SIMPLE TAX INDIA

Stock Market Meltdown Humor

noreply@blogger.com (CA RAJAN GUPTA) — Wed, 26 Nov 2008 17:56:00 +0000

Everything about the financial crisis need not be depressing. People are finding humour in the middle of the stocks meltdown. Mobile phones are abuzz with funny SMSs doing the rounds about the financial storm and the stocks crash. Some samples :

They told me to invest in stocks for my old age. I did and it worked wonderfully ,within a week I started looking like an old man.
Markets are set to regain 20,000 mark... but only if Sensex, Nikkei and Hang Seng are put together at 5,000 points each, NYSE Composite at 1,000 points, Dow Jones Industrial Average at 3,500 and Nasdaq at 500 points.
Black Mondays used to be a once-in-a-lifetime event. Now they are coming along more regularly than Delhi Metro trains.
Assets are written on the left and liabilities on the right side. But, there is nothing is right and on the left nothing left on the right .
Stock market losses to be treated as tax deducted at source: Finance Minister P Chidambaram.
Blockbuster Saare Zameen Par enters into 10th straight month at BSE and NSE multiplexes.
Markets are the places where two types of people meet up in the morning -- those with experience and those with money. Towards the end of the day, they exchange their assets and go home.
P/E ratio is the percentage of investors wetting their pants as the market keeps crashing.
The market may be bad, but I slept like a baby last night. I woke up every hour and cried.
October is one of the peculiarly dangerous months to invest in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.
How many stockbrokers does it take to change a light bulb? Answer is two -- One to take out the bulb and drop it, and the other to try and sell it before it crashes.

New Definiations:

PE - Plunge Endless
EBITDA- Exit Before It Tumbles Down Again
QIB - Quixotic Indian Blunder
HNI - Has No Idea
FII - Furious Impoverished Investors
PMS - Premeditated Scam
SIP - Suicide by Investing Patiently
Fund Manager - Last year's ace stock picker now locked up in an asylum
Investor - Someone who is broke
Broker - Worse off than an investor
Correction - The next day after you bought shares
Momentum buying - The fine art of buying high and selling low
Value buying - The art of buying low and selling even lower

record your view in comment section.

WHY I DECIDED TO BECOME A CA-DIFF VIEWS

SERVICE CHARGES OF ALL BANKS (LINKS)

noreply@blogger.com (CA RAJAN GUPTA) — Sat, 22 Nov 2008 13:40:00 +0000

Dear Friends,
I have collected website link from which you can know service charges by the respective banks .By visiting this sites you can know what banks are charging and what they are promising .

Links to banks' webpage on service charges and fees

1	State Bank of India
2	State Bank of Hyderabad
3	State Bank of Indoren
4	State Bank of Mysore
5	State Bank of Patiala
6	State Bank of Saurashtra
7	State Bank of Travancore
8	Andhra Bank
9	Bank of Baroda
10	Bank of India
11	Bank of Maharashtra
12	Canara Bank
13	Corporation Bank
14	Dena Bank
15	Indian Bank
16	Indian Overseas Bank
17	Oriental Bank of Commerce
18	Punjab National Bank
19	Punjab and Sind Bank
20	Syndicate Bank
21	Union Bank of India
22	United Bank of India
23	Vijaya Bank
24	Uco Bank
B PRIVATE SECTOR BANKS
25	Bharat Overseas Bank Ltd.
26	Catholic Syrian Bank Ltd.
27	Development Credit Bank Ltd.
28	Federal Bank Ltd.
29	Karnataka Bank Ltd.
30	Lord Krishna Bank Ltd.
31	Ratnakar Bank Ltd.
32	Tamilnad Mercantile Bank Ltd.
C NEW PRIVATE SECTOR BANKS
33	ICICI Bank Ltd.
34	HDFC Bank Ltd.
35	Indusind Bank Ltd.
36	UTI Bank Ltd.
37	Yes Bank.
38	Kotak Mahindra Bank
D LOCAL AREA BANKS
39	Capital Local Area Bank Ltd.
E FOREIGN BANKS
40	ABN AMRO N.V.
41	Citibank N.A.
42	Rupee Co-op.Bank Ltd.

UNCLAIMED DEPOSIT / INOPERATIVE ACCOUNT IN BANK:WHAT YOU SHOULD KNOW?

noreply@blogger.com (CA RAJAN GUPTA) — Sun, 09 Nov 2008 17:42:00 +0000

Dear Friends,

Normally many of us have more than one account in various banks/branches .And over a period of time some accounts goes in operative though they have minimum balance as required by the banks but It has widely seen that banks have charged some charges against these account and in some cases charges are too heavy to write off all the amount lying in the bank account.but is it in order ?or Banks are just doing incorrect entries which are not supported by relevant rules.The truth is that RBI has issued instruction to transfer accounts in inoperative category due to Inherent risk involved in these type of accounts ,but on the reverse bank employee are using this as against the customer and saying that you can use this account as this has been transferred to inoperative or in some case account has been closed after being transferred to inoperative and then by charging unauthorize charges has been written off .As per RBI the customer should not be inconvenienced as a result of extra care taken by the bank.but when we normally visit a branch where our account has been transferred to in operative list ,first we will be told that you can not operate your account as it has been transferred to inoperative category.so Bank staff do not deal us in very pleased manner so we should know what are our rights in the regards so I have reproduced the relevant circular for your ready reference.

RBI / 2008-09 / 138
DBOD.No.Leg. BC. 34 /09.07.005/2008-09

August 22, 2008

All Scheduled Commercial Banks
(Excluding RRBs)

Dear Sir,

Unclaimed Deposits / Inoperative Accounts in banks

Please refer to our Circular DBOD.No.Com.BC.109/C.408/A-77 dated October 1, 1977 wherein banks were advised that deposit accounts which have not been operated upon over a period, say two years should be segregated and maintained in separate ledger/s. Further, banks were also advised vide our circular no. DBOD.No.Leg.BC.45/C.466 (IV) / 89 dated November 15, 1989 that they should ensure that their branches follow-up accounts which remained inoperative for a year or so by sending suitable advices to the customers and if the said letters are returned undelivered, they may immediately be put on enquiry to find out the whereabouts of customers or their legal heirs in case they are deceased.

2. In view of the increase in the amount of the unclaimed deposits with banks year after year and the inherent risk associated with such deposits, it is felt that banks should play a more pro-active role in finding the whereabouts of the account holders whose accounts have remained inoperative. Further several complaints have been received in respect of difficulties faced by the customers on account of their accounts having been classified as inoperative. Moreover, there is a feeling that banks are undeservedly enjoying the unclaimed deposits, while paying no interest on it. Keeping these factors in view, we have reviewed the above instructions issued by us and advise banks to follow the instructions detailed below while dealing with inoperative accounts:

(i) Banks should make an annual review of accounts in which there are no operations (i.e. no credit or debit other than crediting of periodic interest or debiting of service charges) for more than one year. The banks may approach the customers and inform them in writing that there has been no operation in their accounts and ascertain the reasons for the same. In case the non operation in the account is due to shifting of the customers from the locality, they may be asked to provide the details of the new bank accounts to which the balance in the existing account could be transferred.

(ii) If the letters are returned undelivered, they may immediately be put on enquiry to find out the whereabouts of customers or their legal heirs in case they are deceased.

(iii) In case the whereabouts of the customers are not traceable, banks should consider contacting the persons who had introduced the account holder. They could also consider contacting the employer / or any other person whose details are available with them. They could also consider contacting the account holder telephonically in case his telephone number / Cell number has been furnished to the bank. In case of Non Resident accounts, the bank may also contact the account holders through e-mail and obtain their confirmation of the details of the account.

(iv) A savings as well as current account should be treated as inoperative / dormant if there are no transactions in the account for over a period of two years.

(v) In case any reply is given by the account holder giving the reasons for not operating the account, banks should continue classifying the same as an operative account for one more year within which period the account holder may be requested to operate the account. However, in case the account holder still does not operate the same during the extended period, banks should classify the same as inoperative account after the expiry of the extended period.

(vi) For the purpose of classifying an account as ‘inoperative’ both the type of transactions i.e. debit as well as credit transactions induced at the instance of customers as well as third party should be considered. However, the service charges levied by the bank or interest credited by the bank should not be considered.

(vii) Further, the segregation of the inoperative accounts is from the point of view of reducing risk of frauds etc. However, the customer should not be inconvenienced in any way, just because his account has been rendered inoperative. The classification is there only to bring to the attention of dealing staff, the increased risk in the account. The transaction may be monitored at a higher level both from the point of view of preventing fraud and making a Suspicious Transactions Report. However, the entire process should remain un-noticeable by the customer.

(viii) Operation in such accounts may be allowed after due diligence as per risk category of the customer. Due diligence would mean ensuring genuineness of the transaction, verification of the signature and identity etc.However, it has to be ensured that the customer is not inconvenienced as a result of extra care taken by the bank.

(ix) There should not be any charge for activation of inoperative account.

(x) Banks are also advised to ensure that the amounts lying in inoperative accounts ledger are properly audited by the internal auditors / statutory auditors of the bank.

(xi) Interest on savings bank accounts should be credited on regular basis whether the account is operative or not. If a Fixed Deposit Receipt matures and proceeds are unpaid, the amount left unclaimed with the bank will attract savings bank rate of interest.

3. Banks may also consider launching a special drive for finding the whereabouts of the customers / legal heirs in respect of existing accounts which have already been transferred to the separate ledger of ‘inoperative accounts’.

Yours faithfully

(Prashant Saran)
Chief General Manager-in-Charge

WHAT IS CRR,REPO RATE,SLR & HOW IT EFFECTS ECONOMY,INFLATION BANK RATE.

noreply@blogger.com (CA RAJAN GUPTA) — Tue, 04 Nov 2008 13:43:00 +0000

Dear Friends,

In last month or so every body have read the words "CRR" "repo rate" & SLR in News paper and wanted to know about it and interested in its effect on various things like Inflation,bank Interest rate and stock price of Bank and other Interest rate sensitive stocks .so we have divided this story in three parts.
(A) Meaning of terms
(B) Impact on Inflation & interest rates
(C) other measure which can be taken

(A) Meaning of terms

CRR(Cash Reserve Ratio):Cash reserve Ratio (CRR) is the amount of Cash(liquid cash like gold) that the banks have to keep with RBI. This Ratio is basically to secure solvency of the bank and to drain out the excessive money from the banks. If RBI decides to increase the percent of this, the available amount with the banks comes down and if RBI reduce the CRR then available amount with Banks increased and they are able to lend more.RBI has reduced this ratio three times and reduced it from 9 % to 5.5% in last one month or so.

Repo Rate:Repo rate is the rate at which our banks borrow rupees from RBI. This facility is for short term measure and to fill gaps between demand and supply of money in a bank .when a bank is short of funds they they borrow from bank at repo rate and if bank has a surplus fund then the deposit the funds with RBI and earn at Reverse repo rate .So reverse Repo rate is the rate which is paid by RBI to banks on Deposit of funds with RBI.A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive.To borrow from RBi bank have to submit liquid bonds /Govt Bonds as collateral security ,so this facility is a short term gap filling facility and bank does not use this facility to Lend more to their customers.present rate is 7.5% and reverse repo rate is 6%.

SLR((Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers. SLR rate is determined and maintained by the RBI (Reserve Bank of India) in order to control the expansion of bank credit.Generally this mandatory ration is complied by investing in Govt bonds.present rate of SLR is 24 %.But Banks average is 27.5 % ,the reason behind it is that in deficit budgeting Govt landing is more so they borrow money from banks by selling their bonds to banks.so banks have invested more than required percentage and use these excess bonds as collateral security ( over and above SLR )to avail short term Funds from the RBI at Repo rate.

Impact on Inflation and Interest rates:

As we all have read the famous line "if all thing remain the same ......".so In all my below paragraphs please note that there are many assumption in fixing the relation between this ratio and interest rates .

SLR and Cash reserve ratio is maintained for bank solvency and Higher ratio of SLR and CRR makes bank relatively safe as higher ratio means they have more of their funds deposited in liquid securities and can fulfill the demand on redemption of deposit from the Bank.lets take an example :suppose a Bank has taken a deposit of 100 from public and CRR is 9 and SLR is 25 then available funds to lend from deposits with the bank will be 100-9-25=66 so their is direct relation between CRR ,SLR and Funds available with bank to lend to public out of deposit received from public .

Now take point what will be the impact on Interest rates of this ratio:Interest rate are fixed on the Demand supply situation of the amount available with person who want to lend and and person who want to borrow and interest rate is fixed on demand supply of the funds if demand is more and supply is less then interest rate rises up and if demand is less and supply is excessive then interest rate comes down .this relation is based on many assumption as said above.

So RBI is controlling the supply side of the Funds and by changes in CRR and SLR they effective control the supply side of the money.so when RBI increase these ratio then available funds with the banks will go down and as demand remain the same then people will have to pay more as interest and interest rate will go up.On the reverse if RBI reduce these rates ,then amount available with bank for lending will be increased and they have to reduce rates to lend more.In these situation bank also reduce the rate of higher short term deposit from public as they have surplus money already to lend.so these rates have double impact the first direct effect is bank reduce rate of lending so more money is available with people and second is interest on Deposit will be reduced so more money will be available with the people.

As from the above para we have understood that how these ratio reduce or increase the money supply in the system and we know if more person is demanding few goods then price of goods tends to increase and its called inflation so when RBI reduce these ratios then money supply in market increases and inflation is rises further but in present case this is not the correct and right relation.This time the reduction of these ratio is to maintain liquidity without disturbing inflation much.while marked is falling and each and every commodity rate going downwards.In these situation after increasing of money supply inflation rate does not goes up as the demand is slow and reduction in commodity prices will nullify the impact of increase in money supply and have less inflationary effects.

Impact of crises on exchange rate:

please note that this explanation is based on many assumptions,

Dollar rate is fixed by demand and supply position of dollar so if there is less supply and more demand of dollar then dollar-rupee exchange rate will go up means dollar value will increase.In present senerio dollar has risen up not the rupee has gone down means the issue is related to more to dollar and less to rupee.more over dollar exchange rates has risen up with all major currencies of the world so as ruppe.

Dollar($) v/s rupee

Dollar Main Inflow:(supply)

through export

through FII investment in share and Dept market

repatriation fund sent back to India by NRI

Capital receipt Loan.

As the Financial position of FII in their country is not good so they are not investing or waiting and in their own states they need funds or the rates of stock s in their home countries are also attractive so inflow to India has been reduced ,and net balance has gone negative as they are investing less than selling of their investments to save their parent companies in the home countries .

Due to financial crunch demand in USA has reduced so less dollar inflow against Export.

Repatriation by NRI has increased as exchange rate is favorable and now they can send more rupee to their relative with same dollar outflow so they are en cashing it.But their capacity to send more dollar has also been affected due to less income in USA.

Capital receipt has also reduced as the financial company are not willing to lend funds.

Dollar main Out flow(demand)

paid for Import

withdrawal of funds by FII

Capital loan repayment

effects of point 2 has increase the demand of dollar

so from the above dollar demand /supply situation the exchange rates has been increased so fast.

Measure which may be taken in this Crises:(this is based on measures taken by other countries )

Share market:Govt should create a Fund which may be called as Market stabilization fund ,which should me managed by professional agency and should buy good reputed stock from the Market when share are available at throw away prices and sell them when they seems to be overvalued.and the purpose of the fund should be stabilization of the market and welfare of the Investor and not to earn a profit from the market and buying and selling should be on the basis of Long term period.By doing this sentiment will improve ,volatility will be reduced and selling from large FII can be absorbed and in my point of view there is no chance of loss in these venture.To start with 5000-10000 cr fund is enough.Russian govt has adopted this system.
Buying of stocks of private sector Banks:if govt By symbolically purchase shares of some major private banks then it will improve the sentiment and increase the confidence of public in private sector bank .This measures Indicate that banks are sound and govt is also investing in them .More over money received from selling of shares also improve the liquidity position of the banks
you can add more if you wish to ,in comment section.

DIWALI GIFT ,EMPLOYER ,EMPLOYEE AND TAX

noreply@blogger.com (CA RAJAN GUPTA) — Thu, 23 Oct 2008 02:26:00 +0000

Dear Friends,

Diwali is a festival of lights ,crackers and Gift.All of corporate and non corporate are have a culture of sending gifts to Customers ,business associates and employees. In Personal life also we all are sending/exchanging gifts to family and friends .In this post we will try to cover the tax issue involved in Gift.The view expressed here in for discussion and if some bodies has different views than me can express it in comment section.

First take FBT(FBT ):Fringe Benefit Tax

FBT is a tax which is applicable on All type of persons except Individual assessee as per section 115W of the income tax act .So Company ,firm etc are mainly liable to pay FBT .FBT is payable at maximum margin rate of tax i.e presently 30% plus 10% surcharge and 3 education cess on valuation of defined expenses at prescribed rates .So full expenses is not liable for FBT in all cases and deemed FBT is defined for various type of expenses between 5 % to 100%.So if valuation of expenses under FBT is 100% then we have to pay 33.99 % effective tax .and where the expenses valuation is 50% the net tax effect on a expenses reduced to 17 % (effective rate ).There are many clauses/expenses under/on which FBT is applicable but we discuss here only relates to Festival expenses and Gifts.

Festival expenses:As per section 115WB(2)(L) expenses incurred at the time of festivals is liable to FBT and valuation under FBT is at the rate of 50% .Means if have incurred expense of 100 Rs on Diwali celebration amount liable for FBT will be 50 Rs and tax on 50 will be 33.99 % will be rs 17 so effective rate on total expense of 100 will be 17 %.As per clarification given wide circular 8/2005 it has been clarified that the Diwali expenses are liable to FBT However, expenditure on celebration of Independence Day and Republic Day will not be liable to FBT because they are not festivals as normally understood. (question number 95)

Gift:As per section 115WB(2)(O) expenses incurred for gift to employees or business associates is liable for FBT and valuation rate is same as the rate of Festival expenses i.e 50%.so effective rate for total expenses is 17 % as explained above. As per main clarification circular on FBT 8/2005 related to Gifts has been given in brief here under

Question no 97:Expenditure on gifts under trade schemes or for promotion of company 's products to distributors / retailers is liable to FBT.

Question no 98:A gift to customer fall under the category gift (O) and not sales promotion. (98.)

Question no 99. Expenditure incurred on gifts provided to employees, on the occasion of marriage, is liable to FBT.

Question no (100). Gift in kind is also liable to FBT and for this purpose the cost to the employer of such gifts will be taken for the purpose of valuation.

even after levy of FBT ,I don't think that there is a major impact on culture of sending /presenting gift to employees and customers but in light of above rules and taxes how we can minimize "our"tax liability.Our in the sense whether tax paid for employer or employee and net tax out go by both the parties.Here are different cases are given how we can minimize tax liability

Case 1: where employee income is less than tax exemption limit or taxable income is less than 300000: when we present a gift to employee whose income is less than taxable limit in that case we have to pay as usual effective FBT rate of 17 % so expense of 100000 means 17000 FBT though gift from employer is not taxable for employee as its liable For FBT.

but in for these type of employees we should give cash bonus instead of gift as cash bonus will be treated as under Salary expense and not liable for FBT and taxable in hands of employees and included in their salary income but as the salary of these type of employees is less the taxable limit or taxed at the rate of 10% so net tax outgo will be Nil or 10% as the case may be but it will be less than FBT effective rate of 17% means saving of 7 to 17 % .

Case -2 :where employee taxable salary income is more than 300000 or more than 500000: In these type of cases if we give gift to employee in that case FBT effective rate remain 17 % and if allow bonus to employee ,employee has to pay tax at the rate of 20% or 30 % as the case may be .so in this cases we should give Gifts to employees as Gifts are not taxable in the hands of the employee and we will save net tax out go upto 3 to 13 % as the case may be .
I here assume that tax saving of employee is as good as as direct tax saving by the firm/company as the employees will be more satisfied with more net salary after tax.

In both of above cases if business is run by individual in that case it is beneficial to give gifts as FBT is not applicable on individual Assesses.

By this tip I think some of reader might have some insight on FBT and gift and able to save some tax out go

Now as per Income tax:
As per income tax act those benefits which are liable for FBT will not be included in the income of the employee as perquisites hence Income tax is not applicable on Gift received from employer as it is covered under FBT so no Tax Liability for employees on gift received from the employers

Personal Gift:
After discussing corporate gifts now check tax provisions for personal gift .For Diwali Gifts there is no specific provisions under the Income tax act and it will be covered under normal rules of income tax act applicable on gifts which can be read out from here

Please read it on 24.10.08 I will complete it by that time

CAPITAL GAIN BOND U/S 54EC Vs CAPITAL GAIN PAYMENT

noreply@blogger.com (CA RAJAN GUPTA) — Sat, 18 Oct 2008 05:50:00 +0000

Hi Rajan, I have sold a residential plot recently. I acquired it in 2001 for 6.5 lacs and sold it at 44 lacs in 2008 Oct. I already own a flat from last 3 years. I believe I am not eligible to reduce capital gains under sec 54 or 54F. Not very keen on 54EC. If I want to pay tax on capital gains, how much it will be. Is there a different slab of tax with and without considering the index? Can you please elaborate.

GIRISH

Recently I have received this comment on blog post BUY HOUSE SAVE CAPITAL GAIN ON SALE OF HOUSE ,I have replied Girish as required but while replying I have noticed that he is not very keen on taking relief given under Section 54EC.So I made a comparison between Investment in Capital gain Bond and payment of Capital gain and invest balance money elsewhere.After reading this Analysis it will be helpful to choose between both the product.Before this just look at main features/condition of section 54EC

Long Term Capital Asset:Long term assets means any capital asset held by assessee for more than 3 Years.
If assesee has sold the Long term capital asset during the previous year and made a long term capital gain then he can invest money of capital gain in Capital gain bonds and can save tax on long term capital gain.
Assessee here means all type of assessees,like individual,firm company etc.
Amount to be invested in bonds is only capital gain not net consideration received on sale of long term capital asset
Amount exempted under this section will be amount of capital gain or amount invested in capital gain bond which ever is lower maximum upto 50Lakh
These Bonds Maturity Period is Three years
Capital gain bonds eligible under this section are now can be issued only by REC or NABARD
Bonds can not be pledged ,sold transfer before completion of three years from purchase of bonds ,and in case its transferred then amount capital gain exempted on investment in these bonds will be made taxable in that previous year as Long term capital gain .
Amount of capital gain should be invested in Capital gain bond within 6 Month from date of transfer/sale of capital asset .

so now evaluate two option and take first option.

Example : On sale of long term asset suppose capital gain amount is 1000000 Rs .

Option-1: Amount of Long term Capital gain Bonds Invested in Capital Gain tax Bond ,Rate of Interest is 5.75 REC bonds

On investment of 1000000 rs in Bonds ,tax payout will be Nil and we will get interest 57500@ 5.75p a at the year end ,suppose we will invest 57500 interest received at the First year end and second year end @ 9% per annum annually compound rate, we will get at the following amounts at maturity .

Now Take second Option :Pay Capital gain Tax and Invest balance amount elsewhere .I have calculated the maturity amount at different interest rates compounded annually.The details are given Below on the basic of balance amount invested and amount at maturity at different Interest Rates.

So from the above we can say that if one can invest balance amount after payment of tax in such a way so that annual rate of return is more than 14.39%@ CAGR then it is beneficial to pay tax at one go as compare to investment in capital gain Bond otherwise he should invest in Capital gain bond and take benefit u/s 54EC .Though the rate of interest offered on capital gain Bond is just 5.75% but Internal rate of return (IRR) will come as 14.39(CAGR) due to out go of log term capital gain tax in first year @20 % plus surcharge on log term capital gain.

Now specific answer to his query

Non eligible for section 54:section 54 is available only if log term asset sold is a residentila house property ,so Gisrish has correctly said that sec 54 is not vailable to him,as he has sold land not a residential house property.
Non eligible for section 54F:undersection 54F ,person can avail relief from paying long term capital gain tax arises on sale of long term capital asset,if he invest net sale consideration in a house in specefied time ,but he should not own more than one house at the time of transfer of long term asset other than purchased under this section(new house).In this Case Girish owned a house on the date of transfer of the property (land) so he is not correct and eligible for section 54 F .(corrected on 21.10.2008) as per comment
Capital gain with or without indexation:For sale of land there is no option for calculation of tax without indexation and pay tax at lower rate.
Tax calculation:As you have not given month of plot purchase so I have assumed it as after march 2001 so on the basic of your tax calculation is given as under

sale price=44
indexed cost of purchase =6.5 X 582/426=8.88
capital gain=44-8.88=35.12

tax on capital gain 35.12 @ 20%=7.02 Lakh
Regarding availing relief u/s 54EF or not it depends on person to person,however necessary calculation which will be helpful in selecting right option at right time is given above.

If you have different views then please record in comment section.

FINANCIAL CRISES,IS YOUR MONEY SAFE IN BANK???

noreply@blogger.com (CA RAJAN GUPTA) — Thu, 16 Oct 2008 02:50:00 +0000

Dear Friends,

Every body now a days reading in New paper and watching on TV "Financial Crises in US" ,Sub prime Crises in US and try to know what it is and how it will effects us in India .Bank has gone/are going bankrupt in US .The "Q" of problems has not been finished yet and each day it is taking Bad shape and now Financial Crises and Liquidity crises are converting into US recession and then World recession.Nation Like Iceland,Pakistan are at door steps of bankruptcy.I know there are many question in every bodies mind but in this post I will take only one..

Is our money Safe in Banks In India?

Every body has saved his money in banking system and some of us worried about the safety of our money in bank in India and some of conservative mind has withdrawn it from the Bank in last month or so .....So question in our mind is "Is our Banks safe ?

As our Finance Minister and Prime Minister has assures us that our banks are safe its includes ICICI bank and all private banks.Indian private banks have to follow strict guidelines/ Regulation in India Like all other Public sector banks .

Even the one of the Bank Goes bankrupt in that case also your deposit upto 100000 is insured through DICGC(Deposit Insurance and Credit guarantee Corporation).Means you will get atleast one lakh from your bank in case of Bank failed.

The Main feature of insurance Scheme are

Insurance of one lakh Rs deposit in all bank branches in India.
Current account,FD,Saving accounts are covered
The limit is applicable on person and not on account.Suppose you have money in saving account 50000 and current account 50000 and FD 50000 ,Then the Insurance amount restricted to 100000 only
The Limit is applicable for all branches of a single bank .Suppose In ABC bank you have accounts in different branches at different location or same location .In that case agregate of all branches will be treated as one in all accounts and insured upto one lakh only.
Each Bank will be treated as seprate cover unlike point 4 .If you have deposited 100000 in ABC bank and 100000 in XYZ bank then you will get 100000 as insurance amount for each bank total 200000
The Limit of one lakh is applicable for one capacity ,suppose you have one saving account as individual in ABC bank amount 100000 and other accout as karta of HUF and having 100000 in it and other account as partner of a firm and balance of 100000 init so you will get insurace amount of 100000 each of three account total 300000 .
All banks have to take this Insurance cover and there is no option for bank ,so its mandatory for banks to insure 100000 deposit of each person .

example

FEED READERS to check exampleS pls visit this link

read What is Sub prime crises