A Complete Presentation on Tax Planning

1. Plan ITSmartly…. Pay ITHonestly……

2. Some Facts….
You will be surprised to know that only 2% population of India file their Income Tax
Return. Either people are scared to disclose their income to Department or they
think it is a bit stressful job.
We work 3 to 4 months to pay the Income Tax in a year.
YOU PAYMORE TAX BECAUSE YOUR NEIGHBOR DON’T PAY TAX…
Let’s encourage people to file their Income Tax Return.

3. Q 1. When we pay Tax ?
Ans. When there is Income.
Q 2. What are the various sources of income ?

4. Sources of Income
 Income From Salary
Income From House Property
Income From Business and Profession
Income from Capital Gain
Income From Other Sources

5. What are Tax Rates ?

6. IncomeRange Male &
Female
(Below60
years)
SeniorCitizens
(Male
& Female
above 60
years of age),
but
below 80years
Very Senior
Citizens (Male
& Female
above 80 years
of age)
Up to Rs. 2,50,000 Nil Nil Nil
Rs. 2,50,001 to 3,00,000 10% Nil Nil
Rs. 3,00,001 to 5,00,000 10% 10% Nil
Rs. 5,00,001 to 10,00,000 20% 20% 20%
Above Rs.10,00,000 30% 30% 30%
Note- Tax Credit of Rs 2,000/- is allowed as a credit whose Income is less
than Rs 5,00,000/-

7. Tax Rates for Capital Gains
LTCG STCG
Sale of units of Equity
Oriented FundsThrough
recognized stock
exchanges
Exempt u/s 10(38) 15% tax u/s 111A
Any othercase 20% Tax 30% for companies
(If individuals
as per slab rates)

8. Tax Planning
• Tax Planning, NOT Tax Evasion.
• Taking maximum benefits of
Deductions &Exclusions.
• Optimizing the Investment
through after tax returns.
Financial Hospital "A complete wealthplanner"

9.  By Tax Evasion - Hiding of Income
By Tax Planning – Systematic Planning with proper
compliances of tax laws.

10. Tools of Tax Planning
Section 10 – Benefit of Various Allowances
Deduction Chapter VI A
 Housing Loan and Tax Benefit
Capital Gain from sale of House Property or any other
assets
Gift and Tax Implication
 Tax Planning through Spouse, Mom andDad
Points you should keep in mind.
Document Checklist for Declaration.

11. Section 10 - Benefit
1.What is Section 10 benefit ?
Ans. Tax Friendly Allocation of CTC.
2.Is it Important for Tax Planning ? Ans.
Yes, for maximizing your tax savings.
Q3. Is it affects the Gross CTC?
Ans. No.

12. Salary
Component
Expenses incurred for- Exempt (Amount)
P.A.
Transportation
Allowances
NO NEED FOR BILLS Rs. 19,200/-
( Rs. 1,600/- p.m.)
HRA Paying rent for residence As per calculation
LTA Vacations As per calculation
Reimbursement
of Expenses
Office purpose only As per Actual
expenses incurred
Benefit of various allowances u/s 10.

13. Salary
Component
Expenses incurred for- Exempt (Amount)
P.A.
Uniform
Allowance
Purchase or maintenance of uniform As per Actual
expenses incurred
Medical Expenses Medical Treatment Rs. 15,000/-
Daily Meal
Allowance
Refreshment Rs. 15,600/-
( Rs. 50/- per day)
Children
Allowance
NO NEED FOR BILLS Rs. 2,400/-
Children Hostel
Allowance
NO NEED FOR BILLS Rs. 7,200/-
Benefit of various allowances u/s 10.

14. Section 10 - Benefit
Leave Travel Allowance (LTA)
 Amount of exemption is-
 Where journey is performed by
Air- Economy class of Air
 Where journey is performed by
Rail – First class rail fare
 Family means- Himself, spouse, two
children and dependent brother,
sister, parents;
 Exemption available for 2 Journey in a
block of 4 calendar years;
 Current block is 2014-2017 (January
1,2014 to Dec 31,2017).
Go on HOLIDAY to save your TAX

15. Amount of Exemption (HRA) -
 Least of Following-
50% or 40% of Salary
Rent paid excess of 10% of Salary
HRA component in your PAY SLIP
 HRA exemption is NOT AVAILABLE if employee-
1. Resides in his/her own house.
2. Does not incur any expenditure on rent.
House Rent Allowance (HRA)

16. YES…..There is no legal requirement but in such case rent has to
be paid through bank transfer entry ( Cheque or NEFT).

17. YES…..There is no legal requirement but in such case rent has to
be paid through bank transfer entry (Cheque or NEFT).
Can claim exemption even if he owns a house (in
same city or in a different city)

18. YES…..If you actually pay rent (through Bank transfer) to reside in
rented property and pay housing loan EMI as well.

19. Housing Loan & Tax Benefit
 Most Popular tool for Saving Tax.
 Repayment of Housing loan -
a)Principal – Chapter VI A (already covered)
b)Interest on Housing Loan
 Payment of Interest on Housing Loan will be covered for Deduction up to
Maximum Rs. 2,00,000/- (In case of Self Occupied)
 It is advisable to take loan on Joint name to take benefit of Rs. 2,00,000/-
each. It means we can claim a deduction of up to Rs 400,000/-.

20. Housing Loan & Tax Benefit
Two or more House Property and Loan
Interest Paid
on Housing
Loan
Self Occupied
Property
(SOP)
Max Benefit
Rs 2,00,000/-
Let out Property (LOP)
/ Deemed Let out
Property (/DLOP)
Unlimited
Amount

21. Housing Loan & Tax Benefit
Having Two or more House Property and Loan-
Hint for Tax Planning -
If both of house used for resident purpose than its upto you
to declare one house property as SOP and one as DLOP.
If both of property is actually let out
and staying on rent than we can claim-
 Entire interest on loan of both of property
 HRA exemption

22. Housing Loan & Tax Benefit
Planning to Buy Second Home
 Go for housing loan if you are in higher
tax bracket because we can claim entire
amount of interest as a deduction.
 Don’t vacant it, Let out your property
because-
 It will generate cash revenue
 Entire amount of interest will allowed
as a deduction

23. Sale of House Property/ Any other Asset- Save Capital Gain
Holding for more than 36
months
Long Term Capital Gain Tax
arises

24. Sale of House Property/ Any other Asset- Save Capital Gain
Invest into another house property-
Before one year or after two year
from the date of original transfer
or
Construction with in three years
Invest in specified bond i.e. NHAI and
REC within a 6 month from date of sale
up to Maximum Rs 50 Lacs.

25. Chapter VIA Deduction
Investment in 80C (Max Rs 1,50,000/-)
 Premium of Life Insurance/TermPlan/ULIP
 Contribution toPF/PPF or National Saving Certificate(NSC)
 Housing Loan PrincipalRe-Payment
 FDR with 5 year lock in
 Tuition Fee - paid for children (own, adopted, step) for full time education;
 Self Contribution to Pensionscheme
 Stamp duty & registration charges on house propertypurchased
 ELSS-Mutual Fund ( Lock in period 3 years).
 NPS (Addition Rs. 50,0000/-)

27. Chapter VIA Deduction
Benefits above Rs 150,000/-
MEDICLAIM (Sec. 80D)
 Max. Benefit : 55,000/-
 Mediclaim for self 25,000/-
 A deduction of Rs 5,000/- for preventive
health check-up is available.
 Mediclaim for parents 25,000/- or 30,000/-
(in case of senior citizen)
 Even if your parents are not dependent,
you can pay for medical insurance and
claim deduction.
“Health bhi aur Wealthbhi”

28. Beauty of Education Loan
 Interest is eligible for deduction with
UNLIMITED amount.
 Deduction available for seven year.
 For full time studies or any vocational
studies after passing SSE.
 Taken a loan from anyFIIs.
 Deduction eligible for repayment of
education loans made for spouse or
children also.
Chapter VIA Deductions
Benefits above Rs 150,000/-

29. Rajiv Gandhi Equity SavingsScheme
(RGESS) u/s 80CCG
 One can invest a maximum of Rs. 50,000/-;
 Available for FY 13-14, 14-15 and 15-16
only;
 Tax rebate of 50%;
 Only for individuals whose annual income
is less than 12 lacs
 Investing in stocks for the firsttime
 Lock in of 3 year but can trade after 1 year.
Chapter VIA Deduction
Benefits above Rs. 150,000/-

30. Chapter VIA Deduction
Benefits above Rs 150,000/-
Expenses incurred in Medical treatment (Sec. 80DDB )
 Specified disease for himself, spouse, children, parents, brother &sisters.
 Maximum deduction Rs. 50,000/- (Senior Citizen Rs.1,00,000/-)
Less amount of claim received from insurancecompanies.
 Required actual bills and Certificate from specialist who is working in GovtHospital.

31. Expenses incurred on maintenance of Handicapped (Sec. 80DD / 80 U)
 Himself, spouse,children, parents, brother & sisters.
 Amount of Deduction Rs. 50,000/-, In case of permanent disability Rs.
1,00,000/-
(Actual Expenses Irrelevant)
Required Certificate from
medical authority.
Chapter VIA Deduction
Benefits above Rs 150,000/-

32. Chapter VIA Deduction
Benefits above Rs 150,000/-
Donation or charity made to any NGO/Trust/Political Parties
Maximum 10% of Gross Total income (For 50% deduction).

33. How to Save TAX by Investingin
Spouse’sName
 If you have some surplus to Invest somewhere – Yes
INCOME will arise Tax Planning needed
 Where you can Invest - In House Property - Rental Income
- PPF, LTCG on MF & Equity -Tax Free Income
 To invest a house in wife’s name , loan her the money and in exchange,
she can give you her jewellery.
 If a couple is engaged, and the girl does not have any taxable income
or pays tax at a lower rate, her fiancé can transfer money to her. The
income from that won’t be included in his income because the
transaction took place before they got married.

34.  If you have some surplus to Invest somewhere – Yes
INCOME will arise Tax Planning needed
 Where they can invest- Anywhere
 If your parents do not have a high income, you can invest
in their name.
 There is NO TAX on such gifts
 No clubbing provisions come into play when money is
transferred to a parent.
 No limit on the amount you can give to your parents.
How to Save TAX by Investing
in MOM & DAD’s Name

35. BE CAREFUL, Income Tax iswatching, ifyou
Cash deposits (10 lakh and above)
 Credit card bills (2 lakh and above)
 Mutual Fund purchase (2 lakh and above)
 Purchase of bonds/debentures (5 lakh and above)
Purchase of shares of a company (1 lakh and above)
Purchase of immovable property (30 lakh and above)
Sale of immovable property (30 lakh and above)
Purchase of RBI bonds (5 lakh and above)
Other points you should keep in mind

36. Most ImportantAlways advisable-
 If you switch the job in middle of the
financial year then inform the new
company about the income from the
old company, so that new company
will deduct the actual TDS on that.
 If You have FD Interest more than Rs
10,000/- then inform your company
and submit the income details so
that the company will deduct the
actual TDS on that.
Benefit- It can save the Interest on Tax
that can be huge.

37. BUDGET HIGHLIGHTS

38. Personal Taxation
Tax Rates
• No change in income slabs or tax rates
• Increase in surcharge from 12% to 15% on individuals, HUFs having income
exceeding Rs. 1 crore.
• Rebate of income tax for resident individuals with total income not exceeding
Rs. 5 lakh enhanced from Rs. 2,000 to Rs.5,000.

39. House Property
• An additional deduction of Rs. 50,000 in respect of interest payable on home loan taken
by an individual during the financial year 2016-17. This deduction is available to a person
not owning a house property and where the cost of house does not exceed Rs. 50 lakhs
and the loan does not exceed Rs. 35 lakhs.
• Maximum deduction for house rent paid by individuals not receiving House Rent
Allowance increased from Rs. 2,000 per month to Rs. 5,000 per month.
• The period within which the construction or acquisition of a self occupied house
property is to be completed, to claim a deduction of interest on housing loan, increased
from 3 years to 5 years reckoned from the year in which the loan is borrowed.
• The permissible deduction limit continues to be Rs. 200,000.

40. Personal Taxation
Capital Gains
• Deposit certificates issued under ‘Gold Monetization Scheme 2015’ will not be
considered as capital assets. The interest thereon would also be exempt from
tax.
• Gains from redemption of gold bonds issued by the Reserve Bank of India
under ‘Sovereign Gold Bonds Scheme 2015’ shall not be subject to capital
gains tax in the hands of the individual.

41. • Additional tax at the rate of 10% of gross amount of dividend will be payable by the
recipients receiving dividend in excess of Rs. 10 lakh per annum.
• Tax to be deducted at source at the rate of 1 % on purchase of luxury cars exceeding
value of ` ten lakh and purchase of goods and services in cash exceeding ` two lakh.
• Securities Transaction tax in case of ‘Options’ is proposed to be increased from
.017% to .05%.
• Equalization levy of 6% of gross amount for payment made to nonresidents
exceeding Rs. 1 lakh a year in case of B2B transactions.
• Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016. Proceeds
would be exclusively used for financing initiatives for improvement of agriculture and
welfare of farmers. Input tax credit of this cess will be available for payment of this
cess.
Other Imp Points

42. PM’s 3 New Schemes
PRADHAN MANTRI SURAKSHA BIMA YOJANA
 Renewable one year accidental death cum disability Cover
 Age group between 18 to 70.
 Rs. 12 per year for 2 lacs
PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA
 Renewable one year Life Cover
 Age group between 18 to 50
 Rs. 330 p.a. for 2 lacs
THE ATALPENSION YOJANA
 Guaranteed Pension
 At the age of 60
 Rs. 1000,2000, 3000, 4000 and 5000 depending on the corpus.

43. Donate and Educate..

44. Documents Check List
For Declaration
 In case you live in a rented apartment: 12 months rental receipt from owner
 In case you have home loan: Statement of housing loan with details of
principal and Interest components
 Medical bills for the year if any
 Tuition fee receipt paid for your
children if any
 Flight & train tickets for LTA claims
 Insurance premium receipts paid
for the year
 NSC purchased in the year
 Mutual fund (ELSS) statement
 Mediclaim premium receipt
 Parents’ mediclaim premium receipt
 Education loan statement (mentioning the interest component)
 Bank Fixed deposit receipts (the 5 year lock-in thing)

45. Manish P.
manish@financialhospital.in
“it’s make you more beautiful…”