What is bond washing transactions in income tax?
A bond-washing transaction is a transaction where securities are sold sometime before the due date of interest and reacquired after the due date is over. Assessee transferring the securities to their relatives/friends in the lower tax slab just before the due date of payment of interest to avoid tax.
Are govt bonds tax-free?
As the name suggests, its most attractive feature is its absolute tax exemption on interest as per Section 10 of the Income Tax Act of India, 1961. Tax-free bonds generally have a long-term maturity of ten years or more. The government invests the money collected from these bonds in infrastructure and housing projects.
What are less tax securities?
Less tax securities refers to those securities where interest is paid to the assesses after deducting tax at source.
Is Bond washing a transaction?
Bond Washing and Tax Avoidance Bond washing is a method of tax avoidance that involves selling a bond cum dividend and buying it back ex-dividend. In effect, the investor generates a tax-free capital gain on his or her sale and repurchase transaction.
How will you treat the loss from house property?
During a specific assessment year, losses arising out of house property will be allowed to be offset against income from other sources. This loss can be adjusted against income shown under other heads i,e Salary, Business or Profession, Capital Gains or other sources as per the IT act.
Is it legal to avoid tax?
The biggest difference between the two is that tax avoidance is completely legal. In tax avoidance, you’re making use of your tax benefits to lower taxes for your small business. In tax evasion, you’re deliberately reducing your tax liability by lying or omitting numbers when you file your taxes.
What investments are tax free?
The easy tax saving investments that should be known by all the taxpayers of India are:
- 5 years Bank Fixed Deposit.
- Public Provident Fund (PPF)
- National Savings Certificate (NSC)
- Equity Linked Saving Schemes (ELSS)
- Unit Linked Investment Plan (ULIP)
- National Pension Scheme.
- Life Insurance.
What are included and excluded from capital assets?
Any stock in trade, consumable stores, or raw materials held for the purpose of business or profession have been excluded from the definition of capital assets. Any movable property (excluding jewellery made out of gold, silver, precious stones, and drawing, paintings, sculptures, archeological collections, etc.)