It was easy for the finance minister to levy a commodity trading tax or commodity transaction tax. However, it will be tough times for the commodities markets.
The bread and butter of the commodities traders is the Arbitrage Trading, with which they earn their living. After the proposal of commodity trading tax or CTT, majority of their earnings will go into the tax payment.
Hence, along with the market makers, traders of the commodities markets, even the regulators have started to lobby around for elimination of this CTT proposal. Commodities market regulator Forward Markets Commission (FMC) has taken up cudgels on behalf of commodity exchanges to exempt futures trading from the proposed commodities transaction tax. As per the news, The tax will kick in soon after the Finance Bill is enacted and will see a 0.017% levy on option premium and the sales price of a commodity derivative. While the seller will have to shell out the payment in both cases, the purchaser will be required to pay 0.125% on the settlement price of options in commodity derivative or an option in goods.
The tax is expected to hit day traders, who account for nearly three-quarters of the trading volume of around Rs 40 lakh crore.
FMC is learnt to have countered by saying that it was wrong to compare the commodities and the equities markets since both had a different character. Besides, commodities, it said, was not an asset class for investment.
If you have filed your tax returns on time and are waiting for a refund, then here is some help to track what may have happened to your tax returns. The Income Tax Department has put on its website the list of income tax refunds of all salary tax payers which could not be sent to the concerned persons for want of correct address.
Salary taxpayers who have not received refunds for assessment years 2003-04 to 2006-07 can click on the link below and query using the PAN number and assessment year whether any refund due to them has been returned undelivered from the menu `undelivered salary refund management system'. If any refund has been returned undelivered due to change in address, then the taxpayer can enter the present address and the refund will be sent to the taxpayer at the new address.
Recently, the US government has declared a new program offering Tax Refund or Tax Rebate to the extent of $1800 for a family of 4 – 2 adults and 2 kids below 17. However, the norms are set for the eligibility and the order in which one can get the tax rebate.
The moral of the story is “First Come, First Serve” or the “The sooner you file your tax returns, the sooner you get your rebate check”.
It is still a question whether the tax rebate offered by the Bush administration will give the required jumpstart the economy. However, filing your 2007 tax return is a prerequisite to receive your tax rebate check.
As per IRS, the tax rebate checks will be mailed beginning in May. People who have already filed their 2007 tax returns and reported at least $3,000 in qualifying income don't need to do anything else. The IRS will assess their rebate eligibility and send a check to those who qualify. Qualifying income for the purposes of the rebate includes wages and salaries, Social Security benefits and certain veterans' and retired railroad workers benefits.
The IRS will also send 2 notices, first to explain to taxpayers the stimulus payment program and second one to confirm the amount of your rebate. The second notice can be expected 7 to 10 days before you receive your payment if you would like to have the tax rebate check sent by mail. If you opt for electronic direct deposit on your 2007 tax return, the second notice may arrive simultaneously with your payment. As with refunds, direct depositing your rebate is the fastest way to get your payment, reducing the time it takes by at least a week.
Some people who may be eligible for tax rebate still may not receive a check, either in full or part. Because, if there are any outstanding back taxes or you have other non-tax federal liabilities such as past-due child support or federal student loans, the IRS will apply at least part of your rebate to those liabilities.
As the financial year ending comes to a close, all the salaried individuals have started receiving reminders from the accounts/payroll department to gather and furnish the proofs of investments made which qualify for tax-exemptions.
Not only the salaried individuals, even businessmen across the country would be up in arms to calculate their tax-liability.
All around the various offices across India, this is the merry making time for the investments advisors, insurance agents and financial planners. High profits of commissions and handsome earnings for these individuals in these 2-3 months. However, the individuals end up making a mess of their money, when they end up buying unwanted and useless insurance products, or make unnecessary investments in the name of tax-savings. Please note that financial planning is not a last month job. You should not go for it starting in January, but start planning for it in April-May or latest by September-October period. Otherwise, in a hurry, you would end up in a situation like this.
A new find has been launched by SBI in the name of tax savings. It’s called the SBI Tax Advantage fund providing tax benefit to individuals under section 80C of Income Tax Act 1961. Primarily it’s an ELSS scheme, or Equity linked Savings scheme, with a minimum lock-in period of 3 years.
Here are the details about the SBI Tax Advantage fund as available from different sources: What is the SBI Tax Advantage Fund – Series I about?
SBI Tax Advantage Fund – Series I is a ten year close-ended Equity Linked Savings Scheme (ELSS) with 3 year lock-in period and tax benefit. The investment objective of the scheme is to generate capital appreciation over a period of ten years by investing predominantly in equities of companies across large, mid and small market capitalization, along with income tax benefit. Hence, once important thing that should be kept in mind while investing in this NFO is that the fund is designed for capital appreciation for 10 year long horizon.
Highlights
• NFO Price Rs. 10/- per unit
• No Entry Load for Investors
• Minimum initial investment is Rs. 500/- in multiples of Rs. 500/- thereafter with no upper limit *
• Growth and Dividend (payout) options available
• However, investment up to Rs. 1,00,000/- will qualify for deduction under section 80C of Income Tax Act 1961
Asset allocation
Instrument
Normal allocation (% of Net Asset)
Risk Profile
Equity and Equity related instruments
80 - 100%
High
Debt and Money Market Instrument and Securitised Debt ^
0 - 20%
Low to Medium
^ the scheme may invest in derivatives (equity as well as debt) and securitised debt, as and when permitted by ELSS / SEBI guidelines
Investment Objective The investment objective of the scheme is to generate capital appreciation over a period of ten years by investing predominantly in equities of companies across large, mid and small market capitalization, along with income tax benefit. Should I Invest in SBI Tax Advantage Fund? SBI Tax Advantage Fund – Series I claims to offer a triple benefit: • Equity Linked Returns
• Tax Free Returns
• No Entry Load
Another claim is on the decades of experience that the SBI Fund management has. However, they are not willing to guarantee even 1% return even if you promise to remain invested for 10 long years.
It’s a Close Ended Scheme, which means only a limited no. of units can be created, hence all the applicants will not get the units if the demand exceeds the supply.
On the official website of SBI Tax advantage fund, there are some tables showing how well the previous ELSS schemes of SBI have performed and how well they have beaten the markets and other similar instruments, but ultimately, its all filled with loads of special characters like * and ^ and other things, which makes it difficult for the common man to understand the numbers and the way they are calculated.
Ultimately, in essence, this is a similar kind of scheme as any other ELSS. Everything depends upon market conditions so, the investors have to take a chance. Withdrawal is allowed only after 3 years of lock-in period. Investors really willing to save tax and wanting to invest in the equity markets can opt for this scheme. The time seems t be justified as the markets are trading low. One may try his luck for the next 3 years (atleast).
There is still a lot of confusion about filing of tax returns, so just wanted to share some information regarding tax returns filing. The last date for filing the tax returns have already passed (31st July 2007). However, you may still NOT have to pay any penalty for filing returns late.
Here’s the actual procedure for tax return filing and penalty: • As per the rules of income tax department, the tax returns should be filed by 31st July 2007. Otherwise, an individual MAY have to pay penalty for filing late returns • When will the penalty be imposed? Penalty on late filing of income tax returns will be imposed as follows: o ONLY if there is an outstanding amount of tax that is due. Meaning: If you have NOT paid taxes by 31st July on your income in the financial year ending March 2007, then there will be a penalty imposed for filing late returns • For salaried employees, where TDS (tax deducted at source) is already taken by the employer, should NOT worry at all. Such individuals can file their returns even till 31st March 2008, i.e. till the end of this current financial year without any penalty. • However, in case you have an extra income which is other than your salary, like income from bank interest, mutual funds, stock trading, or other businesses, then you MUST pay interest on that on your own. This tax is to be paid in addition to the TDS by your employer, and should be paid before 31st July. • Say, if my TDS (as mentioned in my form-16) issued by my employer is 20,000 Rs. Whatever is mentioned in form-16 is based upon my salary. However, I may have additional income from interest earned on the money in bank account and fixed deposit, short term capital gains for trading in stocks or income from other businesses. I HAVE THE RESPONSIBILITY TO DECLARE THIS ADDITIONAL INCOME AND PAY TAX ON THAT. • There are 2 ways of paying taxes on this additional income 1. I declare to my employer that I have this additional income and ask him to deduct TDS on my total income (salary + this additional income). This additional income is quoted as “Income from other sources” in my form-16, and becomes taxable. So if it is included in my form-16, I DON’T have to do anything. 2. If I don’t declare this additional income to my employer and hence it is NOT mentioned in my form16, then I should deposit tax by filling a challan form and deposit it in any of the banks. I should then file my returns with a copy of this challan attached to my return form (ITR-1) • In case I have deposited all my taxes before 31st July, then I need not worry about filing of taxes before 31st July, as there is NO outstanding taxes to be paid by me. I can as well file my returns till 31st March 2008 without any penalty. • In case I’ve missed out paying taxes on some (or all) of my income: I was suppose to pay my taxes before 31st July. Since I’ve missed it, then I am required to pay a penalty of 1% PER MONTH on the OUTSTANDING AMOUNT ONLY (not on the entire amount). For e.g., my employer deducts 20,000 as TDS and mentions it in my form 16. I have additional income of 1000 Rs. on my trading and bank interest. I missed paying tax on this 1000 Rs. before 31st July. I realize my mistake later and I pay my taxes on this additional income of 1000 (say 20% i.e. 200 Rs.) in the month of August. So I should pay a 1% additional penalty since I am late by a month – i.e. I should pay 1% of 200 = 2 Rs, a total of 202 Rs. as my taxes and then file my returns. • One very good way of filing the returns is online – BUT NOT on PAY websites (like moneycontrol or taxsmile). The official website of Income tax department is offering this service for free. I had filed my returns on 31st July, within a matter of just 5 minutes, that too FREE OF COST and avoiding lengthy queues. The website is quite clear and explains everything in easy steps. • Let me know if you have any questions – please post them as comments.
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