National Savings Certificates (NSC)

Dear Readers,
Hear are few points regarding National Savings Certificates (NSC) which you can use for your TAX PLANNING.

* Scheme specially designed for Government employees, Businessmen and other salaried classes who are IT assesses.

* No maximum limit for investment.

* No tax deduction at source. (Interest on NSC is taxable)

* Certificates can be kept as collateral security to get loan from banks.

* Investment up to Rs. 1,00,000/- per annum qualifies for IT Rebate under section 80C of IT Act.

* Trust and HUF cannot invest.

* PPF – A good way of saving for your old age.

* Buy National Savings Certificates (NSC) & Kisan Vikas Patras (KVP) every month for six years – Reinvest on maturity and relax - On retirement it will fetch you monthly pension as the NSC/KVP matures.

National Savings Certificate Act

How to calculate tax

Dear Readers,

There are so many confusion about the calculation of tax in this new financial year, please find the details below which will help you in calculation of your tax.

Let us take a case where the assessee's income is Rs. 5,10,000. (For men)

Case 1: Men

* According to the Income Tax Slab, the first 1,50,000 is not taxable.
* The next Rs. 1,50,000 is taxable @10%.
* 10% of Rs. 1,50,000 is Rs. 15,000.
* The next Rs. 2,00,000 is taxable @20%.
* 20% of Rs. 2,00,000 is Rs. 40,000.
* Rest of the amount is taxable @30%.
* The remaining Rs. 10,000 i.e. 5,10,000 - (1,50,000+1,50,000+2,00,000) is taxable @30%.
* 30% of Rs. 10,000 is Rs. 3,000.
* Therefore, the net Income Tax Payable is Rs. 15,000 + Rs. 40,000 + Rs.3000 i.e. Rs. 58,000.

section 80C you can save tax on 1 lakh more, if you comes under 30% tax slab you can save 33,300 by saving or investing 1lakh.

Case 2: Women

* According to the Income Tax Slab, the first 1,80,000 is not taxable.
* The next Rs. 1,20,000 is taxable @10%.
* 10% of Rs. 1,20,000 is Rs. 12,000.
* The next Rs. 2,00,000 is taxable @20%.
* 20% of Rs. 2,00,000 is Rs. 40,000.
* Rest of the amount is taxable @30%.
* The remaining Rs. 10,000 i.e. 5,10,000 - (1,80,000+1,20,000+2,00,00) is taxable @30%.
* 30% of Rs. 10,000 is Rs. 3,000.
* Therefore, the net Income Tax Payable is Rs. 12,000 + Rs. 40,000 + Rs. 3000 i.e. Rs. 55,000.

section 80C you can save tax on 1 lakh more, if you comes under 30% tax slab you can save 33,300 by saving or investing 1lakh.

Case 3: Senior citizen

* According to the Income Tax Slab, the first 2,25,000 is not taxable.
* The next Rs. 75,000 is taxable @10%
* 10% of Rs. 75,000 is Rs. 7,500
* The next Rs. 2,00,000 is taxable @20%.
* 20% of Rs. 2,00,000 is Rs. 40,000.
* Rest of the amount is taxable @30%.
* The next Rs. 10,000 i.e. 3,90,000 - (2,25,000+75,000+2,00,000) is taxable @30%
* 30% of Rs. 10,000 is Rs. 3,000.
* Therefore, the net Income Tax Payable is Rs. 7,500 + Rs. 40,000 + Rs. 3,000 i.e. Rs. 50,500

(If the assess claims any rebate/ exemption, the claimed amount will be deducted from his income with reference to the law of Income Tax Act before calculating the tax.)

section 80C you can save tax on 1 lakh more, if you comes under 30% tax slab you can save 33,300 by saving or investing 1lakh.

Note:

* Surcharge @ 10% applicable if total income exceeds Rs. 8.5 lakh for A.Y. 2005-06 and Rs. 10 lakh for A.Y. 2006-07.
* There is a new section 80C according to which a person can get rebate upto Rs. 1,00,000 against insurance premium, PF contributions and other such schemes.
* In case of higher education there is a deduction in tax for a maximum period of 8 years.
* Marginal relief would be provided to ensure that the additional income tax payable including surcharge, on the excess of income over Rs. 10,00,000 (Rs. 8.5 lakh for A.Y. 2005-06) is limited to the amount by which the income is more than Rs. 10 lakh (Rs. 8.5 lakh for A.Y. 2005-06).
* Education cess @ 2% on tax plus surcharge.