Insurance
Ø Premiums paid towards an insurance plan will be eligible for a deduction under section 80C.
Ø Any amount received under an insurance plan will be exempt from tax under section 10(10D).
Keyman insurance
Ø Premium paid towards a keyman policy will be admissible business expenditure.
Ø Amount received on death will be exempt from tax under section 10(10D)
Ø Amount received on maturity will be taxable.
Mutual funds
Ø In the equity oriented mutual funds, the dividends will be exempt from tax.
Ø In the case of ELSS schemes, the contribution is an eligible investment avenue under section 80C and the dividends will be exempt from tax.
Derivatives
Ø Derivatives are not treated as a speculative transaction. Hence,losses on derivative transactions can be set off against other capital losses.
Equities
Ø Buy backs – The amount at which the company buys back the shares is the sale consideration and the difference between the sale amount and the cost of acquisition will be taxed as a capital gain in the hands of the shareholder.
Ø Bonus – the cost of acquisition of bonus shares is nil. Hence, the sale value will be fully taken into consideration for computing capital gains.
Ø Rights – In case the right shares are sold in the market, then the amount will be taxable.
Ø ESOPS – In case the employee exercises his option to purchase the shares and sells the same in the outside market, the amount of gain will be taxable.
Bonds and debt instruments
Ø RBI bonds – RBI bonds no longer boast of any tax sops.
Ø Infrastructure bonds – Infrastructure bonds issued by ICICI and IDBI etc are eligible investment aenues under section 80C of the income tax act.
Ø POSS – Contribution towards PPF is eligible under section 80C. Interest earned is exempt under section 10(10D).
Ø NSC – Contribution towards NSC is eligible under section 80C. Interest earned is fully taxable.
Ø POMIS – There are no tax benefits whatsoever in the case of POMIS.
