if total income is > 1 crore 5% 3%

Education Education Education Education CessCessCessCess

To give a boost to primary education in the country and in conformity with the Common MinimumProgramme of the UPA government, a Education cess is levied on income tax, corporation tax, excise andcustoms duties and service tax. The education cess is to be paid on the tax payable (inclusive ofsurcharge, if any)

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EQUITY MF ORIENTED SCHEMEInvestor CategoryInvestor CategoryInvestor CategoryInvestor Category ShortShortShortShort Term Capital Term Capital Term Capital Term Capital

Gain Tax Gain Tax Gain Tax Gain Tax (holding period(holding period(holding period(holding period< 12 months)< 12 months)< 12 months)< 12 months)

LongLongLongLong Term Capital Term Capital Term Capital Term Capital Gain Tax Gain Tax Gain Tax Gain Tax (holding period (holding period (holding period (holding period > > > > 12months)12months)12months)12months)

Dividend IncomeDividend IncomeDividend IncomeDividend Income Dividend Dividend Dividend Dividend Distribution TaxDistribution TaxDistribution TaxDistribution Tax

TDSTDSTDSTDS

ResidentialResidentialResidentialResidentialIndividual/ HUF Individual/ HUF Individual/ HUF Individual/ HUF

15%* Nil Tax Free Nil Nil

Partnership Partnership Partnership Partnership Firms/AOP/BOIFirms/AOP/BOIFirms/AOP/BOIFirms/AOP/BOI

15%* Nil Tax Free Nil Nil

DomesticDomesticDomesticDomestic CompaniesCompaniesCompaniesCompanies 15% *$ Nil Tax Free Nil Nil

NRIsNRIsNRIsNRIs 15%* Nil Tax Free Nil STCG- 15%*

LTCG – Nil

TDS – Tax deducted at Source HUF – Hindu Undivided Family AOP- Association of Persons BOI- Body of Individual

*Additional education cess of 3% on the amount of tax$ Additional surcharge of 5% and an education cess of 3% on the amount of tax

DEBT MF ORIENTED SCHEME

Investor CategoryInvestor CategoryInvestor CategoryInvestor Category ShortShortShortShort Term Term Term Term Capital Gain Capital Gain Capital Gain Capital Gain TaxTaxTaxTax(holding period (holding period (holding period (holding period <12months)<12months)<12months)<12months)

LongLongLongLong Term Term Term Term Capital Gain Capital Gain Capital Gain Capital Gain TaxTaxTaxTax(holding period (holding period (holding period (holding period >>>>12 months)12 months)12 months)12 months)

Dividend Dividend Dividend Dividend IncomeIncomeIncomeIncome

Dividend Dividend Dividend Dividend Distribution Tax Distribution Tax Distribution Tax Distribution Tax ––––Other than Liquid Other than Liquid Other than Liquid Other than Liquid & Money Market & Money Market & Money Market & Money Market SchemesSchemesSchemesSchemes

Dividend Dividend Dividend Dividend Distribution Distribution Distribution Distribution Tax Tax Tax Tax ---- Liquid & Liquid & Liquid & Liquid & Money Market Money Market Money Market Money Market SchemesSchemesSchemesSchemes

TDSTDSTDSTDS

ResidentialResidentialResidentialResidentialIndividual/ HUF Individual/ HUF Individual/ HUF Individual/ HUF

As Per Tax Slab 10%(20% with indexation)*

Tax Free 13.519% 13.519% 13.519% 13.519% # 27.03827.03827.03827.038%# Nil

Partnership Partnership Partnership Partnership Firms/AOP/BOIFirms/AOP/BOIFirms/AOP/BOIFirms/AOP/BOI

30%* 10%(20% with indexation)*

Tax Free 32.445% 32.445% 32.445% 32.445% # 32.445% 32.445% 32.445% 32.445% # Nil

DomesticDomesticDomesticDomesticCompaniesCompaniesCompaniesCompanies

30%*$ 10%(20% with indexation)$^

Tax Free 32.445% 32.445% 32.445% 32.445% # 32.445% 32.445% 32.445% 32.445% # Nil

NRIsNRIsNRIsNRIs As Per Tax Slab 10%(20% with indexation)*

Tax Free 13.519% 13.519% 13.519% 13.519% # 27.03827.03827.03827.038%# STCG- 30%*LTCG- 20%*(After providingfor indexation)

TDS – Tax deducted at Source HUF – Hindu Undivided Family AOP- Association of Persons BOI- Body of Individual

*Additional education cess of 3% on the amount of tax$ Additional surcharge of 5% and an education cess of 3% on the amount of tax #DDT includes 5% surcharge and 3% education cess

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DIRECT EQUITY TRADING TAXATIONIf considered as If considered as If considered as If considered as

non non non non –––– business Incomebusiness Incomebusiness Incomebusiness IncomeIf considered as If considered as If considered as If considered as business Incomebusiness Incomebusiness Incomebusiness Income

Investor Category

Short Term Short Term Short Term Short Term Capital Gain Capital Gain Capital Gain Capital Gain TaxTaxTaxTax(<(<(<(< 12 mnths)12 mnths)12 mnths)12 mnths)

Long Term Long Term Long Term Long Term Capital Gain Capital Gain Capital Gain Capital Gain TaxTaxTaxTax(>(>(>(> 12 12 12 12 mnths)mnths)mnths)mnths)

Short Term Short Term Short Term Short Term Capital Gain Capital Gain Capital Gain Capital Gain TaxTaxTaxTax(<(<(<(< 12 mnths)12 mnths)12 mnths)12 mnths)

Long Term Long Term Long Term Long Term Capital Gain Capital Gain Capital Gain Capital Gain TaxTaxTaxTax(>(>(>(> 12 mnths)12 mnths)12 mnths)12 mnths)

Dividend Dividend Dividend Dividend IncomeIncomeIncomeIncome

Dividend Dividend Dividend Dividend Distribution Distribution Distribution Distribution TaxTaxTaxTax(Paid by the (Paid by the (Paid by the (Paid by the companies)companies)companies)companies)

TDSTDSTDSTDS

ResidentialIndividual/

HUF 15 %* NIL

As per tax slab

NILTax Free 16.609%#16.609%#16.609%#16.609%# NA

Partnership Firms/AOP/

BOI

15 %*NIL

As per tax slab

NIL Tax Free 16.609%#16.609%#16.609%#16.609%# NA

Domestic Companies

15 %*$ NILAs per tax

slabNIL Tax Free 16.609%#16.609%#16.609%#16.609%# NA

NRIs 15 %* NILAs per tax

slabNIL Tax Free 16.609%#16.609%#16.609%#16.609%#

STCG – 15%*LTCG - Nil

TDS – Tax deducted at Source HUF – Hindu Undivided Family AOP - Association of Persons BOI - Body of Individual

* Additional education cess of 3% on the amount of tax$ Additional surcharge of 5% # DDT includes 5% surcharge and 3% education cess

TAXATION ON DEBENTURES

Listed DebenturesListed DebenturesListed DebenturesListed Debentures Unlisted DebenturesUnlisted DebenturesUnlisted DebenturesUnlisted Debentures

Investor Category

Short Term Capital Short Term Capital Short Term Capital Short Term Capital Gain TaxGain TaxGain TaxGain Tax(<(<(<(< 12 mnths)12 mnths)12 mnths)12 mnths)

Long Term Capital Long Term Capital Long Term Capital Long Term Capital Gain TaxGain TaxGain TaxGain Tax(>(>(>(> 12 mnths)12 mnths)12 mnths)12 mnths)

Short Term Short Term Short Term Short Term Capital Gain TaxCapital Gain TaxCapital Gain TaxCapital Gain Tax(<(<(<(< 36 mnths)36 mnths)36 mnths)36 mnths)

Long Term Long Term Long Term Long Term Capital Gain Capital Gain Capital Gain Capital Gain TaxTaxTaxTax(>(>(>(> 36 mnths)36 mnths)36 mnths)36 mnths)

Interest Interest Interest Interest IncomeIncomeIncomeIncome

TDSTDSTDSTDS

ResidentialIndividual/ HUF

As per tax slab 11.33% As per tax slab 22.145% 22.145% 22.145% 22.145% 33.21% NA

Partnership Firms/AOP/ BOI

As per tax slab 11.33% As per tax slab22.145% 22.145% 22.145% 22.145%

33.21% NA

Domestic Companies

As per tax slab 11.33% As per tax slab 22.145% 22.145% 22.145% 22.145% 33.21% NA

NRIs As per tax slab 11.33% As per tax slab 22.145% 22.145% 22.145% 22.145% 33.21%STCG – 15%*LTCG - Nil

TDS – Tax deducted at Source HUF – Hindu Undivided Family AOP- Association of Persons BOI- Body of Individual

Premium receivable on redemption of debentures could be considered as interest income.

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PMS TAXATION

TDS – Tax deducted at Source HUF – Hindu Undivided Family AOP- Association of Persons BOI- Body of Individual

�Portfolio Manager is just an agent�Purchases & Sales is in name of client and therefore the tax liability is on the client�Detailed summary /account statement is furnished to the client by the PMS for his taxation purposeeach financial year

�Incase the PMS has generated STCG and the income has not been distributed to the investor in that financial year, he is still liable to pay tax for that particular financial year

Investor Category

Short Term Short Term Short Term Short Term Capital Gain TaxCapital Gain TaxCapital Gain TaxCapital Gain Tax

(holding period <(holding period <(holding period <(holding period <12 mnths)12 mnths)12 mnths)12 mnths)

Long Term Long Term Long Term Long Term Capital Gain TaxCapital Gain TaxCapital Gain TaxCapital Gain Tax(holding period >(holding period >(holding period >(holding period >

12 mnths)12 mnths)12 mnths)12 mnths)

Dividend Dividend Dividend Dividend IncomeIncomeIncomeIncome

DDTDDTDDTDDT(Paid by the (Paid by the (Paid by the (Paid by the companies)companies)companies)companies)

TDSTDSTDSTDS

ResidentialIndividual/ HUF

15 %* NIL Tax Free 16.223%#16.223%#16.223%#16.223%# Nil

Partnership Firms/AOP/ BOI

15 %* NIL Tax Free 16.223%#16.223%#16.223%#16.223%# Nil

Domestic Companies

15 %*$ NIL Tax Free 16.223%#16.223%#16.223%#16.223%# Nil

NRIs 15 %* NIL Tax Free 16.223%#16.223%#16.223%#16.223%#STCG – 15%*LTCG – Nil

*Additional education cess of 3% on the amount of tax$ Additional surcharge of 5% and an education cess of 3% on the amount of tax #DDT includes 5% surcharge and 3% education cess

PRIVATE EQUITY TAXATION

UnlistedUnlistedUnlistedUnlisted Listed on recognized stock Listed on recognized stock Listed on recognized stock Listed on recognized stock exchangeexchangeexchangeexchange

Type of Instrument

Short Term Short Term Short Term Short Term Capital Gain Capital Gain Capital Gain Capital Gain TaxTaxTaxTax(<(<(<(< 12 12 12 12 mnths)mnths)mnths)mnths)

Long Term Long Term Long Term Long Term Capital Gain Capital Gain Capital Gain Capital Gain TaxTaxTaxTax(>(>(>(> 12 12 12 12 mnths)mnths)mnths)mnths)

Short Term Short Term Short Term Short Term Capital Gain Capital Gain Capital Gain Capital Gain TaxTaxTaxTax(<(<(<(< 12 mnths)12 mnths)12 mnths)12 mnths)

Long Term Long Term Long Term Long Term Capital Capital Capital Capital Gain TaxGain TaxGain TaxGain Tax(>(>(>(> 12 12 12 12 mnths)mnths)mnths)mnths)

Dividend Dividend Dividend Dividend IncomeIncomeIncomeIncome

Dividend Dividend Dividend Dividend Distribution Distribution Distribution Distribution TaxTaxTaxTax(Paid by the (Paid by the (Paid by the (Paid by the companies)companies)companies)companies)

Interest Interest Interest Interest IncomeIncomeIncomeIncome(paid by (paid by (paid by (paid by Investor)Investor)Investor)Investor)

Equity Shares

As per tax slab

20%* with 20%* with 20%* with 20%* with indexationindexationindexationindexation

15%* NIL Tax Free 16.223%# NA

�Benefit of indexation is available for LTCG in case of Equity shares but not in debentures�STCG and LTCG is paid by the investor �Purchases & Sales is in name of the client and therefore the tax liability is on the client�Detailed summary /account statement is furnished to the client by the PE vehicle for his taxation purpose each financial year

*Additional education cess of 3% on the amount of tax# DDT includes 5% surcharge and 3% education cess

Income earned by a domestic SEBI registered VCF (whether a trust or a company) from an investment in a venture capitalundertaking is exempt from tax. Such VCFs have been accorded a “pass through” status, i.e., the investors in the VCF aredirectly taxed on any income distributed by the VCFs as though the investors have made direct investments in the portfoliocompanies. However, to avail this “pass through” status, the VCF’s investments must be made in domestic companies inthe nine specified sectors only

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GOLD TAXATIONInvestment modeInvestment modeInvestment modeInvestment mode STCG STCG STCG STCG (holding period (holding period (holding period (holding period < 12months)< 12months)< 12months)< 12months) LTCG LTCG LTCG LTCG (holding period (holding period (holding period (holding period >12months)>12months)>12months)>12months)

Gold ETFsGold ETFsGold ETFsGold ETFs As per Tax slab 10% (20% with indexation)

While gains are taxed, a loss in gold ETF will be available as a set-off too. The only restriction is that a long-term capital losswill be available for a set-off against a long-term capital gain only, while a short-term capital loss can be set off eitheragainst a long-term capital gain or a short-term capital gain. Short-term capital gains can be adjusted against short-termcapital losses.

Tax liability arising from long-term capital gains, on the sale of gold or other jewelry can be optimised by investing in aresidential house under Section 54F or any other specified assets like capital gains bonds under Section 54EC.

STCG STCG STCG STCG (holding period (holding period (holding period (holding period < 36months)< 36months)< 36months)< 36months) LTCG LTCG LTCG LTCG (holding period (holding period (holding period (holding period >36months)>36months)>36months)>36months)

Gold Bar / JewelleryGold Bar / JewelleryGold Bar / JewelleryGold Bar / Jewellery As per Tax slab 20% with indexation

STCG STCG STCG STCG (holding period (holding period (holding period (holding period < 36months)< 36months)< 36months)< 36months)

Gold Gold Gold Gold ---- FuturesFuturesFuturesFutures As per Tax slab

StampStampStampStamp DutyDutyDutyDuty VATVATVATVAT STCG STCG STCG STCG (holding period (holding period (holding period (holding period < 36months)< 36months)< 36months)< 36months)

LTCG LTCG LTCG LTCG (holding period (holding period (holding period (holding period >36months)>36months)>36months)>36months)

NSE ENSE ENSE ENSE E----Gold Gold Gold Gold Rs 1 per Rs 1 Lakh of Transaction

1% on the transaction value of E-Gold units in the case of delivery

As per Tax slab 20% with indexation

REAL ESTATE TAXATION

Tax on long term capital gain can be avoided if the sale relates to a property other than one residentialaccommodation and reinvested in any residential property within a period of 1 year before or 2 years after thedate of transfer (Section 54 F)

Long term capital gain is exempt if the capital gains are invested within 6 months in 3 year bonds issued byREC or NHAI and that investment is retained for three years.

Investment cannot exceed Rs 50 lakhs - section 54EC of Income Tax Act.

In Budget FY 12-13, under Section 54 (GB) -

Any long term gains arising to an Individual or HUF, from the sale of a residential house property or a plot of land will be exempt, if the net consideration received on the sale of house property or plot of land is invested in equity of a new start up SME company in the manufacturing sector.

STCG STCG STCG STCG ( holding period ( holding period ( holding period ( holding period < 36 months)< 36 months)< 36 months)< 36 months)

LTCG LTCG LTCG LTCG (holding period (holding period (holding period (holding period > 36 months)> 36 months)> 36 months)> 36 months)

Real EstateReal EstateReal EstateReal Estate As per Tax slab 20% with indexation

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INSURANCE TAXATION

At the time of Withdrawal & Surrender

Interest & Dividend

On Maturity On Death

Traditional PlansE.g.-Money Back Plan, Endowment Plan

Tax free - After 2

completed policy years

NA Tax Free Tax Free

ULIPs Tax free - After 2

completed policy years

NA Tax Free Tax Free

Pensions Plans As per tax Slab NA One third of the

commuted Fund

Value is tax free,

2/3rd is taxable as

per tax slab.

Tax Free

However any sum (not including the premium paid by the assessee) receivedunder an insurance policy issued on or after the 1st day of April, 2003 in respectof which the premium payable for any of the years during the term of the policyexceeds 20% of the actual capital sum assured will no longer be exempted

ALL ABOUT SECTION 80 C

� Section 80C of the Income Tax Act allows certain investments and expenditure to be tax-exempt. Thetotal limit under this section is Rs. 100,000 (Rupees One lakh) this is irrespective of how much you areearn and under which tax bracket you fall. Investments that fall under Section 80C are listed as below.

� Employees Provident Fund

� Public Provident Fund

� Life Insurance premium (Only if yearly premium is less than 10% of Sum Assured)

� Pension plans

� Equity Linked Saving Schemes (ELSS) of mutual funds

� Bank Fixed Deposits

� National Savings Certificate

� Senior Citizens Savings Scheme (SCSS)

� New Pension Scheme (NPS)

� Besides these investments, the payments towards the principal amount of your home loan are alsoeligible for an income deduction.

� All the above must be made from the current year's earnings and not past earnings. So if you are payingtax for the financial year 2012-13, then your investments must be made from earnings during thisperiod.

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TAXATION FOR SEC 80 C INVESTMENTS

Instrument Instrument Instrument Instrument Tax TreatmentTax TreatmentTax TreatmentTax Treatment

Employees Provident Fund &Employees Provident Fund &Employees Provident Fund &Employees Provident Fund &Public ProvidentPublic ProvidentPublic ProvidentPublic Provident FundFundFundFund

Contribution, Return and Maturity Proceeds are all tax exempt (EEE)Contribution, Return and Maturity Proceeds are all tax exempt (EEE)Contribution, Return and Maturity Proceeds are all tax exempt (EEE)Contribution, Return and Maturity Proceeds are all tax exempt (EEE)

Mutual Funds Mutual Funds Mutual Funds Mutual Funds –––– ELSSELSSELSSELSS Contribution, Return, Dividends and Redemption Proceeds are all tax Contribution, Return, Dividends and Redemption Proceeds are all tax Contribution, Return, Dividends and Redemption Proceeds are all tax Contribution, Return, Dividends and Redemption Proceeds are all tax exempt (EEE)exempt (EEE)exempt (EEE)exempt (EEE)

Senior Citizen Savings SchemeSenior Citizen Savings SchemeSenior Citizen Savings SchemeSenior Citizen Savings Scheme Interest taxableInterest taxableInterest taxableInterest taxable

Fixed Deposit >Fixed Deposit >Fixed Deposit >Fixed Deposit > 5 years 5 years 5 years 5 years Interest taxableInterest taxableInterest taxableInterest taxable

5 year Post Office Time Deposits5 year Post Office Time Deposits5 year Post Office Time Deposits5 year Post Office Time Deposits Interest taxableInterest taxableInterest taxableInterest taxable

National Savings CertificateNational Savings CertificateNational Savings CertificateNational Savings Certificate Interest taxableInterest taxableInterest taxableInterest taxable

New Pension Scheme (NPS)New Pension Scheme (NPS)New Pension Scheme (NPS)New Pension Scheme (NPS) MaturityMaturityMaturityMaturity Proceeds taxableProceeds taxableProceeds taxableProceeds taxable

TAXATION FOR OTHER SMALL SAVINGS SCHEMES

Instrument Instrument Instrument Instrument Tax TreatmentTax TreatmentTax TreatmentTax Treatment

PostPostPostPost Office Monthly Income SchemeOffice Monthly Income SchemeOffice Monthly Income SchemeOffice Monthly Income Scheme Interest income is fully taxableInterest income is fully taxableInterest income is fully taxableInterest income is fully taxable

KisanKisanKisanKisan VikasVikasVikasVikas PatraPatraPatraPatra (now discontinued)(now discontinued)(now discontinued)(now discontinued) Interest income is fully taxableInterest income is fully taxableInterest income is fully taxableInterest income is fully taxable

Post Office Recurring DepositPost Office Recurring DepositPost Office Recurring DepositPost Office Recurring Deposit Interest taxableInterest taxableInterest taxableInterest taxable

8% GOI Taxable Bonds8% GOI Taxable Bonds8% GOI Taxable Bonds8% GOI Taxable Bonds Interest income is fully taxableInterest income is fully taxableInterest income is fully taxableInterest income is fully taxable

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WEALTH TAX

Wealth tax is leviable on specified assets at 1 percent on the value of the net assets on

the valuation date (March 31) plus surcharge and cess as held by the assessee (net of

debts incurred in respect of such assets) in excess of the basic exemption of INR

30,00,000.00

RAJIV GANDHI EQUITY SAVINGS SCHEME

� New Equity investor

� Maximum investment amount – Rs 50,000

� Taxable income to be below Rs 10 Lakhs

� 50% tax benefit on the investment amount

� Investment may be subject to 1 or 3 yr Lock-in period

� Guidelines awaited

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SECTION 80D – MEDICAL INSURANCE PREMIUM

If the Assessee is a Senior Citizen then tax exemption on Premium is extended to Rs 20,000

� Section 80DDSection 80DDSection 80DDSection 80DD

� Exemption given for Expenditure made for a disabled dependant towards Medical Treatment / Training/Rehabilitation. It also includes the LIC/Insurance premium paid towards maintenance of such dependant.

� Maximum deduction allowed is Rs. 50,000/Rs. 50,000/Rs. 50,000/Rs. 50,000/---- in case of normal disability and Rs. 1 Rs. 1 Rs. 1 Rs. 1 LakhLakhLakhLakh in case of severe disability.

� SectionSectionSectionSection 80DDB80DDB80DDB80DDB

� Exemption given for expenditure incurred on specified disease or ailments such as cancer/aids.� Maximum deduction allowed is Rs. 40,000/-. In case of Senior Citizens, maximum deduction

allowed is Rs. 60,000/-

Self, Spouse and Self, Spouse and Self, Spouse and Self, Spouse and ChildrenChildrenChildrenChildren

Parents (below 56 Parents (below 56 Parents (below 56 Parents (below 56 years)years)years)years)

Parents (above 56 Parents (above 56 Parents (above 56 Parents (above 56 years)years)years)years)

AssesseeAssesseeAssesseeAssessee Rs 15,000 (includes preventive Health-check up to Rs 5,000)

Rs 15,000 Rs 20,000

OTHER USEFUL SECTIONS

� Section 80ESection 80ESection 80ESection 80E

Deduction is allowed for repayment of interestinterestinterestinterest component of Higher Education loan. All education after Class 12 is allowed, either vocational or Fulltime. But should be from a school/institute/university recognized by the government.

� Section 80GSection 80GSection 80GSection 80G

� Contribution to exempt charities – 25/50/75/100% depending on the charity and as per approval� 100% exemption on donation to political parties

� SectionSectionSectionSection 80U80U80U80U

� Deduction upto Rs. 50,000/Rs. 50,000/Rs. 50,000/Rs. 50,000/---- is allowed in case of Permanent Disability.� In case of Permanent Disability exceeding 80%, maximum deduction allowed is Rs. 75,000/Rs. 75,000/Rs. 75,000/Rs. 75,000/----.

� Section 24(1)(vi)Section 24(1)(vi)Section 24(1)(vi)Section 24(1)(vi)

Housing loan interest. Maximum Investment Limit – Rs. 1,50,000 (for loans taken after 1 April 1999, for loans before that Maximum Investment Limit 30,000).

� Savings Bank Interest Savings Bank Interest Savings Bank Interest Savings Bank Interest ---- No tax will be charged on interest earned on balance in savings bank account subject to a maximum of Rs. 10,000 per year.

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THANK YOUTHANK YOUFor any further information, please contact:For any further information, please contact:For any further information, please contact:For any further information, please contact:

Mr. Virendra Kothari, CAIA, CFPMr. Virendra Kothari, CAIA, CFPMr. Virendra Kothari, CAIA, CFPMr. Virendra Kothari, CAIA, CFPM:+91 98677 42732E: virendra.kothari @eticawealth.com

Ética Wealth Management Private LimitedÉtica Wealth Management Private LimitedÉtica Wealth Management Private LimitedÉtica Wealth Management Private Limited501, T-39 Sunshine Building,Shastri Nagar,Lokhandwala Complex Road,Andheri West,Mumbai – 400 053Landmark: Suburban Diagnostics, Near Lokhandwala Circle

T: +91 22 2632 9644+91 22 4264 8740

E: info@eticawealth.com

DIRECT TAX CODE – PROPOSED CHANGES

� Proposed Income Tax slabs

� HRA, LTA and Medical Allowance to be fully taxable

� No Only half of Short-term capital gains will be taxed

� EET system to be introduced for all investments

� All gains to be added to the total income and taxed as per the income slab of the investor.

� Indexation benefit to be allowed

� Tax Savings instruments limit to remain at Rs 1,00,000 ; Additional Rs 50,000 for pure life insurance

� Investments in ELSS, ULIPs, Senior Citizen Savings Scheme, Bank Fixed Deposits, NSC will not be considered for the purpose of tax saving exemption

� EEE to be allowed for provident funds (GPF, EPF and PPF), NPS, Retirement benefits (gratuity, leave encashment, etc), pure life insurance products & annuity schemes.

� Surcharge and education cess are abolished.

� Max limit for medical reimbursements has been increased to 50,000 per year from current 15,000 limit.

AssesseeAssesseeAssesseeAssessee Total Income Total Income Total Income Total Income Tax rateTax rateTax rateTax rate

Men & WomenMen & WomenMen & WomenMen & Women Rs. 0 – 2,00,000Rs. 2,00,001 – 5,00,000Rs. 5,00,001 – 10,00,000Rs. 10,00,001 or more

Nil10%20%30%