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Proposed Tax Code - EEE to EET If implemented would be a Bane

Created by : Niraj S Kakkad, Manager - Wealth, Investascent Wealth Advisors Pvt Ltd  | 09 27 2010 14:15:17 +0000
Functional Area : Personal Finance(Personal Interests)
Keywords : investment income tax planning exemption proposed tax code
Activity:  645 views;  last activity : 10 01 2010 13:49:35 +0000

In the proposed tax code there was one point -  the Govt proposed that income from investments  at the time of maturity would be taxable in hands of investors. The current set up is EEE i.e. exempt while investing, exempt during the tenure of investment and exempt on maturity. this would change and the income would be exempt while investing, exempt during the tenure of investment but TAXABLE  on maturity (EET). Would this change in code and the implications of the same  be beneficial to tax payers ?

  
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It would be a BANE  given the current tax structure. Presently the provision for utilising the first Exemption i,e, at the time of investment is only Rs 1 lac. The average direct and indirect tax that is imposed on the tax payer is phenomenally high. In such a situation a tax payer makes long term investments(i.e. 3 years plus)  with the objective to enjoy the returns as a lump sum to support his life in that if he has to share with the government a whopping sum of 30 % of returns then it is certainly not fair as he/she has been paying taxes regularly throughout his working life. Most of the times the investments are long enough and are provisions at the time of retirement through invesments such as ppf, insurance, etc and government should certainly not be  interested to seek  share in those profits.


By Niraj S Kakkad, Manager - Wealth, Investascent Wealth Advisors Pvt Ltd  09 27 2010 14:15:17 +0000
 
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It can be made taxable at the time of maturity, but there should be limit (if more than specified limit i.e., 25-50 lacs )if exceed then only it should be taxable, because puting into the same basket to everybody (there is no difference between person earning Rs. 10 lacs or 1crore p.m. or more (as per current slab)) from the taxation point of view is a wrong being done from the very beginning.


By shashi b prasad, Accounts & Finance Manager, I & S Communique P Ltd.  | 10 01 2010 13:49:35 +0000
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EEE and EET TAX SHOULD BE BANE
By Pawan Paharia, Lecturer and project finance officer, Xavier Institute  | 09 29 2010 04:22:37 +0000
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Completely agreeing with you niraj. Thats a good suggestion...      


By Sonali Sarkar, Trading Advisor, American Express  | 09 28 2010 12:42:07 +0000
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a tax payer makes long term investments(i.e. 3 years plus)  with the objective to enjoy the returns as a lump sum to support his life in that if he has to share with the government a whopping sum of 30 % of returns then it is certainly not fair as he/she has been paying taxes regularly throughout his working life. Most of the times the investments are long enough and are provisions at the time of retirement through invesments such as ppf, insurance, etc and government should certainly not be  interested to seek  share in those profits.if it is implemented people will reduce savings in these areas. in my view if I have to pay tax on maturity then why i should not pay it now and invest my money in open market. 


By sanjay kumar mangal, IT , TATA Group Co.  | 09 29 2010 02:35:04 +0000
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