Impact of DTC on PPF and ELSS?

Tax queries 2242 views 8 replies

sk_1122

159 Points Joined January 2011

Hi everyone :)

After reading on various blogs and forums on internet about how DTC is going to impact PPF, I am a bit confused.

Some sites say that PPF is not going to stay a Tax Saving Instrument after DTC. Some say it will remain as a Tax Saving option. Which is true?

Also, I read somewhere that, new investments made in PPF after DTC is applied will be taxable while old investements prior to DTC will remain non-taxable. Plz clarify. I am not sure whether to open a PPF a/c or not?

Now, Regarding ELSS - I understand that ELSS is not to stay as Tax Saving option in future (after DTC). I have invested some amount this yr in ELSS funds. If I redeem my investement after 4-5 yrs (when DTC will be applicable), will the amount be taxed? In case LTCG tax becomes applicable by then will I need to pay that? Or will the investements made now will treated according to current rules in future also?

Plz clarify :)

Replies (8)

Ashish Ojha

Chartered Accountant

469 Points Joined September 2009

कृपया चिंता न करें . DTC अभी पुनर्निरीक्षण की अवस्था में है. अंतिम रूप में सभी समस्याओ का हल होगा.

sk_1122

159 Points Joined January 2011

Originally posted by : Ashish Ojha
	कृपया चिंता न करें . DTC अभी पुनर्निरीक्षण की अवस्था में है. अंतिम रूप में सभी समस्याओ का हल होगा.

To, abhi naya PPF account kholna chahiye ya DTC ke antim roop ka intezaar karna behtar hoga?

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

even in case of taxability of some investments on withdrawl or exit of plans, the investment made prior to DTC notification date would enjoy the tax free status or the status of the date prior to DTC notification date, till the exit / redemption, however the fresh investments after DTC notification would attract the DTC new rules.

so one can go happily to for new PPF account without any fear.

sk_1122

159 Points Joined January 2011

Originally posted by : U S Sharma
	even in case of taxability of some investments on withdrawl or exit of plans, the investment made prior to DTC notification date would enjoy the tax free status or the status of the date prior to DTC notification date, till the exit / redemption, however the fresh investments after DTC notification would attract the DTC new rules. so one can go happily to for new PPF account without any fear.

So, what is the new DTC rule for PPF accounts as off now? Will the investements made after DTC period be taxable in PPF? If the future investments in PPF a/c becomes taxable, whats the point in opening a new PPF a/c now which will be having a 15+ yr lock in period.

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

till now the ppf investment is tax free u/s 80C and interest is tax free unconditionally without any limit.

if such investment goes taxable in any year due to change of law, govt gives option to withdraw from plan without damaging the deductions availed, and at that time the circulars are issued to relax the lock in period.

DTC is still under debate, maybe at the time of budget 2011 some more light will come on the issue.

sk_1122

159 Points Joined January 2011

Originally posted by : U S Sharma
	if such investment goes taxable in any year due to change of law, govt gives option to withdraw from plan without damaging the deductions availed, and at that time the circulars are issued to relax the lock in period.

Ok. Gr8. This is what I actually was concerned about. Good to know that Govt gives such options. :)

Vishal

Online Marketing

658 Points Joined September 2010

With the Direct Tax Code proposing elimination of Equity Linked Mutual Funds from the list of tax-saving options; mutual fund houses are doing their best to increase their AUM share under the ELSS category of mutual funds.
While considering an ELSS fund for your market-linked tax-saving portfolio, give importance to those ELSS funds that have completed at least 3 years of track record and select funds from fund houses which follow strong investment systems and processes.

Flavour of the season: ELSS