Personal Finance Pyramid and Tax Deduction_Exemption FY2016_17

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© One Moment Consultancy LLP 2017
Tax Saving Investment
And
Individual Income Tax Deduction / Exemption
FY 2016 - 17
Personal Finance Pyramid,

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7 January 2017 © One Moment Consultancy LLP 2017
reena@stablefuture.in
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Personal Finance Pyramid
Estate
Planning
Investment
Debt Reduction
Emergency Fund
Insurance (protection)
Net worth, Cash Flow and Budget
Goal
Insurance (Savings + Protection)
Investment
What we do wrong ? – Risky Foundation
What we should be doing ? – Strong Foundation

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Set your Financial Goals
• Write Your Financial Goals – Be Specific
• Identify time frame you want to achieve
• Short Term – Within a Year
• Medium Term – Within 5 years
• Long Term – Beyond 5 Years
• Set Priority
• Put a current ₹ value against each goal

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Cash Flow, Net Worth, Budget
Three Very Important Documents
You need to know where you
stand today first to move
toward your goals
Cash Flow Net Worth Budget Vs Actual

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Insurance – Protection
If you care about something – It should be Insured

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Insurance – Protection
Insurance Thumb rule
Life Liabilities + 10-20 times annual Income
Health Minimum 3L individual / 5L Family floater
Recommended 10 L individual / 20 L Family floater
Accident and Disability 2 - 3 times annual income
Home and Contents Natural calamity + Burglary
Vehicle 3rd Party is Legally mandatory, comprehensive if
preferred

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Emergency Fund

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Debt Reduction

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Investment
WHY ?

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Investment
HOW ?

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Investment
Enemies
INFLATION TAX

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Investment
So to meet your goals
and
be wealthy
your investments need to beat inflation
and
also be tax efficient both at the time of
Investment and at the time of withdrawal

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Investment
 Should help you to best 2 enemies.
 Your money is for you and you are not for money.
Should be flexible.
 Should be available when you need.
 Should give you time so you can concentrate on
your work.
 Should have diversified options.
 Should be transparent and regulated.
Which Investment tools to use?

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Investment
Invest in
SELF
Best Asset Class to Invest ?

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Investment
Cash
Debt
Equity
Real estate
Commodity
What are other options available in Market?

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Income Tax
How can your Reduce your Income Tax outgo ?
Utilize available Tax Deductions / Exemption – Legal and Ethical
Tax Avoidance – Illegal and Unethical

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Income Tax
Total Taxable Income Tax Rate
Up To ₹ 2,50,000 NIL
₹ 2,50,001 to ₹ 5,00,000 10%
₹ 5,00,001 to 10,00,000 20%
₹ 10,00,001 and above 30%
 In the case of a resident individual of the age of 60 years or above but below 80 years, the basic
exemption limit is Rs 300,000.
 In case of a resident individual of age of 80 years or above, the basic exemption limit is Rs
500,000.
 As per Finance Act, 2016, a rebate of lower of actual tax liability or Rs 5,000 (against earlier rebate
of Rs 2,000) in case of individuals having total income of less than or equal to Rs 500,000.
 Education cess is applicable @ 3% on income tax plus surcharge
 Surcharge @ 15% is applicable on income exceeding Rs 1 crore; Marginal relief for such person is
available

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Income Tax Deductions/ Exemption
Most Common - Section 80C, 80CCC & 80CCD (1) of the Income Tax Act -
maximum deductions of INR 1,50,000.
Category Eligibility
Life Insurance And ULIP Premiums Self, spouse and children
Public Provident Fund (PPF) Self, spouse and children
National Saving Certificate (NSC) Self
5 year tax saving fixed deposits (FDs) Self
Tax Saving Mutual Fund and ELSS Self
Pension Fund Self
Sukanya Samriddhi Account Daughter
Housing loan Principal Self

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Section
Type of Exemption and
deduction
Maximum Deduction
10(13A)
House Rent Allowance
(HRA)
1. Actual house rent allowance
2. Actual house rent paid by you minus 10% of
your basic salary +DA
3. 50% of your Basic + DA if you live in a metro
or 40% of your Basic + DA if you live in a
non-metro
(Whichever is less)
10(14) Child Education
INR 100 - Education (Max 2 Children)
INR 300 - Hostel (Max 2 Children)
17(2) Medical Bills INR 15,000 Per Annum
10(5)
Leave Travel Allowance
(LTA)
Actual expenditure or actual allowance received
from the employer (whichever is less)
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Income From House
Property - Interest
INR 2,00,000 - Self occupied property
No Limit - Let out property
80D
Mediclaim insurance
and preventive health
checkup
INR 25,000 - Self
INR 25,000/30,000 - Parents/Senior Citizen
Parents

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Section
Type of Exemption and
deduction
Maximum Deduction
80DD
Treatment of
dependent handicap
INR 75,000 - Disability
INR 1,25,000 - Severe Disability
80U
Physically
handicapped resident - self
INR 75,000 - Disability
INR 1,25,000 - Severe Disability
80DDB
Treatment of specified
disease
INR 40,000 - Non Senior citizen
INR 60,000 - Senior citizen
80CCD (1)/(1B) New Pension Scheme
80CCD(1) – INR 1,50,000* OR 10% (Basic +
DA)
80CCD(1B) – INR 50,000
80CCD(2) -- 10% (Basic+ DA) employer
contribution
*80C, 80CCC & 80CCD(1) in total cannot exceed
INR 1,50,000
80CCG
Rajiv Gandhi Equity Saving
Scheme
INR 50,000
80TTA Interest on Saving Bank INR 10,000

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Innocent Mistakes of Honest Taxpayers
Not reporting interest income
Overlooking clubbing of Income
Not filing returns
Missing income from previous Job
Not reporting tax – free Income

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Mutual Funds
One of the best way to invest in Cash,
Debt, Equity and Optimize Tax outgo
 Beating inflation (Equity)
 Tax efficient
 Flexible (Entry & Exit is simple)
 No or small lock in period
 It’s a passive investment for you
 All asset class are covered
 Regulated by SEBI

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Mutual Funds – Where to Invest ?
Short Term Long Term
Risk Takers  Debt Fund
 Corporate Fixed Deposits
 Recurring Deposits
 Fixed Deposits
 Fixed Maturity Plans
 Equity Mutual Fund
 Real Estate
 Index Funds
 Stocks
 Balanced Funds
Risk
Avoiders
 Fixed Deposits
 Recurring Deposits
 Savings Account
 Balanced Funds
 Fixed Deposits
 Gold
 Index Funds
 PPF
 NSC

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Mutual Funds – Taxation

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Do’s and Don’t
 Document your Goals
 Create a Cash flow, Net worth and Budget document
 Purchase Insurance for protection – Save some tax as well
 Build Emergency through Saving A/c and Short Term Debt fund
– Optimize tax outgo
 Avoid FD and PPF - They lower your purchasing power and Tax
inefficient
 Invest in ELSS – Save tax and build long term wealth
 Invest in different mutual funds based on your goals – Optimize
tax outgo
 Portfolio should be diversified and reallocate assets as per
changing scenario
 Share market is good with proper knowledge.
 Distinguish between wants and needs
 Impulsive buying – Avoid as much as possible.

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About Us
At Stable future we believe that one thing at top of
mind for every individual is a stable future for self
and family. Through combination of different
product and services in our portfolio we help you
achieve just that.
With more than 9 years of experience and a client
base of over 300 we help you plan your Investment,
Insurance, Loans and Tax.
We do what is really required for your Stable Future
and not just sell you dreams.

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How do we add value?
• We listen to you and understand your
needs
• We give you the right advice wherever
required
• We help you take the right decision
• We negotiate with multiple Financial
Institution to provide you with best deal
and Save your time

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Q & A

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Thank You
www.stablefuture.in
info@stablefuture.in
940 310 5101/ 827 567 7101

Personal Finance Pyramid and Tax Deduction_Exemption FY2016_17

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