Tax Planning

1. Tax Planning

2. Tax Planning
Taxes are the necessary part of life but they don't have to be treated as burden for us therefore it is required to plan your tax.
Tax planning encompasses many different aspects, including the timing of both income and purchases and other expenditures, se-
lection of investments and types of retirement plans, as well as filing status and common deductions. However, while tax planning
is an important element in any financial plan, it is important to not let the "tax" tail wag the financial "dog." This can ultimately be
counterproductive, as virtually all courses of financial action will have some tax consequences, and they should not be avoided
solely on this basis.
What is tax planning?
Tax planning is a way by which you arrange your
financial affairs in such a way that without break-
ing up any law you take full advantage of all Ex-
emptions, Deductions, Rebate and Reliefs allowed
by law so that your tax liability will be reduced.
Actually Government provide deductions, exemp-
tions, reliefs or rebate for the benefits of economy
and society.

3. Objectives of Tax Planning
 Clai Dedu io s u der se io s 80C to 80U,
 It ill redu e our ta lia ilit a d ou ha e to pa less ta ,
 Mi i ize the ar et ee Ta Pa er a d Ta Ad i istrator, Ta pa er a ts to pa less
ta a d Ta Ad i istrator a ts to e tra t ost of the ta , usi g Ta Pla i g this
ar is i i ized as ta pa er is usi g all legal a s to redu e ta lia ilit ,
 Makes I est e t: - B ta pla i g, a Ta pa er ill i est his o e i so e good
fu ds hi h ill result i produ i e retur s for ta pa er a d tra sfer o e to
go er e t for i est e t too.
 Helps i gro th of e o o ,
 Makes so iet gro , Mo e sa ed ou ill result i
i est e t hi h ill result i e plo e t ge eraio .

4. Importance of Tax Planning
For Tax payer:-
Tax payer has to pay less tax by using tax planning because
he is using all available exemptions, deductions, reliefs, and
rebates. All is done within the boundaries of Law.
For Government:-
To use deduction or exemptions you have to invest money in
some scheme which results that you money is transferred
back to government and then they can use it to develop the
country.
For Society:-
If government invest or start any new project or even tax
payer invest his saved money so he will generate employ-
ment, Government can invest in better projects which devel-
ops society.

5. 6 best ways to save tax……
A tax plan is not only to save taxes, it should also assist you in achieving your other financial goals such as buying a
home, a car, children’s education, retirement to name a few. Here are some top ways in which you could plan for
your tax savings
Tax planning is a very important step towards securing your financial future, and there are several ways rang-
ing from tax saving instruments, to donations to charitable organisations, to health insurance and so on.
While a certain tax outgo is essential, one can benefit from various schemes offered by the government to
save on taxes.
For example medical expenses of dependent parents, interest on housing loan and loan for home renovation,
are tax deductible over and above the 80C limit of Rs 1 lakh.
Health insurance
Premiums paid towards a health insurance policy qualifies for a deduction of Rs 15,000 for an individual
and Rs 20,000 for a senior citizen under section 80D (If one’s dependent parents are below 60 years of age
you get an extra deduction of Rs 15,000 and if they are older you get Rs 20,000). If your premium is less
than Rs 15,000 you can claim a deduction of up to Rs 5,000 on account of preventive health check-up.
Equity-linked savings scheme (ELSS)
If you are planning for the long term and can stomach short-term volatility that stock markets bring to your
portfolio, equity investments are the ideal investment choice. Investments in ELSS offer better returns as it is
based on stock market returns, and it also offers a deduction of up to Rs 1 lakh under section 80C.
You can either invest a lump sum or through systematic investment plans (SIPs). In order to encourage first-
time investors, the government has notified a new scheme called the Rajiv Gandhi Equity Savings Scheme
(RGESS). This comes under a separate deduction limit of Rs 25,000 under section 80CCG
Key Takeaways :
 It is advisable to un-
derstand one’s risk
appetite and invest-
ment horizon prior to
selecting a tax saving
instrument
 One should always
opt for a judicious
mix of different kind
of investments to
benefit from better
returns, while saving
tax
 Each instrument has
positives and nega-
tives, study these
carefully before lock-
ing in your money in
any one instrument
Dec 28,2014| Source: Money control.com

6. Public Provident Fund (PPF)
PPFs are another good method to invest and save tax, as they give a return of around 8.8 per cent, and one can avail a Rs 1 lakh deduction from
investments under Section 80C. Maturity proceeds are tax-free as well.
Fixed deposits
There are notified FDs of five-year tenor or more that also give you the 80C deduction. The interest is taxable though. So it works if you are in
the lower tax bracket or need an assured income in the short term.
Life insurance
If you are married and have kids, risk cover is something you must consider. The premium that you pay qualifies for a tax deduction so long as
the sum assured is at least 10 times the annual premium. This is very important, and ideally one should have a minimum of ten times their yearly
income as the insured amount, i.e. if one’s annual income is Rs 10 lakh, one should have a minimum insurance cover of Rs 1 crore. Other factors
such as age, medical condition, etc, also play a role in deciding the life insurance policy, which can ensure the financial stability of your family.
Housing loan
Individuals intending to buy a house should consider opting for a home loan.
Interest payments of up to Rs 150,000 per annum are eligible for deduction un-
der Section 24. In cases where the home loan is for a substantial sum, it is not
uncommon for the interest and principal repayment to exceed the stated limit.
To ensure that the tax benefit is optimally utilised, an individual can consider
opting for a joint loan with her/his spouse or parent or sibling. This will ensure
that both the co-owners can claim tax deductions in the proportion of their hold-
ing in the loan.
The co-owner falling in the higher tax bracket should hold a higher proportion of
home loan to ensure that the tax benefits are maximised.

7. Finance Minister offered few tax benefits in Union Budget to the tax payers as compared to what was expected by them
Indian Budget is always high on expectation with the audiences from different groups like industrialist, entrepreneurs, tax payers and citizens.
With the improving credibility of Indian economy along with strong expected growth and tripping inflationary pressure, on the personal finance
front it was expected that the government will roll out bundles of measures which will ultimately benefit the taxpayer and the citizens of India.
Amidst the list of expectation which people had from the budget, only few of them were fulfilled. One of the most important segment of tax -
tax slabs, which was expected to be revised upwards. However government did not make any changes to the tax slabs which were revised dur-
ing previous budget. Considering the strength in the current economy, a reduction in tax liability by changing the tax slabs would have left addi-
tional amount in the hands of tax payers which could have been channelized as investments or consumption.
Also considering the importance of infrastructure growth, it was assumed that there would be additional benefits for the home buyers as well as
existing borrowers of home loan, however tax provision on housing loan remains unchanged.
Following were few of the measures which were announced by the government today as a part of the Budget 2015 – 16.
1. Transport allowance which was earlier Rs. 800 per month has been revised to Rs. 1600 per month this would be beneficial considering the
rising cost of transportation especially in cities.
2. Sec 80 D comprises of premium paid towards Health Policy/Medical Premium. Earlier the limit of deduction u/s 80 D was Rs. 15000
which has now been enhanced to Rs. 25000 and in case of senior citizen the same has been revised to Rs. 30000. This measure will not
only boost healthcare programs but will also provide additional tax benefit to the tax payer.
3. An additional deduction of Rs. 50000 has been allowed for investment in New Pension Scheme u/s 80 CCD.
4. The budget has proposed to reintroduce Tax Free bonds. Tax free infrastructure bonds are proposed for projects in rail, road and irrigation
sectors.
5. The wealth tax has been replaced by additional surcharge of 2% for people who have income higher than Rs. 1 Cr. Thus this will lead to
higher tax outgo. From personal finance perspective, budget 2015 – 16 had very limited measures as compared to what was expected.
Union Budget 2015: Nothing meaningful as compared to what was expected
Mar 03, 2015 | Source: Moneycontrol.com

8. May 17th, 2013| source Financial chronicle

9. Union Budget : Tax slab change would have left additional amount in
hands of tax payers
Indian Budget is always high on expectation with the audiences from different groups like industrialist, entrepreneurs, tax payers and citizens.
With the improving credibility of Indian economy along with strong expected growth and tripping inflationary pressure, on the personal finance
front it was expected that the government will roll out bundles of measures which will ultimately benefit the taxpayer and the citizens of India.
Amidst the list of expectation which people had from the budg-
et, only few of them were fulfilled. One of the most important
segment of tax is, Tax Slabs, which were expected to be revised
upwards. However government did not make any changes to the
Tax Slabs which
were revised during previous budget.
Considering the strength in the current economy, a reduction in
tax liability by changing the tax slabs would have left additional
amount in the hands of tax payers which could have been chan-
nelized as investments or consumption. Also considering the
importance of infrastructure growth, it was assumed that there
would be additional benefits for the home buyers as well as
existing borrowers of home loan, however tax provision on
housing loan remains unchanged.
The author is CEO & Founder, Right Horizons.
Mar 03, 2015 | Source: India Infoline