Important questions for Tax Planning and Estate Planning – CFP

No.	Question	Chapter
1	Pramod redeemed entire units of debt oriented mutual fund on 31 December 2011 at Rs 22.16. He originally purchased 3500 units at Rs 18.27 during 2007-08 .He received dividends of 18% 20% 18% 17% in this period. He reinvested the same by Rs 19.15, Rs 20.06, Rs 21.11, Rs 21.81 at last business day of November 08 to 11.Compute his taxable income for this transaction. CII 07-08 551, 08-09 582, 09-10 632, 10-11 711, 11-12 785. Solution:   div% opening amt units cost of acq Nov-08 18 3500 6300 328.981723 19.15 Nov-09 20 3828.981723 7657.963446 381.752914 20.06 Nov-10 18 4210.734637 7579.322346 359.039429 21.11 Nov-11 17 4569.774066 7768.615912 356.195136 21.81   units sale consi indexed cost gain/loss   3500 77560 91101.31579 -13541.316 long term 328.981723 7290.234987 8497.42268 -1207.1877 long term 381.752914 8459.644565 9511.869154 -1052.2246 long term 359.039429 7956.313747 8368.168835 -411.85509 long term 356.195136 7893.284209 7768.615912 124.668298 short term             taxable income 124.668298 short       -16212.583 long Hence, LTCL=16,212 and STCG = 125	Capital Gains
2	Xavier aged 37 was awarded a car of market value 4.5 lakh by his credit card company in a draw on 27 sep 2011. The company did not deduct any TDS. Xavier has a total income of Rs 7.85lakhs in PY 11-12. He saved Rs 1.5 lakh under different investment instruments eligible for exemption in 80 (c) and Rs 18k was paid by him on 5 January 12 towards health insurance policy. Find his tax liability for 12-13 (a)  202980 (b)   193640 (c)    206410 (d)   157980 Solution: For financial year 2011-12 there is not cess applicable on TDS apart for TDS on salary payments. Hence, 1,35,000 is the tax (@30% on gross value) on the car as it covered under the definition of lottery. Other taxable income is 6,70,000 (i.e. 7,85,000-1,00,000-15000) Tax on the same is 66,000+cess Hence the tax amount = 135,000+67,980 = 2,02,980 And answer is A	IFOS

3

Father purchases residential house for Rs 7 lakh on 28 sep 86. He dies on 21 mar 09 and his son inherited the property. On this date the fair mkt value of property is Rs 36 lakh. His son sold the property on 25 June 11 and received a net consideration of Rs 25 lakh. Determine nature and amount of capital gains earned by son? CII 81-87 140 , 08-09 582 , 11-12 785Solution: Section 49 is applicable here. Sale consideration = 25,00,000 Indexed cost of acq = 7,00,000 * (785/582) = 9,44,158 LTCG= 15,55,842

CG

4

Mr. Paresh earned income from other sources Rs 30 and LTCG of Rs 70k by selling house. For 11-12 he invested Rs 80k in ELSS of MF. Compute his net total income. (a)   30k (b)   20k (c)   70k (d)   1 lakh Reason: Deduction U/S 80 C to 80 U cannot be availed in case of LTCG and STCG

CG

5

Mr. Malav purchases house property in 81-82 for Rs 3 lakh and sold for 34 lakh on 14 may 11. He purchased new house on 28 June 11 for Rs 10 lakh. Calculate LTCG? CII 81-82 100 and 11-12 785 Solution: Sale consideration = 34,00,000 Indexed cost of acq = 23,55,000 LTCG = 10,45,000 Deduction u/s 54 = 10,00,000 Taxable LTCG = 45,000

CG

6

Mamta age 63 is having income from other sources 4,50,000 and Agriculture income of 50,000. Calculate tax on income (ignore cess). Solution: Total income i.e. 4,50,000+50,000=5,00,000 Tax = 25,000 – 5000 = 20,000

AI

7

Which of the value of asset attract Wealth tax? (a)   20 Lakh (b)   25 Lakh (c)   30 Lakh (d)  45 Lakh Reason: Wealth tax applies when the net assets exceed 30L

WT

8

Mr A owns a let out property in Delhi whose net annual value is Rs 100000. The interest paid on loan of the property is Rs 30000. Calculate income from house property? (a)    NIL (b)   1,00,000 (c)   40,000 (d)   70,000 Solution: The answer of the question looks like 1,00,000-30,000=70,000. But thats not right. The correct solution is, NAV    = 1,00,000 less: SD 30% = 30,000 less: Interest   = 30,000 Hence, the income from HP is 40,000

HP

 These are the questioned which have been asked by visitors of the site. I have no ownership of any of the question stated above.

Are CFPs made for investment management?

Dear All,

Recently I had a meet with many of the brokers, Mutual fund and Insurance agents. While discussing about CFP as career qualification and as a need of future, I came across interesting feedback.

Almost everybody has the same understanding about CFP and were in the opinion that, they have been doing the same job of investment planning from the years, hence they showed less interest in understanding the actual science of financial planning.

So I would also like to know your opinion on the same. Are CFPs ment only for investment planning in real life (not in books). What is the real role of a CFP in our country. How can the qualification be promoted?

As it has been observed that many of the CFPs are involved only in investment planning and earn commissions or brokerage and have not started charging clients. Lets discuss the same in the comments.

Prashant V Shah.