Pre IPO (FPO)

Latest updated on 05th Jun. 2022.

Documents: (soft copy) Aadhar, CML (Clients Master List) of clients broker, 

Payments mode: All online modes, RTGS etc. 

Note: All stocks will be transfer on Clients demat account. 

Concept: Those are Private Companies stocks which are not listed on share Market / Stock Exchanges. 

Pre IPOs/ Private Equity/ FPO

Last updated on 27th April. 2022.

Pre IPOs

IMP Notes:

1) It's legal deal. It's 📴 Off Market deal.

2) It's in offline Market buy & Sell. Broker help to find Buyers and sellers.

3) You can get in your demat account also.

4) Need to hold 6 months compulsory, if Same IPO come. Before IPO come you can sell any time to Pre IPOs.

Old Pre IPOs

PRE - IPO

Pre-IPO Shares : A Perspective::

 Shares of Promoters, their Friends and Relatives issued at the time of establishing a firm/Company.

 These Shares are held closely amongst themselves indicating their contribution for their Business

 Such shares are issued normally on par- face value and payment same- with no premium.

 These shares gain value over a period of time thanks to the efficiency of performance of the Company

These shares are not listed in any exchange and are not available for Trading-Buying/selling. These unlisted shares are of small companies initially, with good business and growth prospects in terms of business volume and potential growth in value of shares.

 These unlisted shares are available at huge discount before they go for Public issue and listing in Stock Exchanges as they provide for good value once listed.

Smart Investors go in for such unlisted shares ahead of IPO- listing and gain substantially after listing.

 These Shares when they come to Public for subscription, huge Premium will be charged.

How we, at Goodwill Wealth management do to help you in this smart investment? Here it is:

Goodwill has a highly qualified and trained Finance Professionals who thoroughly analysis such forthcoming IPO issues in advance and recommend for securing these company shares. Our Focus in the process would be to:

 Identify those companies whose market reports have been good based on their past performance.

 The background of the Promoters and their track record

 Threadbare analysis of their critical financial data for the past few years, dividend payment etc

 Probable pricing and timing of IPO.

A study of their products, market share, order books etc.,

 A study of their peer Companies in terms of performance

 Major shareholders and their holding pattern of shares

 The market news about the company and their future prospects for the Company

Listed vs Unlisted (Pre-IPO) shares of Companies: Salient Features:

 Listed companies go through the process of SEBI regulator and Exchange rules for getting their shares to become Public and then to get listed in the Exchange. It is a tedious process consuming time

 Whereas it is certain to secure the unlisted shares in advance through this process prior to IPO without much difficulty, the allotment of shares in IPO is not certain if the demand is more and even the quantity is less on allotment sometimes.

One does not know the actual rate/price at which the share is listed/quoted on listing in the Stock Exchange and sometimes it could be less than the offered rate too. This is mainly due to the share's market performance, demand and supply of these shares, the investment preference and perceptions of the investors and the general market scenario like overall economy, recession etc.,

But in the case of picking up unlisted shares one is definite about the quantity, pricing etc.,as it solely depends on the performance of the Company only and not any external factors.

How do you go about buying the Unlisted shares? It is quite simple !

 These shares are bought through your D-Mat account by a simple process- in one day after receipt of the quoted amount into the designated bank account.

 The basic KYC documents to be furnished.

 The Proof of share allotment and transfer will be made and the receipt of amount confirmed.

 The Company will issue a "Share Purchase agreement; (SPA) in the name of the investor.

 Your Investment Advisor- Goodwill- will undertake the entire process and help you in securing the Unlisted -Pre-IPO shares smoothly and with ease.

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Note: Our Services Version updated (Year wise) now, It's 22! We change & improved our system time to time!

24 March 2024

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Taxation %

 Income Tax (Year: 2021)

Shares Trading Taxes

Mutual Funds Taxes

Source of Income from Mutual Funds

Before we delve deeper into the taxation angle, let us discuss the sources of income from mutual funds.

Income from mutual funds can be either from –

• Regular dividend
• Sale of shares in funds

Let us discuss dividends first.

Dividends received from funds are exempted from tax. A DDT of 25% is levied on non-  equity- oriented schemes along with a 12% surcharge and 4%cess, making an effective DDT amounting to 29.12% for both resident Indians and NRIs.

Capital gain tax on mutual funds

Before understanding the taxation structure on capital gains, we need to understand capital gains from the point of the mutual fund holding period.

Since capital gains are taxed by income tax authorities, the quantum of tax to be paid depends on the holding period. The holding period can be classified into two broad categories – Short-term and long-term.

The following table gives an idea of what constitutes short-term and long-term

Taxation

a) Long-term capital gains

1.Tax saving equity funds

• An investment made under ELSS (Equity Linked Savings Schemes) qualifies for tax exemption under section 80C. The total savings under 80C that qualifies for exemption is Rs.1.5 lakhs (max).
• Apart from ELSS, other payments like LIC, PF, Children’s school fees, etc also qualify.
• If an investor has no other deduction in 80C, he can invest a maximum of Rs.1.5 lakhs to qualify for tax exemption. If the investor is in the 20% tax bracket, he saves Rs.30000 tax.
• If the investor claims a Rs.50,000 exemption on payment of children’s school fees, PF, etc, he can invest Rs.1 lakhs in ELSS. The maximum permissible exemption under 80C is Rs.1.5 lakhs
• ELSS comes with a locking period of 3 years. The investor can’t redeem the units before 3 years.
• Long Term Capital Gain (LTCG) Tax on redemption is exempted up to Rs.1 lakh. If LTCG is more than 1 lakhs, the applicable tax is 10% without indexation.

• 2. Non-tax saving equity funds

  Long Term Capital Gain (LTCG) Tax on redemption is exempted up to Rs. 1 lakh. If LTCG is more than 1 lakh, the applicable tax is 10% without indexation.

  b) Short-term capital gains

  Short-term capital gains are taxed @ 15%

  1. Debt funds
  • Long-term capital gains (=>36 months) on debt funds are taxed at 20% after indexation. (Indexation takes into consideration the inflation between the year of purchase of debts funds and the year of sale of debt funds)
  • Short-term capital gains (< 36 months) on debts funds are added to your income and taxed as per the applicable slab your income falls under (5% or 20% or 30%)

  2. Balance fund

  They are equity- oriented funds that invest 65% (minimum) of assets in equities. These are taxed as, “Non-tax savings equity funds”.

  3. Systematic Investment Plan (SIP)

  Each investment is considered a new venture and capital gains are taxed accordingly.

  The following example will help to understand tax:

  One investor invests Rs 5,000 per month starting from April 2020

  Another investor invests Rs 60,000 lump sum at the same time

  Both redeem their entire funds.

  In the case of a SIP investor, Rs 5,000 will qualify for tax exemption as the investment made in April 2020 would have exceeded more than 1 year as of May 2021

  In the case of an investor who invests Rs 60,000 lump sum in April 2020, the entire capital gain is exempted.

Tax on bank FD

When & How to Pay Income Tax on Fixed Deposit’s Interest Income?

Fixed Deposits (FDs) allow you to exploit the complete potential of Section 80C to deduct Rs 1.5 lakh from your taxable income. It also ensures capital protection along with some interest returns. However, the interest income earned on the fixed deposit is taxable. Seldom do investors think about paying tax on the interest income on time. This article will cover when and how to pay income tax on FD interest income.

How is interest income taxed?

Interest income from Fixed Deposits is fully taxable. Add it to your total income and get taxed at slab rates applicable to your total income. It is to be reported under the head ‘Income from Other Sources’ in your Income Tax Return. 

Banks deduct tax at source at the the time of crediting interest to your account if the amount of interest is beyond Rs.40,000 for individuals other than senior citizen.(in case of senior citizen the threshold is Rs.50,000). 

Hence it should be remembered that the TDS is deducted at the time of credit of interest and not when the FD matures. So, if you have an FD for 3 years – banks shall deduct TDS at the end of each year. (See below for more details on TDS on FDs).

Understanding TDS: 

When you receive certain payments the person paying you has to deduct tax before making the payment. This tax deducted at source is called TDS, which they pay to the Central Government. 

You will receive the credit of amount net of tax. You then have to add the gross amount to your income while reporting in your Income Tax return. As against this, the credit of TDS is also provided from the total tax liability or TDS refund is offered in case of nil tax liability. 

For an example, if you earn FD interest of Rs.100, the bank would deduct 10% TDS i.e Rs.10 and deposit it to the government.While reporting the interest income in ITR, you have to report entire interest earned of Rs.100 in your ITR and claim the TDS deducted by the bank of Rs.10 as TDS refund or tax credit from the outstanding liability, as the case may be. 

How to calculate tax on interest income?

Add the interest income to your total income in your Income Tax Return each year (even though, it may not be paid out). Interest income is to be reported under the head ‘Income from other sources’ while filing ITR. See which tax slab rate you fall into. 

The Income Tax Department will adjust the TDS (which has already been deducted) against your final tax liability. 

If the bank does not deduct TDS from your interest income, the total interest income earned from your fixed deposits in a particular financial year is to be added to your total income and pay tax on it.  

It is not advisable to wait until the maturity of your FD when interest is actually received– to report the interest income. This is because the accumulated interest may push you up to a higher slab and you may end up paying the more tax.

You can view the details of TDS deducted on any of your income by viewing your Form 26AS. 

Let’s understaNCOME TAX ON FIXED DEPOSIT’S INTEREST INCOME?

When & How to Pay Income Tax on Fixed Deposit’s Interest Income?

Fixed Deposits (FDs) allow you to exploit the complete potential of Section 80C to deduct Rs 1.5 lakh from your taxable income. It also ensures capital protection along with some interest returns. However, the interest income earned on the fixed deposit is taxable. Seldom do investors think about paying tax on the interest income on time. This article will cover when and how to pay income tax on FD interest income.

Table of contents

• How is interest income taxed?
• How to calculate tax on interest income?
• When to pay tax on interest income?
• Understanding TDS in relation to FDs
• Interest from FD for senior citizens
• Frequently Asked Questions

How is interest income taxed?

Interest income from Fixed Deposits is fully taxable. Add it to your total income and get taxed at slab rates applicable to your total income. It is to be reported under the head ‘Income from Other Sources’ in your Income Tax Return. 

Banks deduct tax at source at the the time of crediting interest to your account if the amount of interest is beyond Rs.40,000 for individuals other than senior citizen.(in case of senior citizen the threshold is Rs.50,000). 

Hence it should be remembered that the TDS is deducted at the time of credit of interest and not when the FD matures. So, if you have an FD for 3 years – banks shall deduct TDS at the end of each year. (See below for more details on TDS on FDs).

Understanding TDS: 

When you receive certain payments the person paying you has to deduct tax before making the payment. This tax deducted at source is called TDS, which they pay to the Central Government. 

You will receive the credit of amount net of tax. You then have to add the gross amount to your income while reporting in your Income Tax return. As against this, the credit of TDS is also provided from the total tax liability or TDS refund is offered in case of nil tax liability. 

For an example, if you earn FD interest of Rs.100, the bank would deduct 10% TDS i.e Rs.10 and deposit it to the government.While reporting the interest income in ITR, you have to report entire interest earned of Rs.100 in your ITR and claim the TDS deducted by the bank of Rs.10 as TDS refund or tax credit from the outstanding liability, as the case may be. 

How to calculate tax on interest income?

Add the interest income to your total income in your Income Tax Return each year (even though, it may not be paid out). Interest income is to be reported under the head ‘Income from other sources’ while filing ITR. See which tax slab rate you fall into. 

The Income Tax Department will adjust the TDS (which has already been deducted) against your final tax liability. 

If the bank does not deduct TDS from your interest income, the total interest income earned from your fixed deposits in a particular financial year is to be added to your total income and pay tax on it.  

It is not advisable to wait until the maturity of your FD when interest is actually received– to report the interest income. This is because the accumulated interest may push you up to a higher slab and you may end up paying the more tax.

You can view the details of TDS deducted on any of your income by viewing your Form 26AS. 

Let’s understand this by way of an example: 

1. Ritwik falls in the 20% tax bracket. He has 2 Fixed Deposits with a bank of Rs 1,00,000 each for a period of 3 years @ 6% interest per annum. In the first year, Ritwik’s interest income is Rs 6,000 from each of the FDs, total interest accrued is Rs 12,000 in the first year. Bank does not deduct TDS for annual FD interest below Rs 40,000. 
2. Another example , Mr. Anurag has a fixed deposit of Rs 10 lakh @ an interest rate of 6% p.a. He receives an annual interest of Rs 60,000. The bank deducts TDS on the whole of Rs 60,000  at 10% i.e Rs.6000. The prescribed rate of TDS is 10%. 

When to pay tax on interest income?

If there is a tax liability on adding interest income to your total income, then the same is required to be paid on or before 31st March of the financial year. This is how you can pay any tax that is due. 

However, if tax payable after the inclusion of your interest income in your total income is more than Rs.10,000 – then you are liable to pay Advance Tax. Hence the rules of quarterly payment of advance tax in installments are to be compiled. 

Understanding TDS in relation to FDs

When does the bank not deduct TDS:

If your interest income from all FDs with a bank is less than Rs 40,000 in a year, the bank cannot deduct any TDS. The limit is Rs 50,000 in the case of a senior citizen aged 60 years and above. 

Prior to Budget 2019, the limit of TDS on interest income was Rs. 10,000.

When does the bank deduct TDS @ 10%

The bank estimates your interest income for the year from all the FDs you have with the bank. There would be a 10% TDS deduction if your interest income exceeds Rs 40,000 (Rs 50,000 in the case of senior citizens). Prior to Budget 2019, the limit of TDS on interest income was Rs. 10,000.

When does the bank deduct TDS @ 20%:

In case you do not provide your PAN information to the bank, they will deduct 20% TDS. So do make sure that the bank has your PAN details.

When your overall income is less than Rs. 2.5 lakh

No TDS is deductible when your total income is less than the minimum taxable amount. Some investors may have more than Rs 40,000 interest income in a year, but their Total Income (including interest income) is less than the minimum exempt income (Rs 2.5 lakh for FY 2019-20).

 When there is no tax payable by the individual, the bank cannot deduct TDS. However, in such cases, the bank will not deduct TDS only where you submit Form 15G or 15H to claim interest income without TDS.

How to ensure zero TDS deduction by the bank

The only way to make sure that no TDS is deducted by the Bank is when your total income is not subject to tax and you submit Form 15G and Form 15H to the bank before the due date. 

Submit these forms at the beginning of each financial year to avoid the whole hassle of additional TDS deduction and subsequent refund from the IT Department.

Interest from FD for senior citizens

Senior citizens receiving interest income from FDs, savings account and recurring deposits can avail of income tax deduction of up to Rs 50,000 annually. This is by way of an amendment vide Finance Act 2018.

 Please read out the detailed article on this here, where we have discussed provisions of section 80 TTB. If the senior citizen’s interest income from all FDs with a bank is less than Rs 50,000 in a year, the bank cannot deduct any TDS. 

Hope this helps you understand taxes on FD interest income in detail, do reach out to us if you have any questions!

Frequently Asked Questions

What is the tax payable on FD interest?

FD interest or fixed deposit interest income gets taxed as per your income slab rates. In case you are in the lowest slab, you pay less tax. However, if you are in the highest slab, you need to pay tax in addition to the tax deducted or TDS by the bank.

Will I be able to get FD interest without TDS if my income is below the taxable limit?

You can claim FD interest in case your income is below the taxable limit by submitting Form 15G. In the case of a senior citizen, you can submit Form 15H.

When do banks or post office deduct tax or TDS?

Banks or post offices deduct tax or TDS when the aggregate interest income on all fixed deposits exceeds Rs 40,000 per financial year. The limit is Rs 50,000 in case of senior citizens.

What is the tax deduction on FD interest for senior citizens?

Senior citizens can claim a tax deduction up to Rs 50,000 on FD interest income while filing their income tax return.

Video 📺🎥🎦 Just click on link (YouTube icons) to see videos.

Equity taxation?

Part 1

https://youtu.be/daMkLSIIuDE

Part 2

https://youtu.be/t8kde6lZGm0

NCD Taxation: (Non Convertible Debentures) Tax as per clients Tax Slab! No deduction of TDS like, Bank FD. So no required to fill 15G & 15H form.

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*Brokerage, Taxes & Charges for client demat account* 

1) Equity & Commodities

 ~Normally (0.05) 5 paise~ 

✔️For you

Intra day: (0.03) 3 paise,

1) Futures: (0.03) 3 paise, 

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2) Option per lot: ~60/-  to 100/-~ 

 ✔️ For you Buy 30/- & Sale 30/-

BEP: 150/- rs. Per lot approximately. 

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3) Delivery: ~50 paise~

✔️For you Buy 30 paise & Sale 30 paise.

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4) Currency future & Options: ~25/- per lot~ 

✔️For you Buy 15/- per lot & Sale 15/- per lot.

BEP: 0.03 (3 paise)

Note: 

1) After crossing BEP (Break Even Point) / (no profit no loss) you will get profit. 

2) *18 %* GST on *Total Brokerage only*  + SST Security Transaction Tax + SEBI turn over tax + any cess etc. Approximately *20%* taxes changed by Government. 

3) Still, no charges for Margin/ Exposure/ Limits!

4) AMC (Annual Maintenance Charges) 299 + 18% GST from 2 nd year.

5) Demat Account Opening charges free (for all segments (Equity + Currency + Commodity) 

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