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Chat Transcript

Balwant Jain

CA & CS ,

Has the Budget really rewarded the tax payers


Questions Answered


kiron59: I have invested in shares in 2014, the value is in loss of about 80% of my original investment, Q1).can i claim loss if i sell after Apr`1. Q2). how to value my face value of shares as of Jan`31. Thanks

Balwant Jain: No. I am afraid you can not claim the loss as the cost of acquisition for you will be the market price on 31st January, which 20% of your cost. I think the loss of 80% is lost for ever. The fair value of the shares is the market price of the shares on the stock exchange on 31st March itself. The same can be downloaded from BSE site.

guest: Failed to understand logic of not increasing income tax limit. Is he taking middle class for granted?

Balwant Jain: Since only 2% of the entire populations are filing thier tax returns and the endeavour of the government is to broad base the tax payers base so it was not possible for the finance minister to raise the exemption limit. He has given relief to the people who needed it the most like senior citizens in the form of deduction for fixed deposit interest and higher claim under section 80 D for either the health insurance or for medical expenses if one does not have any health insurance and poor people in the form of health insurance of 5 lakhs.

guest: Reimbursement of medical expenses for Rs 15000/- has been deleted for senior citizen also .Is standard deduction for pensioners also

Balwant Jain: The exemption for reimbursement of 15,000/- is removed for all the salaried employees who were in receipt of the same from their employers whether you are a senior citizen or not. The standard deduction is available for pensioners if the pension is received from the employer.

guest: Sir LTCG 10(38) removed how it would be benificial

Balwant Jain: It will be beneficial for the government. For the tax payers it can not be beneficial. The government will be able to generate more revenue on long term capital gains which was exempt in our hand.

kiron59: If Govt. reverse/tweak tax treatments like this, how can a investor change the long term plans (equity) already in place. like ELSS was best, now not any more.

Balwant Jain: The government has all the rights to change its policy half the way. Like when you take a home loam, the lender is entitled to increase the rate of interest after the loan is disburshed. When other people are paying taxes on their long term capital gains, why the equity products should not be taxed. The market had earned 31% in the calendar year 2017, what is wrong if the government wants 10%of it. I feel the government should have removed the STT as this was in substitution of the exemption of long term capital gains. When you are bringing back the LTCG on equity products, you should remove the STT as well. The government proposes to tax future profits and the NAV or market value as on 31st January will be your cost for capital gains purposes. I will still say the ELSS is the best products even after LTCG for long term planning.

mauliks1990: To save tax, should we invest in FD/RD, bank PPF ??

Balwant Jain: The answer would depend on various factors like your risk profile, your age, the investment horizon. If your are young and can take some risk and your investment horizon is more than 5 years, the ELSS equity oriented schemes are better than other products. But between FD and PPF, PPF is better if you have time period available with you. for senior citizen FD is equally good as the senior citizens will get deduction for interest on bank FD as well upto 50,000 rupees from next year.

guest: Hello sir. Income or profit for long term investors is applicable today or April 18

Balwant Jain: The tax on long term capital gains will be applicable for all the transactions after 31st March 2018. Even for sale after 31st March, the cost will be taken as the market value of your shares or NAV of your schemes as on 31st January 2018. So effectively the profits earned by you till 31st January 2018 have become exempt in your hand. Moreover the long term capital gains tax is payable on the profits over 1 lakhs and profits upto 1 lakh are fully exempt every year.

guest: what were your expectation on this year\\`s budget relating to indirect tax

Balwant Jain: Indirect tax is not my domain expertise and thus can not comment on it.

rana.vipin47@ya: Sir after availing full 1.5 lacs sec VI A limit the taxable income remains below 5 lacs is the rate applicable 5 or more when gross income is above 5 lacs. And if rebate of 2500 is also available ?

Balwant Jain: The rate of 5% upto 5 lakhs is applicable after the dedcutions under Chapter VIA are claimed. The rebate of 2500/- is available only if your net income(after dedcutionof 1.50 lakhs) does not exceed Rs. 3.50 lakhs.

guest: What about corporate tax cut? what are your views

Balwant Jain: This is a step in right direction. This will in due course prompt the government to reduce the maximum rate applicable for individuals which is 30% today. Since this will cover around (as stated by FM in his budget) 99 % of the Company tax payers the benefit is broad based. Lower corporate tax should in my opinion result in higher dividends to shareholders.

Aditya Masand: @arunjaitley Budget 2018 proposed increase in the investment limit of Pradhan Mantri Vaya Vandana Yojana to Rs 15 lakh Rs 7.5 lakh. Please clarify if an existing senior citizens (who had earlier invested 7.5 lakhs) can invest additional 7.5 lakhs today or one has to wait

Balwant Jain: I do not have clarity about this. In my opinion the senior citizen will be able to invest after the LIC comes with such schemes.

kiron59: If an assessee has only income of LTCG due to shares of 1.5 lacs for next year flat at 10% if no other income, will they need to still pay tax of 15k? as their income limit is below 2.5 lacs?

Balwant Jain: If your total income is lower than the basic exemption limit, you will not have to pay the 10% tax on LTCG. So in case your only income is long term capital gains, you will have basic exemption of 2.5 lakhs available moreover since only LTCG over one lakhs is only taxable, you will get additional benefit of one lakh. So in case you do not have any other income except, you will not have to pay any tax on 3.5 lakhs of long term capital gains on equity shares of equity oriented units.

guest: investments covering 80c

Balwant Jain: Question is not clear. There is no change in the investments available for section 80C in the budget.

rana.vipin47@ya: Sir is not the rebate applicable for fy 17-18 of 2500 below taxable 5 lacs ?

Balwant Jain: No it is for income upto Rs. 3.50 lakhs. Earlier it was lakhs.

guest: I am a govt Employee . Please suggest ways to save tax beyond 80c limit.

Balwant Jain: Your EPF and school fee with LIC would be getting over within in 1.50 lakhs. If you are below 45 years and can invest the money for more than 5 years, I would sugggest you start investments in ELSS (equity Oriented Schemes) through monthly SIP.

T0bfcy9IMM: Dear Sir, Any relaxation or rebate has given to Handicapped persons in the Budget 2018.

Balwant Jain: No I do not thing any benefits is extended to handicapped persons in the budget as far as income tax is concerned.

suku_ajish: Hello Sir. for a Senior Citizen to get 50K tax rebate. How much FD should be invested and @what interest rate

Balwant Jain: For getting the rebate of 50,000 on bank fd interest you n invest upto 7.69 lakhs @ 6.50 % interest. If the rate 0f interest is 7% the amount of FD will go down to Rs. 7.15 lakhs. As the rate of interest goes up the amount fo FD will come down.

cPFMHNcgcx: Is there any chance to review about Long Term Capital Gain tax on Shares and Equity Mutual Fund?

Balwant Jain: I do not think the government will review the LTCG tax. PM Modi even had hinted at this before last year budget, so it can safely be said that this is well thought out proposal.

icassg: Dear Sir, please make us understand the changes proposed in Sec. 139A regarding requirement of PAN by non individual entities and their principal representatives.

Balwant Jain: Simply stated every director, managing director, partner, trustee, founder karta CEO of etc of non individual tax entities like partnership firm, trust whether religious or private, Association of persons, HUF, Company etc. will have to obtain a PAN number if the entity of which they are partner, karta, managing director, director etc which enters into any financial transaction of rupees 2.50 lakhs or more. So effectively even if you have issued a cheque or accepted a cheque of this amount, your entity as well all the partners, directors etc have to obtain a PAN. This is to ensure that maximum number of people who even do not have any bank account but carry out the transaction though some other entity have PAN and their association with such entities is tracked and monitored.
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