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As the New Year approaches, most salaried individuals will be on the lookout for <keyword id="35453" type="PERSON" weightage="20" keywordseo="tax-saving">tax saving</keyword> investments. Most people make the mistake of having a portfolio which is dominated by a single asset class. It’s important to understand that a single asset class can’t deliver the great result compared to that of a well-balanced investment mix. For increased results from your investments, it is necessary to create a responsible assortment of asset classes made up of Equity, Debt and Gold. From SIPs to TIPs, most investments offer tax benefits, but a new type of investment is catching the eye of the investor for providing increased tax- saving benefits. A Unit Linked <keyword id="35450" type="COMPANY" weightage="20" keywordseo="insurance">Insurance</keyword> Plan or a <keyword id="44600" type="CITY" weightage="20" keywordseo="ULIP">ULIP</keyword> is a financial product offered by insurance companies that gives aggressive investors both insurance and investment under one plan. ULIPs are one of the best tax saving investments because not only are the premiums paid eligible for tax deduction under section 80C, but they also help investors below the age of 45 to get great returns: It gives good returns ULIPs allow you to invest in a range of equity funds. Equity has given the best returns over the long term (greater than 5 years). They also have the unique ability to offer 80C tax saving on investments made in debt and balanced funds. No other investment allows 80C tax saving in these asset classes. You can also switch between these funds at no extra cost and still get the benefits of 80C tax saving. Can change between monthly and yearly investments If you want to get the maximum tax benefit in this financial year, it might be best to choose a yearly mode of premium payment.However, with ULIPs, you can change your mode of payment to monthly which is much more convenient way of investing. Tax benefits on maturity The maturity amount on ULIPs can be withdrawn tax free. No other instrument that invests in debt /balanced funds can claim tax free maturity. Life Cover ULIPs come with an in-built life cover element which is ideal for someone in the first 5-7 years of their professional career.<a name="_GoBack"></a> Good <keyword id="2567711" type="PERSON" weightage="20" keywordseo="Long-term-investing">long term investing</keyword> tool The best financial planners are those who invest for the long term. While one can always invest in liquid investments, at least 30% of one’s total investment must be in long term investment instruments and ULIPs by design come with a 5 year lock-in that inculcates the habit of long term investing. The best part about the Unit Linked Insurance Plans are that they are now easily available to buy at any of the trusted insurers websites. In fact, we've made it much easier for you to calculate your monthly premium right here: 
<iframe src="https://www.iciciprulife.com/ulip-plans/ulip-returns-calculator-times.html?UID=6027&amp;utm_source=TimesInternet&amp;utm_medium=BI&amp;utm_campaign=ULIPTaxArticle&amp;cid=Display:Article:TimesInternet:Calculator:DM-TI-Article:LTC:ULIPTax-BI:ULIPTaxArticle::Eng::6027:cpc:::" scrolling="no" width="100%" height="690" frameborder="0">
</iframe>
Disclaimer: The quotes are indicative and TIL bears no legal liability for the calculation. (Image Credits: Policybazaar.com)

ULIPs are one of the best tax saving investments for people under 45 years of age

The <keyword id="35450" type="COMPANY" weightage="40" keywordseo="insurance">insurance</keyword> regulator, <keyword id="6361421" type="ORGANIZATION" weightage="40" keywordseo="IRDA">Irda</keyword>, have given a more customer-friendly avatar to the unit-linked insurance plans, or, <keyword id="6362086" type="CITY" weightage="40" keywordseo="Ulips">ULIPs</keyword>. One of the major reforms in the guidelines was the introduction of cap on charges and commissions that could not be front-loaded and had to be evenly distributed throughout the policy term. Also, the regulator mandated a higher death benefit and a longer lock-in period. 
 
As a result, compared to the old Ulips, the new ones provide better avenues for wealth creation along with adequate cover. With reduced cost structure, there is more that gets invested and therefore makes a significant difference to the returns earned in the long term. 
 
The upfront charges are now uniformly distributed over the five year lock-in period. So, a good portion of the first year premium will be invested and your money starts to grow from day one. 
 
Also, the maximum reduction in yield at maturity, that is, the difference between the gross yield and the net yield has been capped at 3% for policies whose tenure is less than or equal to 10 years, whereas, for plans whose tenure exceed 10 years, the total charges can't exceed 2.25%. This means, the IRR, or, internal rate of return cannot be less than 7.75% in any case. 
 
The lock-in period has increased from 3 years to 5 years which ensures that these policies have long-term orientations and enjoy greater compounding benefits—higher the returns the more your earnings get re-invested. 
 
Insurers have launched plans with lower charges than the cap. In fact, there are online ULIPs in the market where you do not have to pay any commission. So the whole money gets invested and you are able to get higher compounding benefits. 
 They have also become more flexible offering different cover sizes and premium paying terms. Also, there are more fund options to cater to different risk appetites along with top-up options to <keyword id="47916" type="UNKNOWN" weightage="40" keywordseo="invest">invest</keyword> additional premiums. A few insurers are also offering unlimited number of partial withdrawals and higher death benefit as much as up to 40 times the yearly premium. 
 
Being essentially an insurance product, they haven’t lost their core component either. A requirement of minimum sum assured should now be at least ten-times the yearly premium paid ensures they are provide adequate protection as well.

Better returns from new ULIPs

The insurance sector is expected to fly high with the opening up of FDI in the sector. Industry players expect innovation and new insurance products to come in the market, thus giving consumers a wider variety of choices. However, until now, the the $66.4 billion industry has been driven by only a handful of insurance products. BI India brings you some of the popular insurance products in the market and the reason behind their undisputed domination. 
 
<keyword id="514336" type="ORGANIZATION" weightage="20" keywordseo="Endowment-Plan">Endowment Plan</keyword> 
 We all buy a life insurance policy the moment we get our first job. A buyer is often lured into buying a life insurance product through its tax benefits. <keyword id="161880" type="PERSON" weightage="20" keywordseo="Yashish-Dahiya">Yashish Dahiya</keyword>, co-founder of <keyword id="161885" type="COMPANY" weightage="20" keywordseo="Policy-Bazaar">Policy Bazaar</keyword> says, “Traditional policies including endowment and term plan sell more because all non-online channels in insurance companies only sell traditional plans. This is primarily because of the commissions that they would normally make by selling it.” 
 
He further explained that traditional life insurance policies offer short term gains to the consumers which include getting a loan against their policy. “In addition to this, traditional plans offer guaranteed benefits to customers vis-à-vis equity-linked investments. The fact that investment under traditional plans is mostly made in specified government and corporate securities, makes them less risky and more suitable for people with lower-risk appetite,” adds Dahiya. 
 
<keyword id="44600" type="CITY" weightage="20" keywordseo="ULIP">ULIP</keyword> 
 
Unit Linked Insurance Product or commonly known as ULIP have recently started become popular. The new version of ULIPs that was first introduced in 2014 has been gaining popularity amongst retail investors. It offers dual benefit of life cover as well as investment. 
 
Besides, with the onset of online distribution of ULIP, the premium charges have sharply dropped - with no charges for premium allocation, policy admission or discontinuance, except 2.25% fund management charge per annum (for the first 10 years of holding) and mortality charges. According to industry experts, at present, some of the ULIPs cost less than mutual funds. 
 
“The flexibility extended by ULIP has been attracting significant number of investors. ULIPs provide investors an option to invest either in debt funds, equity funds or hybrid funds. Each of these funds has a different level of risk attached to it and you could choose to invest in either of these funds as per your risk appetite. It also gives investors the option to switch between funds with no tax implications whatsoever,” notes Dahiya. 
 
Motor Insurance 
 
Industry players believe that motor insurance is one of the most popular insurance products as it is mandatory to buy one at the time of purchase of the car. However, when compared with health insurance, the premium amount for motor insurance is relatively lower than that for health insurance. This too is also believed to have contributed in making motor insurance more popular than health in India. 
 
Health insurance 
 
Even though India still ranks low globally when it comes to health insurance, industry players have noted that this insurance product is fast gaining popularity. Market estimates suggested that health insurance is the fourth biggest insurance product, next only to motor insurance. 
 
Property Insurance: 
 
Natural calamities as well as unexpected damages to property has boosted this insurance product in the country. Industry players have attributed this trend to the improved awareness amongst people. “The very fact that most of the insurance companies introduced insurance plans that safeguards properties, commercial and personal assets against fire, reiterates its relevance and demand amongst people at-large,” elaborates Dahiya.

These are the Insurance
products that India invests in the most

Insurance policies where the premium is over Rs 5 lakh will no longer be tax-exempt, as per the provisions in the Union Budget 2023-24. Kapil <keyword id="6371425" type="General" weightage="80" keywordseo="mehta" source="Orion">Mehta</keyword>, Co-founder, SecureNow Insurance Broker said the income from traditional insurance where the premium is over Rs 5 lakh will not be tax exempt. While this will dampen the interest of individuals to buy high-value traditional insurance, it will increase the focus on term plans and pure risk covers which is good. A concern is that it should not result in a significant shift towards purely investment-oriented unit link insurances, Mehta said. Arihant <keyword id="4615937" type="General" weightage="80" keywordseo="bardia" source="Orion">Bardia</keyword>, CIO and Co-Founder, <keyword id="16321222" type="General" weightage="50" keywordseo="valtrust" source="Orion">Valtrust</keyword> said if the premium paid on insurance policies (excl. <keyword id="44600" type="General" weightage="50" keywordseo="ulip" source="Orion">ULIP</keyword>) exceeds Rs 5 lakh in a year, then the proceeds from those policies will be taxable (except in case of death benefit). Bardia said this is negative for insurance - as it will impact savings products which are usually high-value and margin products (though not protection). However, smaller policies remain unaffected. Overall a negative for insurance companies as it will impact the high-value premium policies -- thus impacting overall industry GWP growth. A similar provision was already introduced for ULIPs in 2021 wherein the aggregate premium was restricted to Rs 2.5 lakh in a year for tax-exempt proceeds", said Bardia. Mehta said improvements in ease of doing business specifically, the changes pertaining to simplification of the KYC process, one-stop solution for identity and address updating, common business identifier, unified filing, and entity <keyword id="3745298" type="General" weightage="80" keywordseo="digi" source="Orion">Digi</keyword> locker will make placement of insurances easier. Claims payment would also be facilitated. Changes in personal income tax will increase personal disposable income. This will result in individuals' ability to buy better, higher-value insurance to manage their risk, Mehta said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/government-to-set-up-three-centres-of-excellence-in-artificial-intelligence/articleshow/97520242.cms">Budget 2023 gives a boost to artificial intelligence – government to set up three centers of excellence</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/tax-rate-revision-will-increase-purchasing-power-of-middle-class-bandhan-bank-ceo/articleshow/97521375.cms">Tax rate revision will increase purchasing power of middle class: Bandhan Bank CEO</a>

Insurance policies where premium is above ₹5L no more tax exempt

Giving its users a convenience and a cut throat competition to the rivals, the <a href="http://www.businessinsider.in/searchresult.cms?query=LIC">Life Insurance Corporation (LIC)</a> will be launching <a href="http://www.businessinsider.in/searchresult.cms?query=ULIP">Unit Linked Insurance Plan (ULIP) </a>tomorrow. 
 
The policy holders will have options to choose from any of the four funds -- bond fund, secured fund, balance fund and growth fund -- and also with added conveniences of switching between these funds. Within a given policy year, four switches will be allowed free of charge. 
 <keyword id="6367143" type="ORGANIZATION" weightage="20" keywordseo="LIC">LIC</keyword> Senior Divisional Manager, Nagpur, R Chander said that Endowment Plus, a unit linked <keyword id="35450" type="COMPANY" weightage="20" keywordseo="insurance">insurance</keyword> plan will offer investment cum insurance during the term policy and provide due benefit of risk cover and benefits of investment markets. 
 
The NAV (net asset value) of all the segregated funds will be computed on daily basis and will be based on investment performance and fund management change of each fund type. On the launch, tomorrow, the NAV under all funds will be Rs 10. 
 
The product will also offer double death benefit. On death before the commencement of risk, an amount equal to the policy holder's fund value will be payable, while on death after date of commencement of risk, an amount equal to the higher of basis sum assured or policy holder's fund value will be payable. 
 
Further, it comes with an accident death benefit rider which provides for an additional amount equal to accident death benefit sum assured on death due to accident. 
 
Option for partial withdrawal will also be available under the plan, Chander added.

LIC’s maiden product ULIP to be launched tomorrow

<keyword id="443223" type="UNKNOWN" weightage="100" keywordseo="misselling">Misselling</keyword> is defined as deliberate, reckless, or negligent sale of products or services in circumstances where the contract is either misrepresented, or the product or service is unsuitable for the customer's needs. 
 
In simple terms Misselling means that you were given unsuitable advice, the risks were not explained to you or you were not given the information you needed, and ended up with a product that isn’t right for you. 
 
Examples of Misselling in Finance 
· Selling life insurance to someone who has no dependents. 
· Selling retired or elderly person a long-term or child plan. 
· Selling the policy promising a single premium mode or a limited term policy but it actually turns out to be a regular premium mode. 
· Selling endowment plans without disclosing the expenses and commissions earned, 
· Selling ULIPs by promising huge returns, 
· Asking investors to surrender the existing policy (giving false reasons of non performance) and to buy a new high commission-yielding policy. Churning the policy every five or six years while the policyholder pays the price 
· Selling investor five funds with SIPs of Rs 1,000 each instead of one fund with SIP of Rs 5,000. 
· A bank relationship manager suggesting his client to exit from the existing funds as their NAV is at Rs 140, Rs 80 each, and instead start fresh SIP investments in two cheap NFOs with their NAV of Rs 10 each, recommended by the bank’s research team. Relationship manager used the ignorance of his client that low NAV doesn’t mean the fund is cheap and it has nothing to do with the future performance of the fund. · Recently it’s also observed that some unscrupulous elements call randomly(send emails) and introduce themselves as belonging from <keyword id="6361421" type="ORGANIZATION" weightage="60" keywordseo="IRDA">IRDA</keyword> or Ministry of Finance or <keyword id="30067" type="ORGANIZATION" weightage="60" keywordseo="RBI">RBI</keyword> and lure customers with fake offers like bonus or incentives. But they are pushing high commission-yielding products. 
 
Misselling for financial products is not unique to insurance and happens in various lines of businesses such as loans, credit cards, investment products, pharmacy, hospitality etc. The customers mostly buy financial products either in obligation or because of ignorance. Lot of mis-selling of insurance policy happens during last month of a financial year as people are in a hurry to save taxes. 
 
But Misselling is quite rampant in our daily life also in products other than the financial products. Example of a misselling of non financial products: 
 
● Say you were looking to use 4G on a mobile phone. You told the shop assistant that you planned use 4G and they recommended a model. Then you took it home, and found that it doesn’t work. There’s nothing wrong with the phone itself – it’s not faulty – but it’s not what you needed. The mobile phone was mis-sold to you. 
● Fairness creams are a multi-billion rupee industry in India as in India a large population equates fairness with beauty and superiority. Now they have for men too! 
● A superior course, global exposure, international faculty, good placement. Many universities claim. 
● Speak Asia, duped around 23 lakh investors to the tune of Rs 2,000 crore. It promised a weekly income, merely on filling online survey forms. Members paid money to join the firm’s network and earn reward points for referring its offerings to friends and peers. 
● Diet soda With no calories or sugar, comes with its own set of side effects that may harm your health-from kick starting kidney problems to adding inches to your waistline. 
● Brown bread much of the ‘brown’ bread you’ll find in the supermarket is simply the same white bread with brown coloring added. Hardly the healthier choice it’s made out to be! 
● As Indians are becoming more health conscious market is full of high nutritional products heart-healthy cooking oil, crunchy granola bars, fruit-flavoured yoghurt, to dry fruit-sprinkled muesli, we are taking everything that screams low calorie. 
 
If something looks too good to be true, it probably is. And this applies in case of buying anything, any product financial products as well. Don’t get tricked into the trap of marketing, intermediaries and buy the product just because the advertisement or agent is eulogizing it. 
 
Ignorance is no bliss. If you have limited wisdom about a product, an insurance plan or a mutual fund scheme, it becomes easy for commission-seeking agents to trick you into the wrong insurance or mutual fund scheme. Understand that a salesperson or an agent’s job is not to advice on the product's suitability for the specific needs of customers. He/she is just an intermediary between the company he is representing and you, as a customer and so his strategy revolves around just three words: sell, sell, sell. It is unrewarding for him to think about the investor’s financial goals when he has his own to fulfill. 
 
Stop the blame game. Do your own homework before buying any product, including financial product. Playing victim is no use and then till how long can you hide behind it. Misselling happens because mis-buying happens. There is no easy way out, no short cuts. As they say “It is easier to protect your feet with slippers than to cover the earth with carpet.” 
This article is written by Kritika. 
Image: Thinkstock

Misselling: Why You Need To Beware Of It

10 best tax-saving investments

The countdown to meet our financial goals has begun. <keyword id="25456" type="ORGANIZATION" weightage="20" keywordseo="financial-planning">Financial planning</keyword> is usually not our most well-thought-out decision as often our primary focus is saving tax. And, though it should play a key role, just saving tax is not necessarily the best way to go about it. The constant need to save tax instead of planning finances methodically, often leads to lack of liquid funds in times of need. It is, therefore, critical that you strike a balance between your long-term and short-term goals. 
 
This new year, make your savings work double time: save tax and get best possible returns. Here, are a few financial instruments in which you can park your money for long-term investment and ensure quick access to funds, if required. 
 
1. <keyword id="114852" type="ORGANIZATION" weightage="20" keywordseo="Public-Provident-Fund">Public Provident Fund</keyword> (PPF): PPFs top every investor’s list, and they should. The Budget 2014-15 made this scheme even more attractive by increasing the annual investment limit to Rs 1.5 lakhs. This scheme is a safe investment option for all, whether salaried or self-employed. The downside, however, is that it is a long-term saving with a lock-in period of 15 years. Further, you can withdraw money from the fund from the 7th year onward and that too only 50% of the balance. 
 
2. National Savings Certificate (NSC): Post offices issue NSCs as a small savings scheme. You can invest in either 5-year or 10-year NSCs. One great advantage offered by NSCs is that there is no upper limit to the amount you want to invest, though tax benefits will be available on an amount of Rs 1.5 lakh or lower only. 
 
3. Unit-linked <keyword id="35450" type="COMPANY" weightage="20" keywordseo="insurance">Insurance</keyword> Plan (ULIP): It is a long-term savings scheme that doesn’t offer much flexibility or decision-making to the investor. You invest for a period of 10-12 years, with a lock-in period of 5 years. Although <keyword id="6362086" type="CITY" weightage="20" keywordseo="Ulips">ULIPs</keyword> allow you to switch between equity and debt, your profits depend on the financial expertise of your fund planner. On the upside, ULIPs provide the investor with a life cover. 
 
4. Equity-linked Savings Scheme (ELSS): It is flexible with respect to investment duration, with a lock-in period of three years. There is no maximum limit to the amount you can invest in an ELSS, and investment of up to Rs 1.5 lakhs offers tax benefits. One of the many benefits of an ELSS is that no tax is levied on withdrawing your investment after the lock-in period. 
 
5. National <keyword id="6354432" type="UNKNOWN" weightage="20" keywordseo="pension">Pension</keyword> Scheme (NPS): NPS is the cheapest market-linked retirement option as the annual fund management charges are a maximum of 0.25% of the amount invested. Your minimum investment criterion will vary according to the tier you are grouped in. You can invest in any one of the three types of NPS funds and divide your corpus according to your risk-taking ability. 
 
6. Post Office Time Deposit (POTD) scheme: It is primarily a small saving scheme, with the duration ranging from 1 year to 5 years. You can earn an interest of about 8.50%, depending upon your investment period. Though the interest is paid annually, it is compounded quarterly. Further, you can now exit the scheme after 6 months, which makes it a handy investment option. 
 
7. Banks’ Fixed Deposits (FDs): Banks offer 5-year FDs that serve the dual purpose of saving tax and investing money safely. You can invest a minimum of Rs 100 and a maximum of Rs 1.5 lakhs. Banks offer interest rate of 8%-9.75%, depending on the bank you choose. However, the interest earned on the fixed deposits is fully taxable. 
Plan now and save for that rainy day. 
 
 
 
(About the author: The article has been written by By Naveen Kukreja, Director, Paisabazaar.com) 
 
Image: Thinkstock

Your DIY For Optimizing Tax Savings and Financial Liquidity

The <keyword id="6358021" type="General" weightage="100" keywordseo="budget" source="Orion">Budget</keyword> has left the life insurance industry a worried lot with the new tax proposal on higher premium annuity products, a move which the industry fears will hit their top-lines by 10-12 per cent. Leading private life insurer <keyword id="472962" type="General" weightage="50" keywordseo="hdfc-life" source="Orion">HDFC Life</keyword>'s chief executive <keyword id="323997" type="General" weightage="50" keywordseo="vibha-padalkar" source="Orion">Vibha Padalkar</keyword> told PTI that she stares at 10-12 per cent hit on the company's top-line with the Budget proposal to tax life products having annual premium of over Rs 5 lakh. She also fears that the increased tax exemption bracket of Rs 7 lakh and the steep reduction in the maximum surcharge on the affluent to 39 per cent from 42.74 per cent earlier may nudge them to spend more and save less. This can have many cascading impacts on the macro sector by way of a spike in the already high inflation, apart from the life insurance sector which has been facing sales issues since the Covid pandemic as people were not investing in long-term savings. And since the opening up of economic activities, many are on a "revenge spending mode" and not investing in financial products even now. Given the overall increase in incomes, the government should have either ignored the new tax levy on insurance products or it should have imposed tax on products with premium of Rs 10 lakh or upwards. At this level, it will definitely hit the industry hard, she added. The industry was expecting a proposal to offer composite lincence for the insurance sector wherein life insurers would be allowed to renter the health business which they were doing till 2015. Besides, the insurance sector players were also expecting some positive moves on the annuity products front. <keyword id="699506" type="General" weightage="50" keywordseo="tarun-chugh" source="Orion">Tarun Chugh</keyword>, chief executive of <keyword id="138574" type="General" weightage="50" keywordseo="bajaj-allianz-life" source="Orion">Bajaj Allianz Life</keyword>, said the tax proposal on higher value non-Ulip or traditional life policies "is bit of a dampener for the insurance industry and for increasing penetration of insurance and household financial savings." "We as a market still have quite low insurance penetration and there is a need to provide measures and incentives to boost that in the coming years. Also, household financial savings have been falling and insurance is a critical component of that. Household financial savings as percentage of GDP has fallen from 8.1 per cent in FY20 to 6.5 per cent in FY23, he said and warned that discontinuing incentives on insurance plans should put further pressure on household financial savings to some extent. Vighnesh Shahane, chief executive of <keyword id="10687373" type="General" weightage="50" keywordseo="ageas-federal-life-insurance" source="Orion">Ageas Federal Life Insurance</keyword>, said the finance minister has announced that from April income from life insurance policies, other than Ulips, with an aggregate premium amount of Rs 5 lakh per annum or more, which was earlier tax-free, will now be taxable. But she said if the insured person dies in between, the death benefit will continue to remain tax-free. The move is similar to the proposal introduced a couple of years ago which imposed tax on the maturity amount of Ulips if the annual aggregate premium exceeded Rs 2.5 lakh, he said. The proposal is likely to dent the sales of non-par products which have been witnessing strong growth over the last few years, especially during the pandemic. As the cap of Rs 5 lakh is applicable for all life policies across insurers, it may deter individuals from purchasing additional policies if they have exhausted their limit with their primary insurer, he explained. <keyword id="14942220" type="General" weightage="50" keywordseo="supriya-rathi" source="Orion">Supriya Rathi</keyword>, a wholetime director at <keyword id="2647323" type="General" weightage="50" keywordseo="anand-rathi-insurance-brokers" source="Orion">Anand Rathi Insurance Brokers</keyword>, opined that the budget has "given bad news for life insurance companies" by limiting the income tax exemption on proceeds of insurance policies.

Life insurers stare at 10-12% hit on top-line as Budget taxes higher premium products

Investors in India and abroad have been grappling with changing laws on equity investors. Amid the uncertain environment, there are possibilities of an increase in capital gains tax on equities. It is to see whether <a href="http://www.businessinsider.in/searchresult.cms?query=arun+jaitley&amp;sortorder=effectivedate">Finance Minister Arun Jaitley </a>will announce tax measures in favour of investors or not in <a href="http://www.businessinsider.in/searchresult.cms?query=budget+2017&amp;sortorder=effectivedate">Budget 2017</a>. 
 
"A possible resolution of the tax issues in favour of investors this time around may drive outperformance in Indian equities after the Budget. If not resolved favourably, investor sentiment will be impacted negatively,” CLSA said in a note. 
 
As per the CLSA, tightening tax treaties will have a negative impact on <a href="http://www.businessinsider.in/searchresult.cms?query=indian+stock+market&amp;sortorder=effectivedate">Indian markets</a>. In May 2016, the government moved to tighten the India-Mauritius tax treaty, after which foreign portfolio investors (FPIs) ended up paying at the same short-term gains tax rate of 15% on Indian equities. Similar changes were made to the tax treaties with Cyprus and Singapore by the end of 2016. 
 
"Renegotiation of tax treaties with Mauritius, Singapore and Cyprus would raise taxes from April 2017 for investors using those routes,” CLSA said in a note. 
 
"We hope these issues are resolved in the Feb 1 Union Budget. If resolved in favour of investors, the underperformance of the domestic market would reverse, in the same way it did last year when similar concerns existed,” the note said. 
 
Also, the retrospective FPI tax fear is back again. The Indian Government had issued clarifications on indirect tax provisions that bring end-investors in a foreign fund under Indian tax laws. 
 
The clarifications impact those FPIs with over 50 per cent of AUMs in India with a concentrated end-investor base i.e. end-investor with less than 5 per cent of the AUM. 
 
"Some of the India-dedicated funds will likely be impacted. Large end-investors in these funds may be subject to double taxation with this development," said the CLSA note. 
 
Besides, if increased capital gains tax on equities in general happens, unit-linked insurance plans (Ulips) may see larger inflows. 
 
Listed shares in India attract long-term capital gains (over 1 year holding, LTCG) tax at 0 per cent and short-term (less than 1 year holding) capital gains tax at 15 per cent. This is against a 30 per cent top tax bracket on interest and personal income. 
 
The global brokerage firm is of the view that there is a possibility that short-term capital gains tax on equities which is partly being offset by the Securities Transaction Tax currently may be raised. "If any of the above happens, Ulips may gain prominence as they enjoy a tax advantage," it said.

Indian market may see red due to these tax uncertainties

<ul><li>You must disclose income from virtual digital assets (VDA)s such as <keyword id="2420795" type="General" weightage="20" keywordseo="cryptocurrencies" source="Orion">cryptocurrencies</keyword>, non fungible token (NFT)s and more in the ‘schedule VDA’ provided in the <keyword id="6374875" type="General" weightage="20" keywordseo="itr" source="Orion">ITR</keyword> form. </li><li>Schedule VDA requires information such as the acquisition date, transfer date, category of income for taxation, acquisition cost in the case of a gift, and consideration received. </li><li>The donation reference number (ARN), obtained from the form 10BE donation certificate must be included in the ITR to avail 80G deductions. </li></ul>With the <keyword id="6354751" type="General" weightage="20" keywordseo="income-tax" source="Orion">income tax</keyword> filing deadline less than a month away, you need to ensure you are up-to-date on all the changes that are applicable this year. While modifications in tax and taxability of income from insurance policies (other than ULIPs) are among the most notable changes that have drawn a lot of attention, there are a couple of lesser known changes one should be aware of when filing one’s taxes. We take a look at these changes. The first is about disclosing income from virtual digital assets (VDAs) such as cryptocurrencies. “The taxpayer must disclose income from VDAs such as cryptocurrencies, NFTs, and so on in the "schedule VDA" provided in the ITR form,” says Aashish Sharma, co- founder and litigation head, Lex N Tax, a tax consultancy firm. Schedule VDA requires information such as the acquisition date, transfer date, category of income for taxation, acquisition cost in the case of a gift, and consideration received. “Those who get VDA income are not eligible to file ITR-1 or ITR-4. Such income can instead be declared in ITR 2 or ITR 3. Further, income from VDAs can be taxed either under the head of business income or capital gains,” says Sharma. Budget 2022 had introduced new NFT (non fungible token) and VDA regulations. The transfer of such assets will be subject to an income tax rate of 30% plus a surcharge and a levy beginning April 1, 2022, as per recent regulations. “TDS will be deducted at 1% of the sale price beginning July 1, 2022. This tax will be deducted by the developer, intermediary, broker or donor. The taxpayers cannot set off losses or carry forward the losses within crypto or from different heads,” says Suneel Dasari, founder and chief executive officer at EZTax, a tax portal. <cmsannotation type="cmsannotation" annotationid="Provide details of donation reference number to avail 80G deductions" comment="subhead" text="Provide details of donation reference number to avail 80G deductions">Provide details of donation reference number to avail 80G deductions</cmsannotation> To avail a deduction under <keyword id="1667689" type="General" weightage="20" keywordseo="section-80g" source="Orion">Section 80G</keyword> for donations made to charitable institutions, non governmental organisations or research universities, it is crucial to possess the donation receipt, and the donation certificate in Form 10BE. Taxpayers must provide the necessary information regarding their donations in the relevant 'Schedule 80G' within the ITR form in order to claim the deduction. “All approved u/s 80G charitable institutions, NGOs, and research universities must submit Form 10BD for all donations received during the fiscal year. They must also provide form 10BE to the recipients,” says Dasari. Form 10BE, containing a unique registration number, will be issued to benefactors after form 10BD has been filed by the institution. It is essential to enter donation details accurately in the appropriate table while filing the ITR. There is a new column under Table D for disclosing the donation reference number (ARN) for donations made to eligible entities where a 50% deduction is allowed, subject to the qualifying limit. The ARN, obtained from the form 10BE donation certificate issued by the institutions who received the donation, must be included in the ITR. This has been implemented to match donor and donee records and reduce the prevalence of fraudulent donations claims.

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