Page 249 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes Tax Planning Schemes
The investments made under these schemes are deductible from the taxable income up to certain
limits, thus providing substantial tax relief to the investors.

Examples of tax planning schemes:
(a) MTSS’ 89, 90, 91 and Magnum GIFTS of Mutual Fund
(b) Can 80CC and Canstar 80L of Canbank Mutual Fund
(c) Ind 88A of Indbank Mutual Fund

(Here tax rebate is available on investments as in the case of investments in LIC, Provident
Fund, NSC, etc)
(d) Equity Linked Savings Schemes (ELSS)

Scheme Issued by
MELS-91 SBI Mutual Fund
Can Pep-91, 92 Canbank Mutual Fund
Ind Shelter Indbank Mutual Fund

MEP-91,92 Unit Trust of India
BOINAANZA 80 CCB BOI Mutual Fund
PNB ELSS PNB Mutual Fund
ELSSs are 10-year schemes and the withdrawals (by purchase) are permitted after an initial lock-
in period of three years but the entire withdrawn amount again becomes taxable. As such, these
are only tax deferent schemes.

Main advantages
(i) Substantial tax saving/deferment
(ii) Possibility of reasonable capital gains
Main disadvantages

(i) No liquidity during lock in period
(ii) Withdrawn amounts are again taxable
(iii) Units are not transferable
Other Schemes

These include schemes of 10-15 years duration, which offer multiple benefits. For example:
Scheme Benefits
(a) Unit Linked Insurance i. Contribution eligible for tax deduction under Sec 88A of
Plan of UTI IT Act providing tax rebate of 20% of Contribution
ii. Insurance cover up to target amount
iii. Reasonable income by way of dividend
iv. Liquidity: withdrawal from the scheme any time on a
Month's notice permitted

v. Safety of capital
Contd...

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