Most individuals on the finish of their skilled lives sit up for having fun with the advantages of their hard-earned financial savings and main annoying free golden years. However, specialists level out that life after retirement is at all times not the identical as what a person thinks or plans.
Tarun Rustagi, CFO, Canara HSBC OBC Life Insurance says, “With all the returns on investments comes the uninvited gift of Taxes too. Disappointing as it may be, there are various taxes that take a large amount of corpus from savings and thus it clearly calls out for tax-efficient financial planning which will allow complete financial freedom after retirement.”
Plan for these three taxes post-retirement
As and when long-term investments mature and your funding preferences change, your tax state of affairs is more likely to change when you retire. With an everyday pension, the next incomes type a serious a part of your taxable earnings:
- Rental earnings
- Income from the sale of property, i.e. capital features
- Income from different sources like Interest, dividends and many others
I. Tax on Income from home property
For most pensioners, rental earnings varieties a serious a part of post-retirement earnings. “For tax purposes, this income is usually classified as rental income. Rental income from house property increases one’s gross taxable income which is charged as per the income tax slab,” explains Rustagi.
II. Tax on capital features
Capital features are often categorized as taxable earnings if;
- The asset that has been transferred is a capital asset;
- If you transferred the aforementioned asset at any time through the earlier 12 months;
- If you’ve gained sure income or features from stated capital switch
“Capital gains are usually assessed based on the holding period of the asset and classified as either long-term or short-term capital gains,” says Rustagi.
Here’s how capital features are recognized for taxation (as per the present regime):
Type of funding | Long time period Asset | Tax Treatment on capital features | Short time period Asset | Tax Treatment on capital features |
Equity funds (Listed); Equity-oriented hybrid funds | More than 12 months | Taxable @10%, if greater than Rs 1lakh | Less than 12 months | Taxable @ 15% |
Equity funds (unlisted) | More than 36 months | Taxable @20% after indexation; 10% earlier than indexation. | Less than 36 months | Taxable @ 15% |
Debt funds and debt-oriented balanced funds | More than 36 months | Taxable @20% after indexation | Less than 36 months | Taxable @ 15% |
III. Income from different sources like Interest, dividends and many others.
“Depending on the investment portfolio, dividends and interest form a major part of one’s post-retirement income,” factors out Rustagi.
He additional provides, “These are considered interest-bearing securities and form a large part of one’s taxable income and are taxed accordingly.”
- For all investments in fairness shares, your dividends earned are taxable at 10 per cent.
- Make certain to submit your PAN particulars to the payer. If this situation isn’t met, the payer might want to deduct tax at supply (TDS) at a price of 20 per cent.
Source: www.financialexpress.com”