Financial investments can be considered a type of income.
In India, the financial sector has a tax-free exemption from the Income Tax Act of 1871.
In the case of stocks and bonds, the exemption can be up to 10 per cent of the value.
There are a few tax-exempts, such as interest on deposits, and a tax exemption for certain real estate investments.
It can also be taxed at a higher rate if the investments are in a trust or registered in a corporation.
These tax-deferred investments are available only to individuals and small businesses.
In order to get tax-deductible investment income, the investor has to register the investment and provide a return.
There is no limit on the investment size.
The government has introduced a number of incentives to encourage people to take up investments in stocks and bond futures.
India is one of the few countries where people can hold a stock futures position without any income.
But investors have to make the investment, file a tax return, and pay taxes on the gains.
Investors in stock futures positions have to keep a minimum of Rs. 1,000 in the fund and they cannot withdraw the capital at any time.
The minimum investment of Rs 1,200 has been set aside to compensate investors for the uncertainty created by the market volatility.
A tax exemption has also been created for the first time.
Investors can get an investment tax refund for up to Rs. 50,000.
The tax credit will apply to tax paid on the capital gains.
Indian stock futures contracts are traded on exchanges.
If the value of a share rises, the tax rate is reduced.
If a stock drops, the market value is increased.
In this case, the investors are taxed on the amount of gain.
The tax exemption does not apply to mutual funds.
Mutual funds are subject to tax on the income they make from the sale of their shares.
The fund is a business entity, which is subject to the tax laws.
When a stock contract is settled, it has a market value.
However, when the price of a stock contracts, the value is calculated by the exchange rate.
The stock contract price can rise or fall in the short term but is not included in the income of the fund.
The investors are allowed to reinvest the difference in the stock contract.
In theory, the income tax can be collected from the fund in the form of dividends or capital gains on the sale or redemption of the shares.