Government of India has authorised India Infrastructure Finance Co. Ltd. (IIFCL) to raise Rs 10,000 crore (Rupees Ten Thousand Crores), in tranches, through 5 Years tax-free bonds to be issued by 31st March 2009. For more information please visit the following links, These bonds will give tax break under section 80C.
Monday, January 5, 2009
Wednesday, December 31, 2008
Happy New Year
Dear Friends,
Happy new year.... Hope this new year will get all success for every one of you... :), i wish all of you plan your tax well get more income along with success in all your dreams.
Happy new year.... Hope this new year will get all success for every one of you... :), i wish all of you plan your tax well get more income along with success in all your dreams.
Thursday, December 25, 2008
Ways to Reduce Your Taxes
The goal of tax planning is to arrange your financial affairs so as to minimize your taxes. There are three basic ways to reduce your taxes, and each basic method might have several variations. You can reduce your income, increase your deductions, and take advantage of tax credits.
Reducing Income ( Reduce Taxable table income) : Depend on your AGI (or modifications to your AGI)-- such as your tax rate and various tax credits. AGI even impacts your financial life outside of taxes: banks, mortgage lenders, and college financial aid programs all routinely ask for your adjusted gross income. This is a key measure of your finances. Because your adjusted gross income is so important, you may want to begin your tax planning here.
What goes into your adjusted gross income? AGI is your income from all sources minus any adjustments to your income. The higher your total income, the higher your adjusted gross income. As you can guess, the more money you make, the more taxes you will pay. Conversely, the less money you make, the less taxes you will pay. The number one way to reduce taxes is to reduce your income. And the best way to reduce your income is to contribute money to a saving under section 80C or similar retirement plan at work. Your contribution reduces your wages, and lowers your tax bill.
As you can see, two of the best ways to reduce your taxes is to save for retirement or life insurance or other type of savings, either through section 80C at work or through a traditional PF/EPF/PPF plan. Contributions to these retirement plans will lower your taxable income, and lower your taxes. Same with your the amount your contribute towards investment or for your life insurance.
Increase Your Tax Deductions :
Taxable income is another key element in your overall tax situation. Taxable income is what's left over after you have reduced your AGI by your deductions and exemptions. Almost everyone can take a standard deduction, and some people are able to itemize their deductions.
Itemized deductions include expenses for health care( Medical bills) you can save tax on max 15000/- INR , mortgage interest, job-related expenses (Like phone bills, broad band bills and some travel bills), House rent Allowances, LTA (leave travel allowances), tax preparation fees, and investment-related expenses. One key tax planning strategy is to keep track of your itemized expenses throughout the year using a spreadsheet or personal finance program. You can then quickly compare your itemized expenses with your standard deduction. You should always take the higher of your standard deduction or your itemized deduction.
Your standard deduction and personal exemptions depends on your filing status.
The best strategies for reducing your taxable income is to itemize your deductions, and the three biggest deductions are mortgage interest, LTA, HRA (House Rent Allowance).
Take Advantage of Tax Credits: Once we've tweaked our taxable income, we are ready to focus our attention on various tax credits ( also called as tax savings options). Tax credits reduce your tax. There are tax credits for college expenses, for saving for retirement, premium payed to wards your life insurance premium and premium payed towards Health insurance and amount paid towards investments in Equity oriented funds and Savings like NSC Bonds, Postal Savings schemes, and Bank Fixed deposits ( min 5 years duration deposits). Some income tax sections under which we can save the tax.
Section 80C : Deduction in respect of Life Insurance Premium, Contribution to PF/EPF/PPF, NSC Bonds, Fixed Deposits etc click here to know more.
Section 80E : Deduction in Respect of repayment of loan taken for higher education.
Section 80D : DEDUCTION IN RESPECT OF MEDICAL INSURANCE PREMIUM.
Section 10(10D) : Any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy. For more details click here.
Section 80G : Deduction in respect of donations to Cretan fund, charitable institutions. For more details please click here.
Section 10(33) : Dividends from mutual funds are fully exempt from income tax under Section 10(33). Equity funds (schemes that invest 50 per cent or more of their funds in equity) are also exempt from dividend tax. This means that unlike companies, they do not have to pay tax at the rate of 10.2 per cent on the dividend that they distribute.
| INSERT (AY 2008-09) Coir Board included in Section 10(29A) and exempted from income tax. |
These are some sections under which and individual salaried person can get tax benefit. there are may more other options to save the tax of self employed and business owners including these. for more details please visit income tax department of India web site.
Under Section 80C : A person can save tax on the amount upto one lakh. By showing 1lakh savings to the department of income tax. The amounts paying towards Life Insurance Premium, Amount towards Retirement or pension schemes and so many other schemes will come under this. For more details about Section 80C please click here.
Other than these you can clime the tax savings on your interest payed to wards your home loan upto 1.5lakh, Initial stages the amount paying towards contains majority part of the interest so you can clime that amount also for tax savings, but only the problem with this is once you own a house you HR may not come under tax benefit option.
Sunday, December 21, 2008
Section 80C save your tax
Dear Friends,
For lot of individuals who are working, they can save the tax on 1lakh rupees under section 80C of income tax act.
How to calculate your tax click here
Every one of us know about the price of food items and every necessities are increasing very fast even government is trying to control them but its not getting success, simple example for this is check the rice price in last 30 years, it never come down.
So government of India want every one of us save enough money for tomorrow, so they introduce this new section to save money and secure our family. with one of evil called inflation this is only my view way government introduced this section. You can save 1lakh rupees in different ways to get the tax benefits on that. Following are the some products which are used to save tax under section.
Section 80L used to allow deduction of interest earned on, say, a National Savings Certificate or a bank deposit up to a limit of Rs 12,000. But now all these are gone .In their place has come Section 80C -- "u/s 80CCC, & u/s 80CCD", as the Finance Bill puts it. Thus, the new Section 80C of the Income Tax Act proposed in Union Budget gives you a bigger tax break than what the current regime offers.
- Deduction in respect of Life Insurance Premium, Contribution to Provident Fund, etc.
- Rs 1 lakh can be invested under this section without any individual sub-limits except in the case of Rs 10,000 in pension funds.
- Sections 88, 80L, 80CCC and 80CCD is clubbed in.
INSERT (AY 2007-08)
It is proposed to insert clause (xxi) in sub-section (2) of this section in order to provide that the investment in a term deposit for a fixed period of not less than five years with any scheduled bank shall be eligible for a deduction under this section.
It is proposed to insert clause (xxi) in sub-section (2) of this section in order to provide that the investment in a term deposit for a fixed period of not less than five years with any scheduled bank shall be eligible for a deduction under this section.
- Fixed Deposits
- Life Insurance (Term, Endowment, Unit Linked Plans)
- Mutual Funds - ELSS,
- NSC Bonds
- PF/EPF/PPF
- Post Office Time Deposit Account
There are some other products which can offer this benefits but these are the well know and good products. All these products are with risk level from medium to high, every type of saving will have there own risk level.
Sections abolished from Union Budget 2005-06
- 88 (Rebate on Life Insurance Premia, Contribution to Provident Fund, etc.)
- 80L (Deductions in respect to Interest on certain Securities, Dividends, etc.)
- Note : Rebate of Rs 5,000 for women and Rs 20,000 for senior citizens have been wiped off.
So as per your individual needs you can select the products, if you are not sure about which product will best for you, first write all your needs and requirements to contact a better financial adviser who can help you with his unbiased discussion. I feel no one else can understand your financial need better than you.
For best planning write us @
sriram.adviser@gmail.com
Phone No : +1-408-250-9952 (USA)
+91-9741598945 (India)
Tuesday, September 23, 2008
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
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.
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.
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.)
* 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.
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.
Sunday, March 30, 2008
Early tax planning why?
“Early Bird catches the worm” may sound very clichéd. The truth is that the earlier you do your tax planning the more it will benefit you. Though the financial year has just going to started and you are still in the midst of filing your returns for last year in coming financial planning, you must keep your ears to the ground for great tax planning opportunities that come along.
Why plan early
There are several merits to having your tax planning in place early. Here are some benefits:
Early tax planning helps you take advantage of the opportunities available throughout the year. For instance, now that the markets are at a low it would make sense to purchase units in any ULIP or ELSS fund since the price of the units will be lesser now.
Early planning helps you assess your tax burden in the year and one can pay advance tax accordingly.
Tax planning at a later stage can put a severe strain on the pocket since a largish amount has to be invested in one go.
Hidden tax planning you do throughout the year
You may not realize it but you are already doing your tax planning throughout the year. Though you may not be investing in tax-saving instruments, there are several expenses that are deductible and often go unnoticed in our calculations for tax planning. Here are some common expenses that can be used as tax-planning tools:
#
Being charitable helps you too. Money donated to tax-approved charitable institutions is deductible to the extent of 50%, subject to conditions. Deduction of 100% is available in the case of payment to certain specified funds like Prime Minister’s National Relief Fund.
#
Repayments of your home loan EMIs give you tax relief. As per the provisions contained in Section 24 of the Income Tax Act, 1961, a deduction equal to Rs 1,50,000 is permissible for every individual in respect of interest on loan for residential self-occupied house property. This interest on loan is allowed as a deduction irrespective of the person from whom you take the loan. Hence, even if you have taken a loan not from a banker but from a relative or your spouse, the interest payable on the loan would be eligible for tax rebate. The maximum amount of deduction as per Section 24 in respect of interest on loan for residential house property is Rs 1,50,000 per year.
#
Parents can claim a deduction for tuition fees for a maximum of two children within the overall limit of Rs 1 lakh.
#
Compulsory payments you may be making if you are salaried. They may be deduction towards PPF or EPF, payments in a pension plan and insurance those are directly paid from your salary. These payments can be used in your tax-saving calculations too.
The best tax saving instruments
After taking into account these hidden gems, if you have any deduction amount left then there is a vast choice of investments that the finance minister has laid down for you. Here is how to make the choice.
If you are below 30
Your tax investment should revolve round ULIP or ELSS mainly. It can be as high as 50%. Some part of it should be allocated to term insurance(which covers more insurance) and health insurance. You can also invest a part in retirement plans for retirement planning.
If you are between 30-45
Your insurance cover should increase with your responsibilities at least 25% of your tax-saving money should go to insurance. So, a higher amount needs to be allocated to life as well as health insurance. You need to maintain or increase your retirement planning with retirement planning. Simultaneously your exposure to mutual funds should not be more than 35%.
If you are between 45-60
If you fall in this age group then your focus should be in retirement products and Annuity. 50% of the amount can go towards this. Your ELSS must be at its lowest and you must maintain your life and health insurance cover.
If you are retired
Choose safe products that can be easily accessed. Fixed deposits fit the bill perfectly. You are likely to move to a lower tax bracket now so you can invest with greater ease.
Do remember that you have a long time ahead waiting for you upto 31st March, 2009 to make your investment in tax-saving instruments but surely it makes better sense to invest now, relax and save tax right now. You can also opt for making the investment not at one go but in installments.
If you have some small money available right now you may better invest now the money in tax saving instrument and as and when you have balance money available at your disposal then make investment at a later date but surely before 31st March, 2009.
Why plan early
There are several merits to having your tax planning in place early. Here are some benefits:
Hidden tax planning you do throughout the year
You may not realize it but you are already doing your tax planning throughout the year. Though you may not be investing in tax-saving instruments, there are several expenses that are deductible and often go unnoticed in our calculations for tax planning. Here are some common expenses that can be used as tax-planning tools:
#
Being charitable helps you too. Money donated to tax-approved charitable institutions is deductible to the extent of 50%, subject to conditions. Deduction of 100% is available in the case of payment to certain specified funds like Prime Minister’s National Relief Fund.
#
Repayments of your home loan EMIs give you tax relief. As per the provisions contained in Section 24 of the Income Tax Act, 1961, a deduction equal to Rs 1,50,000 is permissible for every individual in respect of interest on loan for residential self-occupied house property. This interest on loan is allowed as a deduction irrespective of the person from whom you take the loan. Hence, even if you have taken a loan not from a banker but from a relative or your spouse, the interest payable on the loan would be eligible for tax rebate. The maximum amount of deduction as per Section 24 in respect of interest on loan for residential house property is Rs 1,50,000 per year.
#
Parents can claim a deduction for tuition fees for a maximum of two children within the overall limit of Rs 1 lakh.
#
Compulsory payments you may be making if you are salaried. They may be deduction towards PPF or EPF, payments in a pension plan and insurance those are directly paid from your salary. These payments can be used in your tax-saving calculations too.
The best tax saving instruments
After taking into account these hidden gems, if you have any deduction amount left then there is a vast choice of investments that the finance minister has laid down for you. Here is how to make the choice.
If you are below 30
Your tax investment should revolve round ULIP or ELSS mainly. It can be as high as 50%. Some part of it should be allocated to term insurance(which covers more insurance) and health insurance. You can also invest a part in retirement plans for retirement planning.
If you are between 30-45
Your insurance cover should increase with your responsibilities at least 25% of your tax-saving money should go to insurance. So, a higher amount needs to be allocated to life as well as health insurance. You need to maintain or increase your retirement planning with retirement planning. Simultaneously your exposure to mutual funds should not be more than 35%.
If you are between 45-60
If you fall in this age group then your focus should be in retirement products and Annuity. 50% of the amount can go towards this. Your ELSS must be at its lowest and you must maintain your life and health insurance cover.
If you are retired
Choose safe products that can be easily accessed. Fixed deposits fit the bill perfectly. You are likely to move to a lower tax bracket now so you can invest with greater ease.
Do remember that you have a long time ahead waiting for you upto 31st March, 2009 to make your investment in tax-saving instruments but surely it makes better sense to invest now, relax and save tax right now. You can also opt for making the investment not at one go but in installments.
If you have some small money available right now you may better invest now the money in tax saving instrument and as and when you have balance money available at your disposal then make investment at a later date but surely before 31st March, 2009.
Friday, March 28, 2008
The importance of tax-planning
For most individuals tax is a four-letter word. How many individuals willingly part with their hard-earned money for taxes? Not many! Mention paying taxes and all those age-old arguments about - "what do we get that we should pay taxes?" surface. While that is a topic which can be debated for eons, few would dispute the utility that tax-planning can offer.
What is tax-planning?
Tax-planning amounts to making investments or contributions in line with prescribed guidelines that lead to reduction in tax liability. Simply put, the tax liability is computed as a percentage of the income. As per prevailing tax laws, certain investments and contributions have been earmarked for claiming tax benefits. When these investments and/or contributions are made, the same are reduced from the income while computing the tax liability. As a result, the tax liability is reduced. No marks for guessing that lower taxes are a welcome break.
Section 80C
Now that we have discussed what tax-planning is, the next step is to discuss how the same should be conducted. Before that, an introduction to Section 80C is necessary. While there are a number of sections in the Income Tax Act that offer opportunities for tax-planning, the most popular and pervasive one is Section 80C. You can claim deductions under Section 80C for a variety of investments - for example investments in tax-saving funds (ELSS), Public Provident Fund (PPF), National Savings Certificate (NSC), infrastructure bonds and tax-saving fixed deposits. Similarly, contributions towards provident fund, life insurance premium, repayment of the principal amount on a home loan, payment of tuition fees are also eligible for Section 80C deductions.
How tax-planning can lead to wealth creation
The Section 80C limit has been set at Rs 100,000 in a financial year. This means you can invest upto Rs 100,000 every year in the stipulated investment avenues or utilise the sum for paying life insurance premium, repaying a home loan and claim tax benefits. Now the same has a two-pronged effect. First, you save tax at present, and second, by investing the monies, you are creating an asset/income for the future. For example, investments in tax-saving funds, PPF and NSC will yield returns in the future. Life insurance premium repayment will mean that your dependents will be provided for in your absence. Finally, home loan repayment will lead to creation of an asset (a housing property).
Let's not forget that we are talking about investing Rs 100,000 (which is a significant sum) every year. Simple maths tell us that Rs 100,000 invested every year at 8.0% per annum (pa) over a 15-Yr period will amount to a substantial Rs 2,715,200.
How to create wealth
Now that we have discussed tax-planning, its benefits and how it can help create wealth, let's come to the interesting part - how to create wealth. We discuss some of the major investment avenues that offer Section 80C benefits and should form a part of your tax-planning portfolio.
1. Unit linked insurance plans
Unit linked insurance plans (ULIPs) are the most "happening" offerings from the life insurance segment. Simply put, ULIPs are market-linked avenues that combine insurance and investment. Premiums paid on ULIPs are eligible for deduction under Section 80C. ULIPs have been dealt with in detail in another article in this guide.
2. Public Provident Fund
Public Provident Fund (PPF) is an assured return scheme (i.e. it offers guaranteed returns) that runs over a 15-Yr period. The scheme requires recurring investments i.e. annual investments are necessary to keep the PPF account active. The minimum and maximum investment amounts are Rs 500 and Rs 70,000 respectively pa. Investments in PPF are eligible for Section 80C deductions. Also the interest income from PPF is tax-free.
At present investments in PPF offer a return of 8.0% pa, compounded annually. However, this rate is subject to revision; hence, investments in PPF may yield a higher or lower return going forward, depending on how rates are revised. You can make smaller contributions to the PPF account. The same will help you build a risk-free corpus for the future.
3. National Savings Certificate
National Savings Certificate (NSC) is another assured return scheme. However unlike PPF, it isn't recurring in nature. Hence, an investor is required to make a lumpsum investment that matures after 6 years. The minimum investment amount is Rs 100, while there is no upper limit for investing in NSC. Interest income from NSC is paid on maturity; the same is also taxable. Interest accrued on NSC is considered to be reinvested; hence, it is eligible for reinvestment under Section 80C.
Investments in NSC offer a return of 8.0% pa, compounded half-yearly. This rate is locked-in at the time of making the investment. Hence investment is insulated from any subsequent rate change. You can make investments in NSC for a 6-Yr period to gainfully invest one-time surpluses and to provide for needs that will arise over a corresponding time frame.
4. Tax-saving fixed deposits
You must be aware of fixed deposits offered by banks. Tax-saving fixed deposits aren't very different. These are fixed deposits, wherein investments upto Rs 100,000 are eligible for deduction under Section 80C. Generally, Rs 100 is the minimum investment amount. Tax-saving fixed deposits have a 5-Yr investment tenure and no premature withdrawals are permitted.
At present, most banks offer a rate of return in the range of 8.0%-8.5% pa. A higher rate of return (additional 0.5%) is offered on investments made by senior citizens. Also the interest income from tax-saving fixed deposits is chargeable to tax and subject to TDS (tax deduction at source). Tax-saving fixed deposits can be utilised like NSC, to meet future needs that will arise over a predictable period.
5. Tax-saving mutual funds
Tax-saving mutual funds (also called equity linked savings schemes - ELSS) are equity funds that offer tax benefits under Section 80C. Essentially, like equity funds, these funds also invest their corpus in equities. However, the differentiating factor is the 3-Yr lock-in and the tax benefits. While in a regular equity fund, the investor is free to sell his investment whenever he wishes to, in a tax-saving fund, the investor must stay invested at least for a 3-Yr period. Also, investments in a regular equity fund aren't eligible for any tax benefits, but investments in tax-saving funds are eligible for Section 80C tax benefits. For a young investor like you who has time on his side, tax-saving funds should be the preferred tax-planning destination. They will aptly match your risk appetite.
In conclusion, remember that tax-planning is not just another dreary chore that has to be conducted annually. On the contrary, it's an opportunity for wealth creation. Give the tax-planning exercise its fair attention and time.
For Right Tax planning Contact.
Sriram,
Phone Number: 09986128592
Email id: sriram.adviser@gmail.com
What is tax-planning?
Tax-planning amounts to making investments or contributions in line with prescribed guidelines that lead to reduction in tax liability. Simply put, the tax liability is computed as a percentage of the income. As per prevailing tax laws, certain investments and contributions have been earmarked for claiming tax benefits. When these investments and/or contributions are made, the same are reduced from the income while computing the tax liability. As a result, the tax liability is reduced. No marks for guessing that lower taxes are a welcome break.
Section 80C
Now that we have discussed what tax-planning is, the next step is to discuss how the same should be conducted. Before that, an introduction to Section 80C is necessary. While there are a number of sections in the Income Tax Act that offer opportunities for tax-planning, the most popular and pervasive one is Section 80C. You can claim deductions under Section 80C for a variety of investments - for example investments in tax-saving funds (ELSS), Public Provident Fund (PPF), National Savings Certificate (NSC), infrastructure bonds and tax-saving fixed deposits. Similarly, contributions towards provident fund, life insurance premium, repayment of the principal amount on a home loan, payment of tuition fees are also eligible for Section 80C deductions.
How tax-planning can lead to wealth creation
The Section 80C limit has been set at Rs 100,000 in a financial year. This means you can invest upto Rs 100,000 every year in the stipulated investment avenues or utilise the sum for paying life insurance premium, repaying a home loan and claim tax benefits. Now the same has a two-pronged effect. First, you save tax at present, and second, by investing the monies, you are creating an asset/income for the future. For example, investments in tax-saving funds, PPF and NSC will yield returns in the future. Life insurance premium repayment will mean that your dependents will be provided for in your absence. Finally, home loan repayment will lead to creation of an asset (a housing property).
Let's not forget that we are talking about investing Rs 100,000 (which is a significant sum) every year. Simple maths tell us that Rs 100,000 invested every year at 8.0% per annum (pa) over a 15-Yr period will amount to a substantial Rs 2,715,200.
How to create wealth
Now that we have discussed tax-planning, its benefits and how it can help create wealth, let's come to the interesting part - how to create wealth. We discuss some of the major investment avenues that offer Section 80C benefits and should form a part of your tax-planning portfolio.
1. Unit linked insurance plans
Unit linked insurance plans (ULIPs) are the most "happening" offerings from the life insurance segment. Simply put, ULIPs are market-linked avenues that combine insurance and investment. Premiums paid on ULIPs are eligible for deduction under Section 80C. ULIPs have been dealt with in detail in another article in this guide.
2. Public Provident Fund
Public Provident Fund (PPF) is an assured return scheme (i.e. it offers guaranteed returns) that runs over a 15-Yr period. The scheme requires recurring investments i.e. annual investments are necessary to keep the PPF account active. The minimum and maximum investment amounts are Rs 500 and Rs 70,000 respectively pa. Investments in PPF are eligible for Section 80C deductions. Also the interest income from PPF is tax-free.
At present investments in PPF offer a return of 8.0% pa, compounded annually. However, this rate is subject to revision; hence, investments in PPF may yield a higher or lower return going forward, depending on how rates are revised. You can make smaller contributions to the PPF account. The same will help you build a risk-free corpus for the future.
3. National Savings Certificate
National Savings Certificate (NSC) is another assured return scheme. However unlike PPF, it isn't recurring in nature. Hence, an investor is required to make a lumpsum investment that matures after 6 years. The minimum investment amount is Rs 100, while there is no upper limit for investing in NSC. Interest income from NSC is paid on maturity; the same is also taxable. Interest accrued on NSC is considered to be reinvested; hence, it is eligible for reinvestment under Section 80C.
Investments in NSC offer a return of 8.0% pa, compounded half-yearly. This rate is locked-in at the time of making the investment. Hence investment is insulated from any subsequent rate change. You can make investments in NSC for a 6-Yr period to gainfully invest one-time surpluses and to provide for needs that will arise over a corresponding time frame.
4. Tax-saving fixed deposits
You must be aware of fixed deposits offered by banks. Tax-saving fixed deposits aren't very different. These are fixed deposits, wherein investments upto Rs 100,000 are eligible for deduction under Section 80C. Generally, Rs 100 is the minimum investment amount. Tax-saving fixed deposits have a 5-Yr investment tenure and no premature withdrawals are permitted.
At present, most banks offer a rate of return in the range of 8.0%-8.5% pa. A higher rate of return (additional 0.5%) is offered on investments made by senior citizens. Also the interest income from tax-saving fixed deposits is chargeable to tax and subject to TDS (tax deduction at source). Tax-saving fixed deposits can be utilised like NSC, to meet future needs that will arise over a predictable period.
5. Tax-saving mutual funds
Tax-saving mutual funds (also called equity linked savings schemes - ELSS) are equity funds that offer tax benefits under Section 80C. Essentially, like equity funds, these funds also invest their corpus in equities. However, the differentiating factor is the 3-Yr lock-in and the tax benefits. While in a regular equity fund, the investor is free to sell his investment whenever he wishes to, in a tax-saving fund, the investor must stay invested at least for a 3-Yr period. Also, investments in a regular equity fund aren't eligible for any tax benefits, but investments in tax-saving funds are eligible for Section 80C tax benefits. For a young investor like you who has time on his side, tax-saving funds should be the preferred tax-planning destination. They will aptly match your risk appetite.
In conclusion, remember that tax-planning is not just another dreary chore that has to be conducted annually. On the contrary, it's an opportunity for wealth creation. Give the tax-planning exercise its fair attention and time.
For Right Tax planning Contact.
Sriram,
Phone Number: 09986128592
Email id: sriram.adviser@gmail.com
Friday, July 6, 2007
Which is the best time to do your tax planning.... ?
Hi Friends,
Please share your views about the tax planning & and best time to do your tax planning ....!!!
This will help us to do great tax planning so lets start our discussion about this you can ask your questions related to tax planning also .... please write you view and comments in comments place.
Please share your views about the tax planning & and best time to do your tax planning ....!!!
This will help us to do great tax planning so lets start our discussion about this you can ask your questions related to tax planning also .... please write you view and comments in comments place.
Monday, June 11, 2007
Prepare yourself to file I-T returns -- By IBNlive.com
As the month of July approaches, taxpayers are getting ready to file their income tax returns. The procedure for each individual taxpayer is to fill Form 16 and Form No16A (tax deducted on Other Income). To avoid last minute rush one must keep the necessary documents ready, well ahead of the stipulated last date. An individual whose taxable income during a financial year exceeds the exemption limit of Rs 1 lakh (Rs 1.35 lakh in case of females and Rs 1.85 lakh in case of senior citizens) has to file in tax returns.
Which ITR Form is applicable to you?
With the introduction of new income tax return forms based on nature of income earned during the year, one needs to know relevance of each return form and select the right form.
ITR 1: This form can be used only by an individual having a salary and interest income. Form ITR-1 cannot be used if the individual has any income under other heads like:
# Property rental income
# Capital gains
# Dividend income from shares of foreign companies (which is not tax free in India)
# Winning from lotteries or any other prize money
Thus, even under the head “Income from Other Sources”, if the taxpayer has any income other than interest income then he cannot use ITR 1.
On the web site of the IT Department, there are two versions of ITR 1 available for downloading. Version 1 is two pages and Version 2 is three pages, long.
Both versions have additional pages of notes that serve as guidance to the taxpayer, when filling up the form. The font size seems to be the only difference between the two versions though.
It may be noted that this 'Form' is likely to be of use to a very limited number of taxpayers.
Most salaried taxpayers have income from other heads as well as income from sources other than interest (which would be chargeable to tax under the head 'Income from Other Sources'). Therefore, one can only wonder about the actual utility of this form.
Which ITR Form is applicable to you?
With the introduction of new income tax return forms based on nature of income earned during the year, one needs to know relevance of each return form and select the right form.
ITR 1: This form can be used only by an individual having a salary and interest income. Form ITR-1 cannot be used if the individual has any income under other heads like:
# Property rental income
# Capital gains
# Dividend income from shares of foreign companies (which is not tax free in India)
# Winning from lotteries or any other prize money
Thus, even under the head “Income from Other Sources”, if the taxpayer has any income other than interest income then he cannot use ITR 1.
On the web site of the IT Department, there are two versions of ITR 1 available for downloading. Version 1 is two pages and Version 2 is three pages, long.
Both versions have additional pages of notes that serve as guidance to the taxpayer, when filling up the form. The font size seems to be the only difference between the two versions though.
It may be noted that this 'Form' is likely to be of use to a very limited number of taxpayers.
Most salaried taxpayers have income from other heads as well as income from sources other than interest (which would be chargeable to tax under the head 'Income from Other Sources'). Therefore, one can only wonder about the actual utility of this form.
Friday, June 1, 2007
File the tax return very easily...!!!
Every person/individual or HUF (Hindu undivided family) - an assessee of any status, as per the Income Tax Act is liable to follow a certain statutory requirements to file a return of income.
It is mandatory for everybody to enter his/her PAN (permanent account number) correctly in the return form. The 'jurisdiction menu' will help you identify your assessing officer.
When total income - from all sources of income - of any person exceeds the maximum amount, which is not chargeable to income tax in any previous year ending on March 31, the person is liable to file the income-tax return.
Let us highlight a few basic income heads and then various steps or the procedure of computing. Heads of income include salaries, income from housing property, profits/gains of business/profession, capital gains, and income from other sources.
Computing procedure
While computing income from the above-mentioned different heads, the procedure is: First, the taxable income from each source is to be computed under each head of income by allowing deductions and then they are aggregated.
For example, in case of an assessee deriving income from his salary and housing property, and also in the form of interest income from a fixed deposit in a bank, firstly, the taxable income under the head 'salaries', then 'income from housing property', and lastly, the taxable income under the head 'income from other sources' for bank interest etc will be computed.
Then all the three incomes under the three heads would be aggregated. From this amount, certain eligible deductions are made to arrive at the net taxable income on which tax is chargeable.
Tax deducted at source
The employer making payment to an assessee earning income from 'salary' deducts a certain amount of tax, from such payment(s) made during the financial year.
Such deduction from the payment is called 'tax deducted at source'. The payment, of TDS, to the government is treated as payment of tax on behalf of the assessee.
Advance tax
In case the assessee does not wish to furnish particulars of his income under other heads to his employer, he has to estimate his total taxable income under the different heads of income during the previous year, and pay tax on it (after excluding the TDS), by the due dates specified under the Income Tax Act. These payments are called 'advance tax payments'. (See Table I)
Table I:
However, the liability for payment of advance tax arises only where the amount of such tax payable by the assesses during that year is Rs 5, 000 or more. Also, any amount paid by way of advance tax on or before the March 31 of that year, is treated as advance tax paid during that financial year.
After the return is prepared and the net taxable income finally determined, it may so happen that, after taking into account the amount of TDS and advance tax, if any, already deducted/paid still some tax or interest (payable for delay in furnishing the return or delay in payment of advance tax) remains to be paid.
This amount should be paid as 'self-assessment tax' before furnishing the return. It is, therefore, important to note that before furnishing the return, the assessee has to pay the entire tax and interest, if payable, and the proof of such tax payments has to be attached with the return. (See Table II)
Table II
Penalty for non-filing of returns
A person who is required to file a return of income compulsorily is liable to a penalty of Rs 5,000 for not filing the return by the end of the assessment year concerned. However, if there is a reasonable cause, penalty may not be levied.
It is mandatory for everybody to enter his/her PAN (permanent account number) correctly in the return form. The 'jurisdiction menu' will help you identify your assessing officer.
When total income - from all sources of income - of any person exceeds the maximum amount, which is not chargeable to income tax in any previous year ending on March 31, the person is liable to file the income-tax return.
Let us highlight a few basic income heads and then various steps or the procedure of computing. Heads of income include salaries, income from housing property, profits/gains of business/profession, capital gains, and income from other sources.
Computing procedure
While computing income from the above-mentioned different heads, the procedure is: First, the taxable income from each source is to be computed under each head of income by allowing deductions and then they are aggregated.
For example, in case of an assessee deriving income from his salary and housing property, and also in the form of interest income from a fixed deposit in a bank, firstly, the taxable income under the head 'salaries', then 'income from housing property', and lastly, the taxable income under the head 'income from other sources' for bank interest etc will be computed.
Then all the three incomes under the three heads would be aggregated. From this amount, certain eligible deductions are made to arrive at the net taxable income on which tax is chargeable.
Tax deducted at source
The employer making payment to an assessee earning income from 'salary' deducts a certain amount of tax, from such payment(s) made during the financial year.
Such deduction from the payment is called 'tax deducted at source'. The payment, of TDS, to the government is treated as payment of tax on behalf of the assessee.
Advance tax
In case the assessee does not wish to furnish particulars of his income under other heads to his employer, he has to estimate his total taxable income under the different heads of income during the previous year, and pay tax on it (after excluding the TDS), by the due dates specified under the Income Tax Act. These payments are called 'advance tax payments'. (See Table I)
Table I:
However, the liability for payment of advance tax arises only where the amount of such tax payable by the assesses during that year is Rs 5, 000 or more. Also, any amount paid by way of advance tax on or before the March 31 of that year, is treated as advance tax paid during that financial year.
After the return is prepared and the net taxable income finally determined, it may so happen that, after taking into account the amount of TDS and advance tax, if any, already deducted/paid still some tax or interest (payable for delay in furnishing the return or delay in payment of advance tax) remains to be paid.
This amount should be paid as 'self-assessment tax' before furnishing the return. It is, therefore, important to note that before furnishing the return, the assessee has to pay the entire tax and interest, if payable, and the proof of such tax payments has to be attached with the return. (See Table II)
Table II
Penalty for non-filing of returns
A person who is required to file a return of income compulsorily is liable to a penalty of Rs 5,000 for not filing the return by the end of the assessment year concerned. However, if there is a reasonable cause, penalty may not be levied.
Saturday, March 10, 2007
You should not get caught in the Rush of March
Invest Rs.7,500 a month at 8% and you will earn rs.3,254 more than if you had invested Rs.90,000 at one go at the end of the year.
Benefits of regular tax savings(at 8% returns)
Not only the above mentioned results you may loose more than that also, that depends on your investments.
Benefits of regular tax savings(at 8% returns)
Not only the above mentioned results you may loose more than that also, that depends on your investments.
Wednesday, February 28, 2007
Tax proposals from Chidambaram
Here are the highlights of tax proposals by Finance Minister P Chidambaram, who have left the taxpayer unhappy:
Budget(2007-2008) Special::
# Rs 1.95 lakh exemption for senior citizens
# I-T limit for women up at Rs 1.45 lakh
# I-T exemption limit hiked by Rs 10,000
# No change in Income Tax rates
# Dividend distribution tax raised from 12.5 to 15 per cent.
# ESOPs to be brought under FBT.
# Expenditure on samples and free distribution items to be exempted from fringe benefit tax.
# Additional revenue from direct taxes to yield Rs 3000 crore and indirect taxes revenue neutral.
# Tax exemption on aviation turbine fuel sold to turbo prop aircraft extended to all small aircraft less than 40,000 kg.
# Withdrawals by central and state governments exempted from Banking Cash Transaction Tax. The limit for individuals and HUF raised from Rs 25,000 to Rs 50,000. Corporate Tax Rates Unchanged
# No surcharge for SMEs (firms with a taxable income of Rs 1 crore (Rs 10 million) or less).
# Peak Rate For Non Agricultural Products From 12.5% to 10%
# Second and defective steel from 20% to 10%
# No Duty on Coking Coal
# Customs duty on Polyster Fibre and Yarns down to 7.5%
# Duty on Cut and Polished diamonds from 5 to 3%
# Dredgers to be exempt from import duty
# Duty on Drip Irrigation, Agricultural Sprinklers and Food processing machinery from 7.5% to 5%
# General rate on medical equipment to 7.5%
# Duty on Sunflower Oil down 15 percentage points
# Duty on pet foods down from 30 to 20%
# Excise & Service Tax: No change in Excise and Service Tax Rates
# Ad-valorem component on petrol and diesel down from 8% to 6%
# Excise & Service Tax:Relief for deserving cases in job creating sectors
# SSIs exemption from Rs 1 crore to Rs 1.5 crore
# Exemption limit for small service providers from Rs 4 lakh to Rs 8 lakh. Two lakh assessees will go out of service tax. Revenue loss will be Rs 800 crore
# Two lakh people to benefit out of service tax exemption. Govt to lose Rs 800 crore as a result.
# Service tax on Residents Welfare Associations whose members contribute more than Rs 3,000.
# Surcharge on Corporate income tax on companies below Rs one crore removed.
# Tax free bonds to be issued by state-owned urban local bodies.
# Five year tax holiday for two, three, four star hotels and convention centres with a seating capacity of 3,000 in NCT of Delhi, Gurgaon, Ghaziabad, Faridabad and Gautam
# Minimum Alternate Tax being extended to I-T companies.
# Benefits of investment in venture capital funds confined to IT, bio-technology, nano-technology, seed research, dairy among some others.
Budget(2007-2008) Special::
# Rs 1.95 lakh exemption for senior citizens
# I-T limit for women up at Rs 1.45 lakh
# I-T exemption limit hiked by Rs 10,000
# No change in Income Tax rates
# Dividend distribution tax raised from 12.5 to 15 per cent.
# ESOPs to be brought under FBT.
# Expenditure on samples and free distribution items to be exempted from fringe benefit tax.
# Additional revenue from direct taxes to yield Rs 3000 crore and indirect taxes revenue neutral.
# Tax exemption on aviation turbine fuel sold to turbo prop aircraft extended to all small aircraft less than 40,000 kg.
# Withdrawals by central and state governments exempted from Banking Cash Transaction Tax. The limit for individuals and HUF raised from Rs 25,000 to Rs 50,000. Corporate Tax Rates Unchanged
# No surcharge for SMEs (firms with a taxable income of Rs 1 crore (Rs 10 million) or less).
# Peak Rate For Non Agricultural Products From 12.5% to 10%
# Second and defective steel from 20% to 10%
# No Duty on Coking Coal
# Customs duty on Polyster Fibre and Yarns down to 7.5%
# Duty on Cut and Polished diamonds from 5 to 3%
# Dredgers to be exempt from import duty
# Duty on Drip Irrigation, Agricultural Sprinklers and Food processing machinery from 7.5% to 5%
# General rate on medical equipment to 7.5%
# Duty on Sunflower Oil down 15 percentage points
# Duty on pet foods down from 30 to 20%
# Excise & Service Tax: No change in Excise and Service Tax Rates
# Ad-valorem component on petrol and diesel down from 8% to 6%
# Excise & Service Tax:Relief for deserving cases in job creating sectors
# SSIs exemption from Rs 1 crore to Rs 1.5 crore
# Exemption limit for small service providers from Rs 4 lakh to Rs 8 lakh. Two lakh assessees will go out of service tax. Revenue loss will be Rs 800 crore
# Two lakh people to benefit out of service tax exemption. Govt to lose Rs 800 crore as a result.
# Service tax on Residents Welfare Associations whose members contribute more than Rs 3,000.
# Surcharge on Corporate income tax on companies below Rs one crore removed.
# Tax free bonds to be issued by state-owned urban local bodies.
# Five year tax holiday for two, three, four star hotels and convention centres with a seating capacity of 3,000 in NCT of Delhi, Gurgaon, Ghaziabad, Faridabad and Gautam
# Minimum Alternate Tax being extended to I-T companies.
# Benefits of investment in venture capital funds confined to IT, bio-technology, nano-technology, seed research, dairy among some others.
Monday, February 26, 2007
Raising the limit of Rs 1 lakh under section 80C
The tax collections have been very buoyant in the current fiscal year and if the economic growth continues, the finance minister can expect a further boost next year too. Therefore, the FM could consider raising the limit under section 80C without seriously affecting the tax collections.
Besides, the Rs 100,000 limit is proving to be too less from the point of view of inducing long-term saving through tax benefits. Rising salaries mean higher provident fund deduction; premium payments on the legacy of insurance policies; clubbing of Rs10,000 under section 80CCC with section 80C; large home loans resulting in large repayment of principal - all this leaves very little room, if any, for further saving.
Therefore, a raise in the limit would be very welcome to make meaningful saving for the long-term.
Some tax-relief on bank interest
Re-introduction of section 80L, even with a lower limit of say Rs 7500-10000 would be very useful.
Everyone must keep aside some emergency funds in the savings account & short-term fixed deposits. These carry a very low rate of interest about 3.5-6 per cent. With section 80L abolished two years back, the post-tax return on these works out to practically nothing. In fact, it doesn't even cover a modest inflation of 5 per cent and hence loses value with time.
Since the amount kept in such short-term instruments is not large, and moreover there would be a limit above which bank interest would be taxable, the loss to the exchequer is going to be very minimal. But the benefit to practically every one of us is going to be huge. One, of course, is a decent return and two is the administrative convenience of not being required to keep track of even a few hundred rupees of interest we earn on the savings account balance.
Let's hope the FM takes care of these issues in the forthcoming budget to give a further impetus to long-term financial planning.
Tax Free Income
1. Interest on PPF/GPF/EPF, GOI tax free bonds, saving bank account in a post office and dividends on shares and on Mutual funds.
2. Any capital receipt from life insurance polices i.e., sums received either on death of the insurance or on maturity of life insurance plans. However, in case of life insurance polices issued after March 31,2004, exemption is available only if the premium paid in any year does not exceed 20% of the sum assured.
3. Long term capital gain on sale of shares and equity mutual funds if the security transaction tax paid/imposed on such transactions.
2. Any capital receipt from life insurance polices i.e., sums received either on death of the insurance or on maturity of life insurance plans. However, in case of life insurance polices issued after March 31,2004, exemption is available only if the premium paid in any year does not exceed 20% of the sum assured.
3. Long term capital gain on sale of shares and equity mutual funds if the security transaction tax paid/imposed on such transactions.
Tax deduction at source
1. Interest from FDs exceeds Rs5,000 in a financial year.
2. Interest from Financial Institutions/Company bonds Debentures exceeds Rs.2,500 in a year.
3. Interest from Housing finance companies/ Banks exceeds Rs.5,000 in a year.
2. Interest from Financial Institutions/Company bonds Debentures exceeds Rs.2,500 in a year.
3. Interest from Housing finance companies/ Banks exceeds Rs.5,000 in a year.
Deductions from taxable income
Deduction under section 80C:Under this section, a deduction of up to Rs. 1,00,000 is allowed from taxable income.
Some specified investment schemes u/s 80C and u/s 80CCC(1)
1. Life Insurance Premiums.
2. Contribution to Employees Provident Fund/GPF.
3. Public Provident Fund(maximum rs. 70,000 in a year).
4. NSC(National Savings Certificates).
5. Unit Linked Insurance Plan(ULIP).
6. Repayment of Hosing Loan(Principal).
7. Equity Linked Savings Scheme(ELSS) of Mutual Funds.
8. Tuition Fees including admission fees of college fees paid for full-time education of any two children of the asses-see.
9. Infrastructure Bonds issued by IDBI,ICICI,REC,PFC etc.
10. Pension scheme of LIC of India or any other Insurance Company.
Some specified investment schemes u/s 80C and u/s 80CCC(1)
1. Life Insurance Premiums.
2. Contribution to Employees Provident Fund/GPF.
3. Public Provident Fund(maximum rs. 70,000 in a year).
4. NSC(National Savings Certificates).
5. Unit Linked Insurance Plan(ULIP).
6. Repayment of Hosing Loan(Principal).
7. Equity Linked Savings Scheme(ELSS) of Mutual Funds.
8. Tuition Fees including admission fees of college fees paid for full-time education of any two children of the asses-see.
9. Infrastructure Bonds issued by IDBI,ICICI,REC,PFC etc.
10. Pension scheme of LIC of India or any other Insurance Company.
Subscribe to:
Posts (Atom)
