Budget2008

Budget 2008: Short Term Cap Gains Up, Service Tax Extras and Relief

6 comments Written on February 29th, 2008 by
Categories: Budget2008

Short Term Capital Gains Tax up to 15%

The FM has rationalised this by saying it needs to be equal to dividend distribution tax, and to promote longer term investing.

STT will be a business expense, and Introduction of CTT

Securities Transaction Tax is no longer an advance tax, it's a set off against income, as a business expense. Doesn't affect the salaried, only those that file business income returns.

On the lines of STT, a tax called Commodities Transaction Tax will be paid by commodity traders

Stock Exchanges, Clearing houses, AMC services to ULIPs to pay service tax

Earlier, these services were out of the service tax net. Now they're in. Meaning you will probably need to pay a wee bit more on your transactions on stock exchanges. And please, for heaven's sake, don't buy ULIPs.

Banking Cash Tax OUT the door

I don't know who ever paid this tax, but they don't have to pay it any more. So withdraw as much cash as you like. Just make sure it's in your account first.

Service Tax limit up to Rs.10 lakhs

Nice for small companies like ours or for startups who are renting offices for less than 10 lakhs a year. You don't need to pay service tax until your turnover crosses Rs. 10 lakhs.

Additional Rs. 15K off for Medical Insurance

If you pay it for your parents.

Posted in Budget2008

Budget 2008: Income Tax Slabs Changed

5 comments Written on February 29th, 2008 by
Categories: Budget2008, IncomeTax
Update: Click here to find out how much you save on tax in [the year starting April] 2008. compared to 2007.

Just finished the Budget speech. Income tax slabs have been changed.

  • Upto Rs. 1.5 lakhs: No tax. Yay.
  • 1.5 to 3 lakhs: 10%.
  • 3 to 5 lakhs: 20%.
  • Above 5 lakhs: 30%.
For women the first slab ends at Rs. 1.8 lakhs and for senior citizens, Rs. 2.25 lakhs. Applicable from the April 1 2008 to March 31 2009.

Surcharge of 10% for earnings above Rs. 10 lakhs stays.

No change in the 3% cess either.

Savings:
1. Earn a net income (after all deductions, 80Cs etc.) of Rs. 2 lakhs and you'd save Rs. 4,000 in taxes. (4K vs. 9K)
2. For Rs. 4 lakhs, you save about Rs. 34,000 as compared to last year. (35K vs 69K)
3. For Rs. 8 lakhs, your saving is Rs. 44,000. (1.45L vs. 1.89L)
4. For Rs. 12 lakhs you save about 49K. (2.91L vs. 340L) [This has a 10% surcharge so savings are higher]

Higher incomes would save about the same - about 4K a month, approximately. Net effect of this is positive for people, and hugely positive for people earning below 5 lakhs (effectively half their taxes are saved).

[Will cover rest of the budget items separately]

Posted in Budget2008, IncomeTax