Reserve Bank of India to Issue New Batch of Rs 20 Notes Soon


Mumbai, July 20: The Reserve Bank of India is all set to release a new batch of currency notes of denomination of Rs 20 under the Mahatma Gandhi series-2005. The new notes of Rs 20 will be released with the inset letter ‘S’ in both the number panels, news agency ANI reported.

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According to a report, another major change that will be seen in the new currency notes will also carry a signature of RBI Governor Urjit Patel, which the older Rs 20 notes did not have. However, the design of the new Rs 20 notes will not change in any way and will remain the same as the ones released in September 2016 with the inset letter ‘R’. The RBI also said that the old Rs 20 notes in circulation will continue as a legal tender.

Earlier this month an image of a note of Rs 200 denomination was being widely shared on social media, even though there was no official confirmation about its authenticity came from the responsible authorities. Some report suggests that the printing process had begun and the central banks would soon issue the new notes of Rs 20.

There were reports that the RBI is looking to issue the Rs 200 notes to make daily transactions easier for people. Last month, the RBI introduced a new series of the recently introduced Rs 500 notes.

“In continuation of issuing of Rs 500 denomination notes in Mahatma Gandhi (new) series from time to time which are currently legal tender, a new batch of banknotes with inset letter “A” in both the number panels, bearing the signature of RBI Governor Dr Urjit R Patel Governor; with the year of printing “2017” on the reverse, are being issued,” RBI said in a statement.

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Middle class can breathe bit easy as tax rate halved


news24in7(IANS) In a major relief to the tax-burdened middle-class people, Finance Minister Arun Jaitley on Wednesday proposed to halve the income tax to five per cent for those earning between Rs 250,000 and Rs 500,000 per annum.

Presenting the 2017-18 Budget in the Lok Sabha, Jaitley said he proposes to halve the income tax for persons earning between Rs 2.5 lakh-Rs 5 lakh from the current 10 per cent.

“This will reduce the tax liability of all persons with incomes below Rs 500,000 either to zero (with rebate) or 50 per cent of their existing liability,” Jaitley said.

The existing benefit of rebate available to the same group of beneficiaries is being reduced to Rs 2,500 that is available only to assessees up to an annual income of Rs 350,000.

According to him, the combined effect is that there will be nil tax liability for people with incomes of up to Rs 300,000 per annum.

The tax liability will only be Rs 2,500 for people with incomes between Rs 300,000 and Rs 350,000.

If the limit of Rs 150,000 under Section 80C for investment is used fully, the tax would be zero for people with incomes of Rs 450,000.

While the tax liability of people with incomes of up to Rs 500,000 is being reduced to half, all other categories of taxpayers in the subsequent slabs will also get a uniform benefit of Rs 12,500 per person.

“The total amount of tax foregone on account of this measure is Rs 15,500 crore,” Jaitley said.

In an effort to somewhat make good the loss of revenue, Jaitley proposes to levy a surcharge of 10 per cent of tax payable on individuals whose annual taxable income is between Rs 50 lakh and Rs 1 crore.

The surcharge will generate additional revenue of Rs 2,500 crore.

The existing surcharge of 15 per cent of the tax on people earning more than Rs 1 crore will continue.

For those with incomes of up to Rs 500,000 — other than business income — Jaitley said a single-page income tax return form will be introduced.

“It is a populist budget for the middle class. The budget proposes to give relief to the middle class while taxing the super-rich,” Neha Malhotra, Executive Director, Nangia & Co., an international tax advisory and accounting firm, told IANS.

“It was a legitimate expectation post-demonetisation that the personal income tax rate will be reduced to soften the tax hit on the pockets of the individuals,” she added.

According to Malhotra, immovable property owners have been relieved by lowering the holding period for availing lower rate of long-term capital gains tax from three years to two years.

“Also, the base year for computing capital indexation benefit has been changed from existing April 1, 1981, to April 1, 2001. This move will give significant relief to the taxpayers earning profits from sale of house property and will encourage investments in the real estate sector,” she said.

Another woe of the taxpayers is that provisions applicable on dishonoured cheque under Section 138 of the Negotiable Instrument Act are ineffective.

New effective way to tackle the issue of bounced cheque is a welcome move which shall relieve those facing hardship on these fronts, she added.

–IANS

Budget 2017: Personal Income Tax Rate Reduced To 5% For Those Earning Upto Rs 5 Lakh


Finance Minister Arun Jaitley in Union Budget 2017 slashed the existing rate of taxation for individuals with income between Rs 2.5 lakh to Rs 5 lakh to 5 percent from the existing 10 percent.

“While the government is trying to bring in its tax net more people who are not paying tax, the present burden is on the taxpayer and on the employees who are showing their income correctly,” Jaitley said.

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The finance minister added that there was a “legitimate expectation” post demonetisation that tax burden on honest individuals be lowered. Further, Jaitley emphasised that if the nominal tax rate is lower for the lowest slab, more people will prefer to come under the tax net.

CALCULATE YOUR NEW TAX LAIBILITY

Earlier, personal income tax was exempt for an annual income up to Rs 2.5 lakh but charged at 10 percent for income between Rs 2.5 lakh to Rs 5 lakh.
As this comes down to 5 percent, the tax burden of individuals in the income bracket is likely to become zero or halve as compared to previous years, Jaitley said.
Individuals with income between Rs 5 lakh and Rs 10 lakh will continue to be taxed at 20 percent and those above the Rs 10 lakh income bracket will be taxed at 30 percent, the finance minister added.

“If the exemption of Rs 1.5 lakh is used fully under Section 80C, the tax liability will be zero for income up to Rs 4.5 lakh,” Jaitley said. “All other categories of tax payers in subsequent brackets will also get a uniform benefit of Rs 12,500 per person.”
Jaitley said that the government will forego revenue to the tune of Rs 15,500 crore due to the tax incentive. To recover some of the revenue loss, he announced an additional surcharge of 10 percent for those whose annual taxable income is between Rs 50 lakh to 1 crore; Surcharge on income of Rs 1 crore or more remains unchanged.

In order to expand the tax net, the government also proposed a simple one-page form for individuals with an income up to Rs 5 lakh. Jaitley also said that anyone filing income tax return for the first time will not be subject to any income scrutiny in the first year unless there’s specific information with the taxman about high-value transactions.

“I appeal to all citizens to contribute to nation building by making a small contribution of 5 percent tax if their income is under Rs 5 lakh,” Jaitley said.

–Bloomberg Quint

Budget 2017: Cash No Longer Valid For Payments Above Rs 3 Lakh


Digital payments in India are set to get a big boost with Finance Minister Arun Jaitley, in his Budget 2017 speech, announcing that cash will be no longer allowed for transactions of more than Rs 3 lakh.

Budget 2017 year on cube with pencil and clockThe government also proposed a new payments regulator to be set up within the Reserve Bank of India. Jaitley said the government is also working to quickly roll out the recommendations put forward by a committee of chief ministers on digital transactions.
Arun Jaitley, Finance Minister In His Budget Speech To begin with, it is proposed to create a payment regulatory board in the Reserve Bank of India by replacing the existing board of regulations and supervision of payment systems. As we move faster to the path of digital and cheque payments, it is necessary to ensure that payees of dishonoured cheques are able to realise their payments. Therefore, the government is considering the option of amending the Negotiable Instruments Act suitably.

While the government brings about structural changes in payment regulation, it is also promoting digital transactions by proposing and potentially mandating petrol pumps, fertiliser depots, hospitals and colleges to have the option of accepting digital payments, including from the BHIM app.

Jaitley also announced two new schemes targeted at increasing the number of digital transactions through its flagship BHIM app — a referral bonus scheme for individuals and a cash-back scheme for merchants.

Budget 2017 set a target of 2,500 crore digital transactions in the upcoming financial year through various modes such as UPI, Aadhaar Pay and plastic cards.

While the government is yet to roll out Aadhaa- based payment systems — which come with their set of safety concerns — Jaitley said that 20 lakh Aadhaar enabled point-of-sale machines will be rolled out by September 2017.

According to Reserve Bank of India data, the value of debit card transactions at point of sale (PoS) terminals has grown by over 63 percent between 2012 and 2015. Credit card transactions at PoS terminals has grown 54 percent.

However, estimates suggest that 90% of transactions by value are still being carried out in cash in the country. This is set to change with the government’s latest push for digital payments post demonetisation.

In its attempt to boost use of cards, wallets and unified payments interface, the government has announced that banks will deploy 10 lakh additional PoS machines by March 2017 which will be complemented by the launch of Aadhaar Pay, which obviates the need of having a phone, debit card or passwords.

Bloomberg Quint

Incorporating E-Insurance Into Your Financial Plan


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Given the standard of living in India, we can safely assume that a third of our income goes towards our monthly expenses and another third is eaten up by taxes. The remaining third can put under savings only if you don’t have any health expenses, lifestyle needs, and miscellaneous expenses that need to be addressed. Phew! Tough life, we know. Given this scenario, is it possible at all for you to save? Yes! Here are some simple steps you can follow to save more and how insurance and e-insurance, in particular, can help.

Start saving early

Ideally, one should start saving as soon as they start earning. It is recommended that one start investing 10 to 15% of their income as soon as they start working. Distributing savings over a larger number of years reduces liabilities to a great extent. You must also have a Life Insurance plan in place so that there are no roadblocks for your savings.

Look at the risks

Risk is an inherent part of life but there are risks that can be covered. This can done using various insurance policies at different stages in your life. The policies will ensure that your savings, especially for goals such as retirement, remain untouched during emergencies.

Plan, plan and plan some more

Factoring in healthcare costs while you are planning your financial life becomes critical, as health costs keep rising at a higher rate than inflation. Adequate Health Insurance for each family member is the most effective way of managing financial needs during medical emergencies.

Increase income streams post retirement

You know you won’t have a steady income after retirement. So, you must plan to set up at least two different income sources. This is because retirement income needs are likely to be large. Reliance on a single scheme, such as a provident fund or a pension from an employer will expose you to significant risk. Therefore, many different sources from which retirement income can be generated, need to be cultivated. A good balance between different investments is also required. Annuity plans are a good option to consider. Under an annuity plan, you pay a lump sum and get a regular payment for a fixed period – similar to getting an income. However, it is essential that you check the features and compare between plans before choosing the right one. When investing in annuities, starting early will help in availing the best premium rates and one can enjoy the benefits of compounded returns.

As you can see, an insurance policy becomes your companion at every stage in life and stays with you even after retirement. That is why you need to hold an e-insurance account. This account will store all your policies electronically throughout your life. You don’t need to go through the hassles of storing a physical copy of all your policies. You can go back and review all the policies that you have held and hold at present. Having your policies in a single place will help you manage your insurance portfolio better. You can have an account in the name of each of your family members so that you don’t need to handle multiple physical policies at the same time. Be it Car Insurance, Health Insurance or Life Insurance, an e-insurance account can hold any of your insurance policies.

The magic mantra is to keep things simple so that you have fewer hassles while handling your investments. So, save, work as much as possible, make smart investment choices and keep track of your policies through an e-insurance account to get the maximum out of your financial life.

Sponsored by ICICI Prudential Life Insurance Co. Ltd

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Taxman Sends 18 Lakh Notices For Suspicious Deposits Post Demonetisation


The Central Board of Direct Taxes (CBDT) on Tuesday said that it has identified 18 lakh people whose account data do not match with their taxpayer profile. Accordingly, the tax department has send 18 lakh notices for large, ‘suspicious’ deposits of more than Rs 5 lakh, Chairman Sushil Chandra told reporters at a media briefing.

These deposits were made between November 9 and December 31, after the government’s demonetization exercise.

The department has also identified 1 crore accounts in which deposits of more than Rs 2 lakh were made.

The CBDT also launched an e-platform for online verification of deposits made post demonetization, called Operation Clean Money. In the initial phase, this new software will be used for e-verification of large cash deposits made post demonetization Revenue Secretary Hasmukh Adhia said at the same media briefing.

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The 18 lakh accounts was a part of the first batch identified by the tax department through the use of data analytics.

Going forward, data analytics will be used in select cases for verification based on an approved risk criteria. If a particular case is selected for verification, the department will send an email and text message to the concerned account holder, and the information will have to be provided by submitting an online response on the portal, according to a media statement issued by the CBDT. The response will have to be submitted on the portal within 10 days.

The response will be assessed, and if found appropriate, the verification will be closed. The verification will also be closed if the cash deposit is declared under the Pradhan Mantri Garib Kalyan Yojana, the statement added.

–Bloomberg Quint

What is Direct and Indirect Taxes


Direct Taxes
The most fundamental classification of taxes is based on who collects the taxes from the tax payer.
Direct Taxes, as the name suggests, are taxes that are directly paid to the government by the taxpayer. It is a tax applied on individuals and organizations directly by the government e.g. income tax, corporation tax, wealth tax etc.

Indirect Taxes are applied on the manufacture or sale of goods and services. These are initially paid to the government by an intermediary, who then adds the amount of the tax paid to the value of the goods / services and passes on the total amount to the end user.
Examples of these are sales tax, service tax, excise duty etc.
How do these important Direct and Indirect Taxes affect you?

DIRECT TAXES

 

Income Tax

Income Tax is paid by an individual based on his/her taxable income in a given financial year. Under the Income Tax Act, the term ‘individual’ also includes Hindu Undivided Families (HUFs), Co-operative Societies, Trusts and any artificial judicial person. Taxable income refers to total income minus applicable deductions and exemptions.
Tax is payable if the taxable is above the minimum taxable limit and is paid as per the differing rates announced for each tax slab for the financial year.

Capital Gains Tax
The profits made on sale of property are taxable under Capital Gains Tax. Property here includes stocks, bonds, residential property, precious metals etc. It is taxed at two different rates based on how long the property was owned by the taxpayer – Short Term Capital Gains Tax and Long Term Capital Gains Tax. This deciding period of ownership varies greatly for different classes of property.

Wealth Tax

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Wealth tax is applicable on individuals, HUFs or companies on the value of their assets in a given financial year on the date of valuation. It is taxed at the rate of 1% of the net wealth of any assesse exceeding Rs 30,00,000.
‘Net wealth’ here includes, unproductive assets like cash in hand above Rs 50,000, second residential property not rented out, cars, gold jewellery or bullion, boats, yachts, aircrafts or urban land. It does not include productive assets like commercial property, stocks, bonds, fixed deposits, mutual funds etc.

Corporation Tax
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Corporation Tax is paid by Companies and Businesses operating in India on the income earned worldwide in a given financial year. The rates of taxation vary based on whether the company is incorporated in India or abroad

INDIRECT TAXES

Sales Tax

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Sales Tax is charged on the sale of movable goods. It is collected by the Central Government in case of inter-state sales (Central Sales Tax or CST) and by the State Government for intra-state sales (Value Added Tax or VAT). The rates of taxation vary depending on the product type.

Excise Duty

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Excise duty is applicable on the manufacture of goods sold in India. Once goods are manufactured, it is originally paid by the manufacturer directly to the Central Government. When the goods change hands from the manufacturer to the buyer, this tax is bundled by the manufacturer along with the cost of goods and passed on to the buyer.

Service Tax

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Service tax is applicable on all services provided in India except a specified negative list of services that are exempt. It is paid by the service provider to the government who in turn collects it from the end user by the service provider at the time of provision of such service.

Source: Yahoo