How is DTC, that is proposed to come in April 2011, going to effect investors?
Before the DTC comes into effect, investments in stocks for short-term are taxable while income long-term is not taxable. With DTC into effect, the tax will be on total income.
For income from short-term stock investments, if suppose your total income falls into 30% tax slab, and your income from short-term stock investments is 10000/- then the tax to be paid is 3000/-
Government is deciding to give some deduction on long-term stock investments, the rate has not been decided yet. For income from long-term stock investments, if suppose your total income falls into 30% tax slab, and your income from long-term stock investments is 10000/-, and deduction by govt. is 40%(just an example) then your tax calculation:
Taxable income = 10000 - 4000 = 6000/-
Tax = 30% of 6000 = 1800/-
People in lower tax slab will be benefited more than people in higher tax slab for the long-term stock investments
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awesum read, very informatv
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