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Preface
All of us engage in some economic activity and work hard to make a living. But as you start
doing so you tend to attract the attention of the Income Tax Department, as they too are doing
their economic activity of taxing your income, as you earn. And thus as we work hard to make a
living, it becomes imperative for us to work a little more harder and smarter to save our taxes
(the legal way) too, so that we can make our dreams come true - A dream of buying a better
car, bigger house etc.
But, remember in the objective of attaining the same, if you keep your tax planning exercise
pending till the eleventh hour, then it would be merely a “tax saving” exercise leading to sub
optimal gains.
This guide on Tax Planning has been written with the purpose of helping you plan your taxes
smartly. If one incorporates the financial planning aspects such as your age, income, ability to
take risk and financial goals to tax planning exercise, then one can wisely complement tax
planning to investment planning as well.
Also, realisation will dawn on you that there’s more to tax planning than the mere ` 1 lakh limit
under Section 80C, of the Income Tax Act, 1961. There are many other provisions that can
provide you tax benefits. A simple thing like taking a loan for buying a house provides can make
you eligible to get tax benefits.
But to avail the benefit all these, you should subscribe to “tax planning” – a planned approach
to saving taxes and creating wealth to meet our long term goals.
So, read on and wish you all VERY HAPPY TAX PLANNING!!
Team Personal FN
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Disclaimer
Quantum Information Services Private Limited (PersonalFN) is enrolled as AMFI Registered Mutual Fund Advisor (ARMFA) under
AMFI Registration No. ARN- 1022 and adheres to AMFI Guidelines and Norms for Intermediaries (AGNI), and all its employees
engaged in distribution of Mutual Fund products have passed the prescribed AMFI certification examination. This is a
generalized Service, provided on an "As Is" basis by PersonalFN. PersonalFN and its affiliates disclaim any warranty of any kind,
imputed by the laws of any jurisdiction whether in or outside India, whether express or implied, as to any matter whatsoever
relating to the Service, including without limitation the implied warranties of merchantability, fitness for a particular purpose.
PersonalFN will and its subsidiaries / affiliates / sponsors / trustee or their officers, employees, personnel, directors will not be
responsible for any direct/indirect loss or liability incurred to the user or any other person as a consequence of his or any other
person on his behalf taking any investment decisions based on the above recommendation. This is not a specific advisory
service to meet the requirements of a specific client. Use of the Service is at any persons, including a Client's, own risk. The
investments discussed or recommended under this service may not be suitable for all investors. Investors must make their own
investment decisions based on their specific investment objectives and financial position and using such independent advisors
as they believe necessary. Information herein is believed to be reliable but PersonalFN does not warrant its completeness or
accuracy. The Service should not be construed to be an advertisement for solicitation for buying or selling of any securities. All
intellectual property rights emerging from this guide are and shall remain with PersonalFN. This guide is for user’s personal use
and the user shall not resell, copy, or redistribute this guide, or use it for any commercial purpose. Please read the Terms of Use
on the website www.personalfn.com.
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Index
Section I: Introduction
Section II: Mistakes which you have been doing while saving tax 07
Section III: Your small steps (to “Tax Planning”) can take you leaps
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I - Introduction
“All men make mistakes, but only wise men learn from their mistakes.”- Sir Winston Churchill.
The above proverb is very much relevant to our daily lives - be it handling finances or even in
any other facets of life.
Moreover the famous author John C. Maxwell has also quoted “A man must be big enough to
admit his mistakes, smart enough to profit from them, and strong enough to correct them.” But
again this is conveniently forgotten by most, which often leads to failure to learn from
mistakes, the arrogance to admit it and which thus leads you to repeat the same mistakes
again.
While undertaking your tax planning exercise too, you tend to repeat the same mistake of
waiting till the eleventh hour and are arrogant enough to admit it.
As the financial year draws to a close, we all start feeling the heat and realise that yes, now we
have to invest in order to save tax. But have you ever wondered whether it is the prudent way
for tax planning?
Remember, waiting till the eleventh hour to undertake your tax planning exercise will often
drive it towards mere “tax saving”, rather than “tax planning”; which in our opinion is a sub-
optimal way to undertake a tax planning exercise.
Unlike “tax saving” which is generally done through investments in tax saving
instruments/products, under “tax planning” we take into consideration one’s larger financial
plan after accounting for one’s age, financial goals, ability to take risk and investment horizon
(including nearness to financial goals). And by adopting to such a method of “tax planning”, you
not only ensure long-term wealth creation but also protection of capital.
Hence, please remember to commence your “tax planning” exercise well in advance by
complementing it with your overall investment planning exercise.
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The root of all mistakes in tax planning lies in waiting till the eleventh hour to save taxes, which
eventually lead to mere tax saving, rather than tax planning. And this in return is a sub-optimal
way of saving taxes, caused by the sheer attitude of procrastination. Waiting till the eleventh
hour, will often lead you to forgetting or ignoring the facets of financial planning such as your
age, income, ability to take risk and financial goals (explained further in this guide) thus guiding
you to not complement your tax planning exercise with investment planning.
Remember waiting till the eleventh, is just going to lead you to a path of sub-optimal tax planning
exercise, which would destroy the theory of holistic tax planning.
At the end of the financial year, many of you must have attended telephone calls of insurance
agents pestering you to buy an investment cum insurance plans – typically market linked i.e.
Unit Linked Insurance Plans. And many of you realising the need to save taxes, even entertain
these calls and eventually tear a cheque for buying one. But do you ever wonder whether you
have done the right thing?
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The answer in our opinion is a sheer “No”. And that’s because of the ignorance and / or
arrogance (of not admitting your mistakes) which you have while doing your tax saving
investments.
Remember when you are thinking of insuring yourself, it should purely mean protecting your life against
any contingent events; and thus given that you should be ideally buying only pure term life insurance
plans, which gives due importance to your human life value. It is noteworthy that ULIPs are investment-
cum-insurance plans where for the premium paid, the insurance cover offered under these plans is far
less (usually 10 times your annual premium) when compared to pure term life insurance plans; where for
a lesser premium amount you get a greater life cover – which precisely what a life insurance plan is
intended for.
Many of you despite the fact that age, income, ability to take risk along with financial goals
support you to take risk, you absolutely rule out the concept of power of compounding to your
portfolio. It is noteworthy that if you want to meet and / or elevate your standard of living
going forward, you need to beat the rate of inflation. And thus, role of equity as an asset class
cannot be ignored in one’s tax saving portfolio too. While some do consider the tax saving
mutual funds in their tax saving portfolio the ideal composition (depending on your age, income
ability to take risk and financial goals) is not maintained, which leads the tax saving portfolio to
give sub-optimal returns.
It is noteworthy that being risk averse is well appreciated by us. But if your age, income, ability to take
risk and financial goals, permit you to take equity exposure one should not ignore the same.
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For many tax planning starts as well as ends with Section 80C - which enunciates investment
instruments for tax saving. But just investing in these investment instruments would not lead to
optimal reduction of tax liability.
To bring to your notice our Income Tax Act, 1961 also considers humane side of our life and also gives
deduction for contributions made for financing our country’s infrastructure development. So, in case if
you pay your medical insurance premium, incur expenditure on the medical treatment of a “dependant”
handicapped, donate to specified funds for specified causes, contribute in monetary form to political
parties or electoral trusts, take a loan for pursuing higher education or if you are an individual suffering
from “specified” diseases, then all this too can help you effectively plan your tax obligations, thus
optimally reducing your tax liability. Moreover, take into account the urge to buy your dream home by
taking a loan, the Act also extends tax saving benefits to you.
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In the past if you have taken your tax planning decisions at the eleventh hour, never mind. But,
please learn from them and don’t the repeat the same mistakes again. Adopt the prudent steps
while doing your tax planning.
The process of tax planning begins with computation of your Gross Total Income (GTI). This step
enables you to ascertain the total income earned by you during a financial year, from various
under-mentioned sources of income, and helps you to judge where you stand.
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Hence, GTI is the total income earned by one before availing any deductions under the Income
Tax Act, 1961. And it is vital to know the same, in order for you to undertake your tax planning
effectively, so that you can plan within the sources of income (by using the relevant provisions
of the Income Tax Act applicable to the aforementioned sources of income) , as well as by
availing deductions to GTI.
Now, one may ask – “how do I undertake this activity if I’m a novice?”
Well, the answer is pretty simple! You can either get it done at your office (many organisation
do offer this facility), ask your CA / tax consultant to do it, or use the convenience of the new
tax portals that have emerged in more recent times. But, along with all this please do not forget
to do your self-study to carry out effective tax planning exercise. One must note that it’s vital to
know at least those provisions of the Income Tax Act, which directly have an impact on your
finances.
After having done with computation of GTI by using the relevant provisions of the Income Tax
Act for each source of income, the next step is to compute your Net Taxable Income (NTI).
Under NTI from the GTI, the various deductions allowed under the Income Tax Act, should be
accounted for (i.e. subtracted from your GTI), which would thus reduce your taxable income.
These deductions enable you to enjoy reduction in tax liability, as it covers Sections under the
Income Tax Act for:
Investing in tax saving instruments (your most loved and sought after Section 80C, along
with the recently introduced Section 80CCF)
Donations
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Remember, if you use the respective provisions effectively to do tax planning, it will enable you
to achieve the long-term objective of wealth creation.
After having effectively saved tax in the prudent way mentioned above, the next step is to
compute your tax liability based on the present income tax slabs, and thereafter file your tax
returns.
The income tax rates for Individuals and HUFs for FY 2010-11 are as follows:
Moreover you would also have to pay an education cess @ 3% on your tax liability computed.
So, say if your net taxable income (NTI) after availing for all deductions available is ` 10,00,000
then your tax liability will be computed as under:
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A Prudent exercise of tax planning also extends to appropriate investment planning, which also
takes into account your ideal asset allocation by considering the under-mentioned factors.
Hence after you have utilised the tax provisions within each head / source of income for
effective reduction in GTI, you must also consider the following parameters as these will enable
you to optimally reduce your tax liability.
• Age
Your age and the tenure of your investment play a vital role in your asset allocation. The
younger you are more risk you can take and vice-a-versa. Hence, for prudent tax planning
too, if you are young, you should allocate more towards market-linked tax saving
instruments such as Equity Linked Saving Schemes (ELSS), Unit Linked Insurance Plans
(ULIPs) and National Pension Scheme (NPS), as at a young the willingness to take risk is
high. One may also consider taking a home loan when you are young as; number of years
of repayment are more along with your willingness to take risk being high.
Also a noteworthy point is the earlier you start with your investments, the greater is the
tenure you get while investing in an investment avenue, which enables one to make more
aggressive investments and create wealth over the long-term to meet your financial goals.
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(years)
Retirement age 60 60 60
(years)
Investment tenure 35 30 25
(years)
annum
accumulated (`)
(Source: Personal FN Research)
The above table reveals that, Suresh starts at age 25, and invests ` 7,000 per month in an
ELSS scheme through SIPs (Systematic Investment Plans) until retirement (age 60). His
corpus at retirement is approximately ` 2.65 crore. Mahesh starts at age 30, a mere 5 years
after Suresh, and invests the same amount in ELLSS scheme (through SIPs) until retirement
(also at age 60). His corpus comes to approximately ` 1.58 crore, note the difference
between the 2 corpuses here. And lastly, we have Sandesh, the latest bloomer of the lot. He
begins investing at age 35, the same amount monthly in an ELSS Scheme as Suresh and
Mahesh, and invests up to his retirement (also at age 60). His corpus is, in comparison, a
meagre ` 92 lakh.
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One can also consider donating an affordable amount towards a noble cause, as doing so
will make you eligible for a tax benefit (under section 80G of the Income Tax Act – which is
discussed ahead in this guide).
For some of you young people, perusing higher education may be a priority. But there may
be a case you do not have enough corpus (funds) garnered by you. However, you don’t
need to worry, as there are several banks willing to offer higher education loan; and if you
avail the same the interest paid by you on the loan taken will be eligible for tax benefit
(under section 80E of the Income Tax Act – which is discussed ahead in this guide).
• Income
Similarly, if your income is high, your willingness to take risk is high. This thus can work in
your favour, as you have sufficient annual GTI which allows you to park more money
towards market-linked tax saving investment instruments, for generating higher returns and
creating a good corpus for your financial goal(s). Also, on account of the higher GTI your
eligibility to take a home loan also increases, which can also help you to optimally reduce
your tax liability.
Yes, one may say if I have a high income, then why do I need a home loan. I can straight
away go ahead and buy!
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Sure, you can do so but, the Income Tax Act provides you the tax benefit for repayment of
principal amount along with the interest of loan taken, which you will miss.
Also given that you are rich, you can also consider donating some of your money towards a
noble cause, which can also enable you to enjoy a tax benefit (under section 80G of the
Income Tax Act – which is discussed ahead in this guide).
Similarly, if your income is not high enough (i.e. it is low), you can invest in tax saving
instruments which provide you assured returns. These instruments can be Public Provident
Fund (PPF), National Savings Certificates (NSCs), 5 Yr Bank Fixed Deposits, 5 Yr Post Office
Time Deposits, Senior Citizen Savings Scheme (provided you are a senior citizen) and Non-
ULIP insurance plans.
• Financial goals
The financial goals which one sets in life, also influences the tax planning exercise. So, say
for example your goal is retiring from work 5 years from now, then your tax saving
investment portfolio will be also less skewed towards market-linked tax saving instruments,
as you are quite near to your goal and your regular income will stop.
Likewise if you are many years away from the financial goal, you should ideally allocate
maximum allocation to market linked tax saving instruments and less towards those
instruments (tax saving) which provide you assured returns.
• Risk Appetite
Your willingness to take risk which is a function of your age, income, expenses, nearness to
goal, will be an important determinant while doing your tax planning exercise. So, if your
willingness to take risk is high (aggressive), you can skew your tax saving investment
portfolio more towards the market-linked instruments. Similarly, if your willingness to take
risk is relatively low (conservative), your tax saving investment portfolio can be skewed
towards instruments which offer you assured returns, and if you are a moderate risk taker
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you can take a mix of 60:40 into market-linked tax saving instruments and assured return
tax saving instruments respectively.
Yes, we reckon the fact that “prudent tax planning” exercise can be a time consuming and
complex. But please note the fact that it’s an annual activity which every tax payer has to
go through – and if you start early and plan properly, the task becomes easier.
Remember, procrastination will only ensure that you invest at the last moment and not in
line with the parameters discussed above. If you are hard pressed for time, consider hiring
a competent tax consultant along with an investment advisor.
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Hence, if you invest in any or all of the aforementioned instruments; you would qualify for
deduction under this section subject to the maximum of ` 1,00,000 p.a. But we think rather
than just merely investing in any of the above tax saving instruments, one can also can use
these tax saving instruments for prudent tax planning by recognising your age, income, financial
goals and risk appetite.
Well, it’s simple! In the aforementioned list you can classify the tax saving instruments into
those offering variable returns (i.e. market-linked instruments) and those offering fixed returns
(i.e. assured return instruments). By doing so you would be able to ascertain which suits you
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best (taking into account the factors mentioned above) and will also extend your tax planning
exercise to investment planning too.
Let’s discuss in detail the classification into market-linked tax saving instruments and assured
return tax saving instruments.
If you are young, income is high, and therefore willingness to take risk is high along with your
financial goals being far away, then this category would suit you. Under this category you are
investing in the capital markets, giving you variable returns. Following tax saving instruments
are available for investment.
These are mutual fund schemes, which are 100% diversified equity funds providing tax benefits.
And these are popularly known as Tax Saving Mutual Funds. A distinguishing feature about
them is that they are subject to a compulsory lock-in period of three years, but the minimum
application amount in most of them is as little as ` 500, with no upper limit. You can either
make lump sum investments or investments through the Systematic Investment Plan (SIP).
It is noteworthy that, in the long-term if you intend creating wealth by hedging the inflation
risk, then this tax saving instrument can give you luring returns.
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Scheme Name 1-Yr Returns (%) 2-Yr Returns (%) 3-Yr Returns (%)
Yes, you may say – “but there is risk involved”. Well, no doubt about that, but in order to even
out the shocks of volatility in the equity markets you can adopt the SIP route of investing here
which will provide you the advantage of “compounding” along with “rupee-cost averaging”.
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However a noteworthy point in SIP investing for ELSS is that your every SIP installment (which
can be monthly, quarterly or half yearly) should complete the minimum lock-in period of 3
years.
Deduction: The maximum tax benefit which you can enjoy is ` 1,00,000 p.a. under section 80C.
Moreover, if you make any long term gains at the time of exit any time after the end of the
lock-in period; then you would not have to pay any Long Term Capital Gains Tax (LTCG) too.
These are typically insurance-cum-investment plans which enable you to invest in equity and /
or debt instruments depending on what suits you as per your age, income, risk profile and
financial goals. All you simply need to do is, select the allocation option as provided by the
insurance company offering such a plan. Generally they are classified as “aggressive” (which
invests in equity), “moderate or balanced” (which invests in debt as well as equity) and
“conservative” (which is invests purely in debt instruments).
Hence apart from the insurance cover (which is 10 times your annual premium) offered under
these plans, the returns which you would get would be completely market-linked as your
premium amount (after accounting for allocation and other charges) is invested in equity and
debt securities.
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And in order for you to track such plans the NAV is declared on a regular basis. These policies
have a minimum 5 year lock-in period, and also have a minimum premium paying term of 5
years. The overall term of the policy would vary from product to product.
In case of any eventuality the beneficiaries would be paid the sum assured or fund value,
whichever is higher.
But a noteworthy point is, while some well selected ULIPs may add value to your portfolio in the
long-term; your insurance and investment needs should be dealt separately, thus enabling you
to have the optimum insurance coverage and the right investment instruments for long-term
wealth creation.
Deduction: The premium which you paying for your ULIP plans would be eligible for tax benefit,
subject to the maximum eligible amount of ` 1,00,000 p.a. as available under Section 80C.
Moreover, a positive point is that at maturity the amount which you or your beneficiary would
receive is tax free (exempt) as per the provisions of Section 10(10D) of the Income Tax Act.
National Pension Scheme which was earlier available only for Government employees was later
on May 1, 2009 also introduced for people in the organised (private) sector, as need for deeper
participation in the pension contribution (through this product) was felt.
For NPS, if you (eligibility age: from 18 to 60) belong to the unorganised sector (i.e. private
sector); the contributions done by you towards the scheme would be voluntary, and you can
invest in any of the two under-mentioned accounts:
Tier-I Account:
In this account your minimum investment amount is ` 500 per contribution and ` 6,000
per year, and you are required to make minimum 4 contributions per year. Under this
account, premature withdrawals upto a maximum of 20% of the total investment is not
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permitted before attainment of 60 years, however the balance 80% of the pension wealth
has to be utilised by you to buy a life annuity.
Tier-II Account:
For opening this account you will have to make a minimum contribution of ` 1,000 per
` 250. However, if you open an account in the last quarter of the financial year, you will
have to contribute only once in that financial year. You will be required to maintain a
minimum balance of ` 2,000 at the end of the financial year. In case you don’t maintain the
minimum balance in this account and do not comply with the number of contributions in a
year, a penalty of ` 100 will be levied. Moreover, in order to have this account, you first
need to have a Tier-I account. This account is a voluntary account and withdrawals will be
While investing money in NPS, you have two investment choices i.e. “Active” or “Auto” choice.
Under the “Active” choice asset class, your money will be invested in various asset classes viz. E
(Equity), C (Credit risk bearing fixed income instruments other than Government Securities) and
G (Central Government and State Government bonds); where you will have an option to decide
your asset allocation into these asset classes. In case of Auto Choice, your money will be
invested in the aforesaid asset classes in accordance with predetermined asset allocation.
But remember, the return on your investment is not guaranteed as it is market-linked. At your
age of 60 years, you can exit the scheme; but you are required to invest a minimum 40% of the
fund value to purchase a life annuity. And the remaining 60% of the money can be withdrawn in
lump sum or in a phased manner upto your age of 70 years.
In our opinion this product is not very appealing for creating a substantial corpus to meet your
retirement need. Rather, if you chalk-out a prudent financial plan with the help of a financial
planner, and invest wisely as per the plan laid out (which would mostly recommend you equity
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allocation at younger age, and then as your age progresses balance the asset allocation
between equity and debt instruments), then the corpus which you would be able to create will
be substantial enough to meet your retirements needs. Also under this scheme, when one
withdraws money, at the age of 60 it is taxable.
Deduction: The contributions which you make to the accounts mentioned above, would be
eligible for tax benefit but subject to the maximum eligible amount of ` 1,00,000 p.a. as
available under Section 80C.
Unlike the case presented above (i.e. under tax planning with market-linked instruments), if
your age, income, risk profile and financial goals do not permit you to invest in market-linked
instruments (for your tax planning) along with the fact that your risk taking ability is low; then
you should plan investing in tax saving instruments which offer you assured returns. Under
these instruments there’s zero risk of erosion to your capital. Following are the tax saving
instruments available under this category:
Life Insurance plans can be broadly classified as “pure term life insurance plans” and
“investment-cum-insurance life insurance plans”.
Pure term life insurance plans are authentic in nature, as they cater to the need of only
protection and not investment. Hence such plans offer a high life insurance coverage at low
premiums. Generally the term insurance plans offer a policy term of 10, 15, 20, 25 or 30 years.
Investment-cum-insurance plans on the other hand, as the name suggest offer you an
investment option as well as an insurance option. But here your insurance coverage is far
lesser, than the one provided under pure term insurance plans. So, you pay a high premium
which gets invested, but insurance coverage on the other hand is meagre. Such insurance plans
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can be offered in various forms such as ULIPs (as discussed above), endowment plans, money
back plan, pension plans etc.
We think that while you are considering your insurance needs, you should ideally look at only
pure term life insurance plans, thus keeping your insurance needs separate from investment
needs.
Deduction: Over here too the premium which you paying for your such non-ULIP life insurance
plans would be eligible for tax benefit, subject to the maximum eligible amount of ` 1,00,000
p.a. as available under Section 80C. Moreover, a positive point is that at maturity the amount
which you or your beneficiary would receive is tax free (exempt) as per the provisions of
Section 10(10D) of the Income Tax Act.
In order to invest in PPF, you are required to open a PPF account (which is irrespective of your
age) at your nearest post office or public sector (nationalized) bank providing this facility. You
can open the account in your name, and also in the name of your wife as well as children. And if
do not wish to do so, you can also nominate them; but joint application is not permissible.
The account so opened will have an expiry term of 15 years from the end of which the initial
investment (subscription) to the account is made. You can invest in the account ranging from a
minimum of ` 500 to a maximum of ` 70,000 in a financial year in order to enjoy the tax
benefit under Section 80C, and the amount to the credit of your account will be entitled to a
tax-free interest at 8% p.a. Your each deposit in the PPF account should at least be ` 500, and
one has the convenience of depositing in either lump sum or in convenient installments not
exceeding 12 such installments. However, a noteworthy point is that it is not necessary to
deposit every month and the amount too can be any amount subject to the minimum (` 500)
and maximum (` 70,000) amount.
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The interest to the account will calculated on the lowest balance to the credit of the account
between the close of the 5th day and the end of the month, and will be credited to account on
March 31, each year.
As regards withdrawal from the account is concerned; it is permitted any time after the expiry
of 5 years from the end of the year in which initial investment (subscription) to the account is
made. However, your withdrawal will be restricted to 50% of the amount which stood to the
credit of your account in the immediate 4th year immediately preceding the year of withdrawal
or at the end of the preceding year, whichever is lower. And in case if your term of 15 year is
over, you can withdraw the entire amount together with the interest accrued till the last day of
the month, preceding the month in which application for withdrawal is made.
After your term of 15 years is over if you wish to renew your account, you can do so for a
period of another 5 years at the rate of interest prevailing then (which can be 8%) without
having the compulsion of putting any further deposits in case of extension. The withdrawal in
case of extended accounts is permissible once in every financial year. But the total withdrawal
should not exceed 60% of the balance accumulated to the account at the commencement of
the extension period (of 5 years).
It is noteworthy that if you are risk averse, then this product is best in its class for tax planning.
Moreover, it also offers you an appealing tax-free return of 8% p.a. (compounded annually).
Deduction: The contributions which you make to the accounts mentioned above, would be
eligible for tax benefit but subject to the maximum eligible amount of ` 1,00,000 p.a. as
available under Section 80C.
The NSC is also a scheme floated by the Government of India, and one can invest in the same
through your nearest post offices, as the scheme is available only with the India Post.
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The certificates can be made in your own name, jointly by two adults, or even by a minor
(through the guardian), and has a tenure of 6 years.
The minimum amount which you can invest is ` 100, with no maximum limit to the same. NSC
offers an interest @ 8.0% p.a. compounded half-yearly, thus giving you an effective interest
rate of 8.16% p.a. The interest income accrues annually and is reinvested further in the scheme
till maturity (i.e. 6 years) or until the date of premature withdrawals.
Premature withdrawals are permitted only in specific circumstances such as death of the
holder.
Deduction: Your investment in NSC is eligible for a deduction of upto ` 100,000 p.a. under
Section 80C. Furthermore, the accrued interest which is deemed to be reinvested qualifies for
deduction under Section 80C. However, the interest income is chargeable to tax in the year in
which it accrues. But in case if you have no other income apart from interest income, then in
order to avoid Tax Deduction at Source (TDS), you can submit a declaration in Form 15-H (for
general) or Form 15-G (for senior citizens) as applicable.
The 5-Yr tax saving bank fixed deposits available with your bank is also eligible for a deduction
under Section 80C. The minimum amount that you can invest is ` 100 with an upper limit of `
1,00,000 in a financial year. The interest rates offered by some of the popular banks are as
under:
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However, the interest earned here would be subject to tax deduction at source, making it
detrimental for your tax planning, but again you can submit a declaration in Form 15-H (for
general) or Form 15-G (for senior citizens) as applicable for not deducting tax at source.
Similarly 5 Yr Post Office Time Deposits (POTDs) also offer you a tax benefit under Section 80C.
The account can be opened by you either in single name or jointly or even by a minor (through
a guardian) who has attained the age of 10.
The minimum investment amount is ` 200, and there isn’t any upper limit. However, the
investment amount over ` 1,00,000 will not be eligible for any tax benefit.
A 5-Yr POTD earns a return of 7.5% p.a. (compounded quarterly), but paid annually. Hence, say
if deposit an amount ` 10,000, the interest income which you will fetch would approximately
be ` 771 p.a.
As regards premature withdrawals are concerned, they are permitted only after 6 months from
the date of deposit with a penalty in the form of loss of interest.
Deduction: Your investment in the both these schemes are eligible for a deduction of upto `
1,00,000 p.a. under Section 80C. But as mentioned above, the interest earned on your
investments will be subject to tax deduction at source. However, in case if you have no other
income apart from interest income, then in order to avoid Tax Deduction at Source (TDS), you
can submit a declaration in Form 15-H (for general) or Form 15-G (for senior citizens) as
applicable.
Well, the SCSS is an effort made by the Government of India for the empowerment and
financial security of senior citizens. So, in case if you are over 60 years old, you are eligible to
invest in this scheme. Moreover, if you have attained 55 years of age and have retired under a
voluntary retirement scheme; then too you are eligible to enjoy the benefits of this scheme.
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In order to avail the benefits of this scheme, you are required to open an SCSS account (either
in a single name, or jointly along with your spouse) at your nearest post office or any
nationalised bank. You can do a onetime deposit under this scheme subject to the minimum
investment amount of ` 1,000 and a maximum of ` 15,00,000. The maturity period provided
for this scheme is 5 years offering a rate of interest of 9% p.a. payable on a quarterly basis (i.e.
on March 31, June 30, September 30 and December 31) every year from the date of deposit.
After one year from the date of opening the account, premature withdrawals are permitted. If
you withdraw between 1 and 2 years, 1.5% of the initial amount invested will be deducted. And
in case if you withdraw after 2 years, 1.0% of the balance amount is deducted.
Deduction: Your investments upto ` 1,00,000 in SCSS are entitled for a deduction under Section
80C. However, the interest earned by you would be subject to tax deduction at source. But in
case if you have no other income apart from interest income, then in order to avoid Tax
Deduction at Source (TDS), you can submit a declaration in Form 15-H (for general) or Form 15-
G (for senior citizens) as applicable.
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National Pension Scheme Growth Market-Linked Returns 30-35 years ` 6,000 Yes 80C
1-YR: 6.25%;
2-YR: 6.50%;
3-YR: 7.25%;
Fixed
Post Office Time Deposit 5-YR: 7.50%; 1-5 years ` 200 - No upper Limit Yes 80C
Deposit
(compounded
quarterly & paid
annually
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So, let’s understand how each of the above expenses for a cause or an investment, can help
you in effective tax planning. Herein below is the list of some major ones.
The premium paid by you on medical insurance policy (commonly referred to as a medi-claim
policy) to cover your spouse and you, dependent children and parents against any unexpected
medical expenses, qualifies for a deduction under Section 80D.
The maximum amount allowed annually as a deduction (from your GTI) is ` 15,000, in case if
you pay for yourself, spouse and dependent children. And if you are a senior citizen, the
maximum deduction gets extended to ` 20,000.
Further, if you pay medical insurance premium for your parents (irrespective of whether they
are dependant or not on you), you can claim an additional deduction of upto ` 15,000 under
this section. So, for example, if you pay a premium of ` 15,000 for yourself and ` 15,000 for
your parents, you will be eligible for a total deduction of ` 30,000.
However, while paying the premium you need to ensure that the payment is made in any mode
other than cash.
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If you have incurred any expenditure in the form medical treatment (including nursing), training
and rehabilitation for a handicapped “dependent” suffering from disability, then the
expenditure so incurred by you qualifies for deduction under Section 80DD of the Income Tax
Act. Similarly, if you have deposited a sum of money under any scheme framed in this behalf by
LIC (Life Insurance Corporation of India) or any other insurer or administrator or a specified
company (approved by the Board), for maintenance of the “dependent” being a person with
disability; also qualifies for a deduction under Section 80DD.
The quantum of deduction here depends upon the severity of the disability suffered by the
“dependent”. Hence, if the “dependent” is suffering from 40% of any disability [Specified under
section 2(i) of the Person with Disability (Equal Opportunities, Protection of Rights and Full
Participation) Act, 1955], then you would be entitle to a deduction of a fixed sum of ` 50,000
p.a. from your GTI irrespective of the expenditure incurred or amount deposited. Similarly, if
the “dependent” is suffering from severe disability (i.e. 80% of any disability), then you claim a
higher deduction of fixed sum of ` 75,000, from your GTI irrespective of the expenditure
incurred or amount deposited.
It is noteworthy that over here the term “dependent” being a person with disability means your
Moreover, in order to claim the deduction you need to submit a medical certificate issued by a
medical authority along with your return of income. Also if you are claiming a deduction in your
tax returns for such an expenditure incurred or amount deposited, your “dependent” cannot
claim a deduction under Section 80U in case he’s (handicapped dependent) filing his tax returns
separately.
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If you have incurred expenditure on your medical treatment or for your “dependents”, then too
the expenditure so incurred, makes you eligible for deduction under Section 80DDB of the
Income Tax Act.
The deduction from your GTI, which you are entitled to, is ` 40,000 or the amount actually
paid, whichever is lower. And if you are a senior citizen, then you are eligible for a deduction of
` 60,000 or the amount actually paid, whichever is lower.
It is noteworthy that over here the term “dependent” means your wholly or mainly dependent
spouse, children, parents, brothers and sisters. Also, in order to claim a deduction under this
section, you are required to submit a medical certificate from a doctor (neurologist, oncologist,
hospital.
While pursuing a personal goal of enrolling for “higher education” in order to be competitive
enough to meet your financial goals; the Income Tax Act offers you deduction (from your GTI),
when you take a loan to fulfil such dreams.
Sure, you can also take an education loan for your wife’s or children’s education or for any
person (minor) for whom you are the legal guardian. But that makes you eligible for deduction
under Section 80E of the Income Tax Act, to the extent of the interest paid on such a loan
taken.
The deduction is available for a maximum of 8 years or till the interest is paid, whichever is
earlier. So, to simplify it further, the deduction is available from the year in which you start
paying the interest on the loan, and the seven immediately succeeding financial years or until
the interest is paid in full, whichever is earlier.
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It is noteworthy that, here the term “higher education” means full-time studies for any
graduate or post-graduate course in engineering (including technology / architecture) ,
medicine, management or for post-graduate courses in applied science or pure science
including mathematics and statistics. But now from present Finance Act of 2010 its scope is
extended to cover all fields of studies (including vocational studies) pursued after passing the
Senior Secondary Examination or its equivalent from any school, board or university recognised
by the Central or the State Government or local authority or any other authority authorised by
the Central or the State Government or local authority to do so.
As mentioned earlier that our Income Tax Act, 1961 considers the humane side of our life, and
so if on humanitarian grounds you donate to certain specified funds, charitable institutions,
approved educational institutions etc, the donation amount qualifies for deduction under this
section.
The deductions allowed can be 50% or 100% of the donation, subject to the stated limits as
provided under this section. For example, donations to “National Defence Fund” set up by the
Central Government are allowed 100% deduction, while for “Prime Minister Drought Relief
Fund” are allowed at 50%. Under the Income Tax Act, if you make donations to any of the host
of notified funds and / or charitable institutions, you are eligible for deduction under Section
80G.
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Maharashtra Chief Minister’s Relief Fund and Chief Minister’s Earthquake Relief
Fund 100%
Any fund set up by Gujarat State Government for providing relief to earthquake
victims 100%
Note: There are also other funds and charitable institutions that are eligible for deduction under Section 80G. The full list is available here:
http://www.incometaxindia.gov.in/Acts/INCOME TAX Act/80g.asp
(Source: Personal FN Research)
In order to claim deduction under this section, you are required to attach a proof of payment
along with your return of income.
6. Rent paid in respect property occupied for residential use (Section 80GG):
If you are a self employed or a salaried individual who is not in receipt of any House Rent
Allowance (HRA), and is paying a rent for an accommodation (irrespective whether furnished or
unfurnished) occupied for residential use, then you can claim a deduction under this section.
But as a pre-condition for availing deduction under this section, you or your spouse or your
minor child must not own any residential accommodation either in India or abroad.
And the deduction which will be available to you under this section is the least of:
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Say, if you have some nepotism for any political party or electoral trust as you appreciate the
work done by them; and therefore decide to make a monetary contribution to the party or
electoral trust, then the amount so contributed would be eligible for a deduction under this
section.
As said earlier too, that our Income Tax Act, 1961 considers the humane side of life; so if you as
an individual resident in India is suffering from any specified disability i.e. not suffering from not
less than 40% any specified diseases given below, then you would be eligible for deduction
under this section.
Specified disabilities:
Blindness
Low vision
Leprosy-cured
Hearing impairment
Locomotor disability
Mental retardation
Mental illness
The deduction available under this section is flat (i.e. fixed) ` 50,000, immaterial of the
expenditure incurred. But if the disability is severe in nature (i.e. 80% or above), then one is
entitled to flat (i.e. fixed) deduction of ` 1,00,000.
However in order to avail of the deduction, one needs to file copy of certificates issued by the
medical authority, at the time of filing returns.
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In the Finance Act 2010, the Government introduced this new section, which enables you to
invest additional an additional sum of money in long-term infrastructure bonds (notified by the
Central Government), and avail a deduction over and above the investment limit of ` 1,00,000
specified under section 80C.
But under this section from a tax deduction purpose only a sum upto ` 20,000 would be eligible
for a deduction.
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But again just to reiterate please don’t rule out the financial planning aspect of number of years
left with you for repayment of your home loan.
Yes, our Income Tax Act, 1961 too considers our desire to buy or construct or reconstruct or
repair or renew our dream home and gets a little benevolent, if one avails of a loan to fulfill
these desires for your dream home. The Act encourages you to buy, to do the aforementioned
activities (for your home) with a loan, as it provides you with tax benefits (that come along with
it). Both, “repayment of principal amount” and “payment of interest” are eligible for tax
benefit.
The “repayment of principal amount”, makes you eligible to claim a deduction upto a sum of `
100,000 under section 80C; and that benefit is available with you immaterial of the fact
whether you stay in the same property (Self Occupied Property - SOP), or has let it out on rent
(Let Out Property LOP).
As far as the payment of interest amount (for the loan amount availed) is concerned, it’s
available for deduction under section 24(b). So, if you buy or acquire a house and decide to stay
in the same (SOP) then the maximum sum ` 150,000 p.a. can be availed by you as a deduction
for interest. However, if you have let out the property on rent (LOP), then the actual interest
payable is eligible for deduction, thus not being subject to any maximum limit.
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Similarly, if you have taken a loan for the purpose of reconstructing, repairing or renewing the
property, the amount of deduction under section 24(b) which you’ll be eligible for will be
restricted to ` 30,000, irrespective whether you want to stay in it or let it out on rent.
Let’s understand with an example how home loan taken for “buying” your dream home to stay
in it (SOP) can reduce the total tax payable by you.
Let’s assume you earn ` 650,000 p.a. by way of salary and have taken a home loan of `
40,00,000 for buying your dream home and you have decide to stay in it. The home loan is for
tenure of 20 years and the rate of interest is 9.0% p.a. and the Equated Monthly Installments
(EMI) is ` 35,989.
Tenure (yrs) 20
The above table clearly shows the benefit of availing a housing loan if you are contemplating
buying a house. The total tax payable on your income without a home loan works out to `
45,320. The same with a home loan works out to ` 24,720, thus saving you ` 20,600.
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Now, let’s delve deeper into the benefits available. Your interest amount in the first year is `
356,960 which is much more than the maximum amount of ` 150,000 allowed as a deduction.
Your principal repayment amount of ` 74,908 is within the ` 100,000 limit allowed under
Section 80C. However, it takes away a big chunk of the amount eligible under Section 80C and
leaves you with little (i.e. ` 25,092) to claim towards other tax saving instruments such as PPF,
NSC, Life Insurance, ELSS, POTDs.
And now consider, you have invested in the following manner under Section 80C.
Particulars Amt ( `)
Principal Repayment 74,908
Life Insurance 10,000
PPF 20,000
EPF 10,000
NSC 20,000
Total 134,908
Claim deductions
under Section 80 C 100,000
Contributed but can't
claim tax benefit 34,908
(Source: Personal FN Research)
The amount eligible is more than what you can claim. Yes, you have an option of not investing
in PPF, POTDs or NSC but these are assured return schemes with attractive returns. And as said
earlier your portfolio should always comprise of a mix of assured return and market-linked
return instruments, in a composition which is in accordance to your financial goals and
willingness to take risk. Hence, ignoring these investment avenues may not be prudent from
financial planning perspective.
So, now the next question is how do you claim maximum available deductions to minimise your
tax liability? The answer lies in taking a joint home loan. A joint home loan can be taken with
your spouse or relative.
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Let’s understand with an example how a joint home loan with your spouse can help reduce
your tax liability.
Assume your spouse and you decide to take a joint home loan of the same amount as
mentioned above and shares the loan in ratio of 50:50.
Note: * calculations on the done assuming the spouse here is a woman. Assumption made that home loan and the EMI paid by you and your
spouse are in the ratio 50:50
(Source: Personal FN Research)
Now since your spouse is a co-owner and has contributed towards repayment of the loan she
too would be eligible for the tax benefit (both principal and interest component).
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So, as indicated in the table above, if the principal and interest amount is shared equally
between your spouse and you, the contribution per person comes to ` 37,454 for principal
repayment and ` 178,480 for interest payment. The principal amount is now half of what was
earlier which allows you to claim deductions towards other contributions. At the same time it
reduces the tax liability to a significant extent and leads to a household saving of upto ` 57,156.
As compared to a Single home loan, a Joint home loan leads to a saving of ` 36,556.
From the tax planning point of view, it is vital to ensure that the higher earning member pays
higher portion of the home loan EMI. This is because the tax benefit accrues in proportion to
your contribution towards loan repayment.
So, remember if you plan to buy a house, it makes sense to include your spouse as a co-owner;
especially if your spouse’s income is taxable. This will result in higher tax saving in addition to
boosting your loan eligibility.
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*Owning a farm house, which forms a part of your agriculture income, is not brought under the tax net.
Now you may ask – “How can the income tax authority tax me, if I have not let out my property
on rent”?
Well, that’s because “annual value” of your property after proving for deduction available
under Section 24(b) is taxed under the head “income from house property”. A noteworthy
point is, term “house property” includes building(s) or land appurtenant (i.e. attached) thereto
also.
And now the next question which may be popping on your mind is – “What is “annual value of
the property and which deductions are available?”
Annual Value:
To understand that better let us take a case where you have let out the property (LOP) and
then DLOP.
In cases where you are enjoying a regular income from the property in the form of rent, then
the annual value of your property would be calculated by adopting the following steps:
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a) Find out the reasonable expected rent of the property ( which is municipal rent or fair
rent, whichever is higher)
b) *Consider rent actually received / receivable
d) Calculate loss due to vacancy ( i.e. in case if the property is vacant for period(s) during
the financial year)
e) The difference between step c) and step d), will be your “annual value” – which is here
referred to as the “Gross Annual Value” (GAV)
Now when we go one step further and minus the municipal taxed paid by you (on the property)
from “step e)” you’ll arrive at the “Net Annual Value” of your property. But to avail the
deduction for municipal taxes; they have to paid by the landlord only.
*Note: Rent earned by you from the property is calculated after subtracting unrealised lent from the tenant (i.e in case if he defaults to pay)
In case you are owning more than one house, and the other too apart from the one where you
are staying are vacant throughout the month, then the other house property(s) would be
considered as a “Deemed to be Let Out Property(s)” - DLOPs. Moreover, you would be liable to
pay tax on such property(s) after having calculated the Gross Annual Value (GAV), which will be
calculated in the same way as for LOP. But the only difference being that, here rent would be
the standard rent calculated as per the municipal laws.
Thereafter, if you as the landlord are paying any municipal taxes towards theses properties,
then those would be subtracted to obtain the Net Annual Value (NAV).
Remember, over here in case you have multiple DLOPs, then you have an option to consider
one of property as an SOP and the rest would be considered as DLOPs as the present Income
Tax law. So, say you have 4 such DLOPs then you should be ideally select the property with the
highest GAV as an SOP property, as this optimise your tax planning exercise, as the remaining
properties available with you will have a lower GAV.
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You need not worry here if you are occupying the property, throughout the financial year for
your stay (i.e residential use) and thus the NAV of the property will be considered as Nil.
But if you are occupying the property for some part of the year, and the rest of the year you
have earned an income by letting it out, then proportionately for the rest of the year when the
property was let out, the calculation of “annual value” would be applicable as that of LOP.
Deductions:
After having calculated the Net Annual Value (NAV) as seen above, you are eligible to claim
deductions under Section 24(b), which further reduces your taxability under this head of
income. You broadly get the following deductions:
Owning a home and maintaining the same costs your money. But irrespective of the fact
whether you have incurred any expenditure or not to do so, you will be eligible to claim a flat
deduction of 30% calculated on the NAV of the property. And this deduction is of specific use if
one’s property is LOP and / or DLOP. In case if the property is SOP, then you are not eligible to
claim any deduction as the NAV of your SOP is Nil.
As reiterated above too (in the home loan section), if one wisely takes an home loan for buying
a house property then the interest so paid on the borrowed capital will make you eligible for
deduction under Section 24(b), irrespective whether the house property is SOP, LOP or DLOP.
In case of SOP the income from house property will be negative income, (if interest is paid on
capital borrowed by you to buy or construct or reconstruct or renew or repair the house),
which will enable you to reduce your overall Gross Total Income (GTI). In case other properties
– that is LOP and DLOP the income from house property will be positive, but would be reduced
to the extent to standard deduction and interest paid.
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The quantum of deduction depends upon the purpose for which you take a loan – i.e. purchase,
construction, reconstruction, repair or renewals, and also the type of property – i.e. SOP, LOP
or DLOP.
Hence, in case you have taken a loan for the purpose of purchase or acquisition of the house
which is an SOP, then you we eligible for a maximum deduction of a sum of ` 1,50,000. But if
the loan is taken for the purpose of repair, renewal, or reconstruction, then eligible deduction
is restricted to ` 30,000.
Now if the property is LOP or DLOP, then you do not have any maximum restriction for claiming
interest – so it can be above the otherwise limit of ` 1,50,000, irrespective of the usage – i.e
whether for the purpose of purchase, construction, reconstruction, repair or renewals.
Remember, while everyone buys house property(s), it is important to avail the benefits available under
the Income Tax Act, wisely as this would enable in optimally saving your tax liability, and off course enjoy
the fruits of your investment made too and / or enjoy the comfort of your dream house too.
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Many of you today get a big fat pay cheque, but it is important that one restructures the vital
components of salary well in order to be saved from being taxed.
Basic Salary:
While this is the base of your head of income – “income from salary”, it is important that you
have your basic salary set right. This is because the basic salary constitutes 30% – 40% of your
Cost-to-Company (CTC). So, having a very high basic component may lead to having a high tax
liability in absolute Indian rupee terms. But similarly if you reduce your basic salary
considerably, then you would lose out with the other benefits such as Leave Travel Allowance
(LTA) and superannuation benefits associated with your salary.
If you are paying rent for an accommodation, and if your organisation extends you HRA
benefits, then this is another vital component which can help you to reduce your tax liability.
But it should be noted that you cannot pay rent for the house which you own and if you are
residing in it.
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Hence, now on the other if you are staying in a rented house house and you are the one paying
the rent, then HRA exemption [under Section 10(13A)] can be availed for the period during
which you occupy the rented house during the financial year.
However in order to obtain an exemption, you are required to submit appropriate and
adequate proof of payment of rent for the entire period for which you want to claim
exemption. But, if you as an employee is drawing an HRA upto ` 3,000 per month, you are not
required to provide a rent receipt to your employer.
The maximum exemption which you can enjoy for HRA is as under:
Here a noteworthy points is, if you are rent is very high and if you are not fully covered by the
HRA limit, then it would be wise to pick a company leased accommodation (if the company in
which you work in offers so), as this company leased accommodation would constitute to be
the perk value and would be taxed @ 15% of your gross income. Sure, the perk value is taxable
but it still works out to be more effective for tax planning, than opting for a HRA than doesn’t
fully cover your rent.
While you may be fond of opting for a leave and travel with your family for a holiday, don’t
forget to assess what tax benefits are extended to you for doing so. The Income Tax Act
provides you tax concession if you have actually incurred expenditure on your travel fare
anywhere in India either alone or along with your family members (i.e. your spouse, children,
parents, brothers and sisters who mainly or wholly dependent on you).
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The exemption extended to you under the Act is for two journeys performed in a block of four
calendar years. And the current block of four calendar years is from 2010 to 2013 (i.e. from
January 1, 2010 to December 31, 2013).
As per the present Income Tax Rule, the exemption would be available to you in the following
manner:
In case you have not availed of a LTC and have not travelled in any of the four calendar year
block period, then you are allowed to carry-over the concession to the first calendar year of the
next block, but for only one journey.
It is vital that you utilise you leaves wisely and travel to any of your loved holiday destination in
India, as this will not only de-stress you, but also help you in reducing tax liability. After you
have returned from your journey, in an excitement please do not tear your travel tickets /
boarding pass (for air travel) as you need to submit them to your employer so that your tax
liability can be reduced.
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Education allowance:
If you are married with kids, and if your employer is providing with education allowance, then
do not refrain from availing it, as this can again help you in reduction of your tax liability. The
exemption extended to you under the Income Tax Act is ` 100 per month for a maximum of
two children (i.e. in other words ` 2,400 p.a. totally). Similarly, if your children are staying in a
hostel then a maximum of ` 300 per month per child, but subject to a maximum of two
children, will be available to you as an exemption (i.e. ` 7,200 per month).
While you may be tempted to increase your NTH (in the cash form) you should not ignore to
avail the food coupon / card benefit, if your employer provides one. This is because effective
utilization of the same, will enable you to effectively reduce your tax liability along with getting
the feeling of being pampered by your employer.
The exemption amount which you can enjoy is ` 50 per meal available only in respect of meals
during office hours. However, the exemption is also available in case your employer provides
you food vouchers / cards of value of which can be used at eating joints. The exemption limit in
this case is restricted to ` 2,500 per month for a food voucher / card value.
So remember, if your employer is providing you food coupon / card don’t refrain from availing
the same for a maximum voucher value of ` 2,500 every month.
Medical reimbursement:
During the year if you and / or family members have visited a doctor or bought medicines from
a chemist, then all the expenditure incurred by you and / or your family members during the
year for medical purpose too, would help you in reducing your tax liability.
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As per the Income Tax Act, the maximum amount of deduction available with you is ` 15,000
for every financial year, and to claim the same you are required to submit to your employer,
medical bills for the financial year stating the amount in total which you intend claiming.
Similarly, it is noteworthy that if your medical insurance premium is paid by the employer or
reimbursed, then that too will not be subject to tax. Also if your employer is providing medical
facility in hospital or clinic owned by him, local authority, Central Government or State
Government then medical expenditure incurred under such a hospital too, would not be
subject to any tax.
So, next time when you get your pay cheques in hand please evaluate the aforementioned
points, and assess whether every component in your salary is structured well – and to do so you
can certainly talk to the human resource department, as they too may help you on this.
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IX - Conclusion
In the previous pages of this guide we have seen that your extra step toward the tax planning
way would enable you to wisely reduce your tax liability. Remember waiting till the eleventh
hour to do your tax planning exercise, is not going to help in a big way. It would just lead to “tax
saving and not “tax planning”. Just to reiterate, while you have host of tax-saving investment
options available under Section 80C, following an asset allocation model (for your tax planning
exercise), in accordance to your age, ability to take risk and investment horizon is going to make
your tax saving portfolio look more prudent even from a financial planning perspective.
Also one needs to look beyond the ambit of section 80C, as you may exhaust the limit of `
1,00,000 and still find it insufficient to reduce your tax liability. So, you should access the other
deduction available under other 80s (as mentioned above) too.
Moreover, while you are working hard with an organisation to make a living; remember to
effectively know and structure each component of your salary income in order to effectively
save more tax, which in a way will help you buying all the comforts and luxuries in life.
We think that while you must take help of your tax consultant while filing your returns and seek
opinion from him, we also think that a self-study approach on your tax planning exercise is
quite necessary as one should be well versed with the at least those tax provisions which affect
us directly. And with that note we wish you all Happy Tax Planning!!
General Disclaimer: This communication is for general information purposes only and should not be construed as a
prospectus, offer document, offer or solicitation for an investment or investment advice.
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Contact us
Head Office
West
Mumbai /Pune
Email: info@personalfn.com
South
Chennai / Bengaluru
Chennai-600 004
Email: chennai@personalfn.com
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