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- Save Tax through ELSS Mutual Funds under Sec 80C
- Income tax exemption on your LTA
- Investing for children helps parents save tax
| Save Tax through ELSS Mutual Funds under Sec 80C Posted: 05 Jan 2013 12:52 AM PST If you haven't done the tax planning in advance then this is the time to carefully select the investment products under section 80C. A wise investment will not only lessen the tax burden but also give some good returns. What is Section 80C? Under section 80C of the Income Tax Act, certain investments are deductible (up to a maximum of Rs 1 lakh) from gross total income. This tax exemption is available across individual tax slabs. If you earn Rs 4 lakhs per annum and make investments of Rs 1 lakh in 80c instruments then the taxable amount will be Rs 3 lakhs. It is not at all complicated and the following chart simplifies even more. Fixed Income instruments, which offer fixed returns, are suitable for risk averse investors who want to protect their investment from the uncertainties of the market. All these instruments are backed by the Government and hence they are risk free. But the returns may just beat the inflation and you should not expect any meaningful appreciation in investments. Per annum returns will vary from 6% to 10% depending upon the instrument you choose. Market Linked: Market linked products are ELSS (Equity Linked Saving Scheme) and ULIPs (Unit Linked Insurance Plan). These instruments invest the money in equities (Except some debt based ULIPs) and hence there is an inherent market risk. However it has been seen that over a long period return from equities beat inflation by a comfortable margin and create wealth for the investor. ELSS is similar to mutual fund except that it has a lock in period of 3 years. The money is invested into diversified stocks by a fund manager/AMC. On the other hand ULIPs are a form of life insurance where a part of the premia is invested into equity or debt market (or combination of two). ULIPs usually have longer lock-in periods. ELSS: ELSS has some advantages over other investments and people with moderate to high risk appetite should consider them seriously. Some key features of ELSS are: * Lock-in period of 3 years. * SIP (Systematic Investment Planning) available To sum up Section 80C benefit has been provided to encourage long term savings and investments. You should choose a combination of fixed income and market linked investments depending on your age and risk profile. For example if you are in your 20s, give a higher allocation to ELSS whereas if you are nearing retirement, concentrate more on fixed income investments. But remember that Investment is to be done keeping your overall financial situation and future goals. Tax advantage is just an add-on benefit. Never make investments just for saving tax. Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
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We can help. Call 0 94 8300 8300 (India)
Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest Mutual Funds Online Download Mutual Fund Application Forms from all AMCs Download Mutual Fund Application Forms Best Performing Mutual Funds
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| Income tax exemption on your LTA Posted: 04 Jan 2013 11:11 PM PST Income tax exemption on your LTA The exemption is for travel expenses and is not available for expenses on food, hotel stay and sight-seeing VACATION is one of the best ways to break away from our busy work schedules and spend time with family. Many employers grant leave travel assistance (LTA) to their employees as part of their compensation plan that is eligible for a tax exemption.
According to Section 10(5) of the Income-Tax Act, 1961, exemption is available to an individual who receives LTA from his employer for expenses incurred on travelling to any place in India with his family. Family includes spouse and children as well as par ents, brothers and sisters who are mainly dependent on the individual. The exemp tion can be obtained for a maximum of two children. The exemption will not be avail able if the employee is not on leave and the family members are travelling separately.
The employee must maintain original proofs of expenses incurred, that is, tickets, boarding passes and bills, as the employer's policy may require submission of proof of expenses. The exemption is for travel expenses and is not available for expenses on food, hotel stay and sight-seeing. The criteria for claiming exemp tion is as follows: Journey is performed by air: Amount not exceeding the economy air fare of the national carrier. Place of origin of journey and destina tion are connected by rail, and the jour ney is performed by any mode of trans port other than by air: Amount not ex ceeding the air-conditioned first class rail fare. Place of origin of journey and destination are not connected by rail and a recognised public transport system ex ists: Amount not exceeding the first class or deluxe class fare, on such transport. Place of origin of journey and destination are not connected by rail and no recognised public transport system exists: Amount equivalent to the air conditioned first class rail fare for the same distance, as if the journey had been performed by rail. An important point to note is that the exemption is available for the amount incurred by the shortest route to the place of destination. If the travel is for a cir uitous route, then the exemp ion will be available for the far hest destination through the hortest route.
f the exemption is not availed loyee during such block, it can by an employee during such block, it can be availed in the first calendar year after the four year's block.
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
Happy Investing!!
We can help. Call 0 94 8300 8300 (India)
Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest Mutual Funds Online Download Mutual Fund Application Forms from all AMCs Download Mutual Fund Application Forms Best Performing Mutual Funds
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| Investing for children helps parents save tax Posted: 04 Jan 2013 10:23 PM PST Do you have some excess cash that you want to invest? Maybe you can think of an indirect method of investing (that is not in your own name), and save some tax on the income. Investing in assets or financial instruments directly in your own name will increase your tax liability and could also push you into a higher tax bracket. You can take a slightly circuitous route on investments for better mileage. One way of saving on taxes is to gift your children and parents assets and cash for investments. As per the current laws, any gift received in cash or kind exceeding Rs 50,000 is taxed in the hands of the recipient as "income from other sources". However, this rule does not apply to gifts received from relatives. Additionally, any gift received on the occasion of your marriage, under a will or inheritance is not taxed in your hands. So who is a relative and what is a gift for the purpose of claiming tax benefits? "Relatives, for the purpose of taxation, include spouse of the individual, siblings, brothers and sisters of the spouse, brothers and sisters of the parents, and any lineal ascendant or descendant of the individual or the spouse," says Vikas Vasal, executive director, KPMG India. As for gifts, the income-tax laws say any transfer of money in cash or through a cheque as well as transfer of movable or immovable assets, such as property, shares and securities, jewellery, paintings and sculptures, is considered as a gift. When you transfer a property, you may have to get the transfer registered, which attracts stamp duty and registration charge. "The Indian tax laws do not contain mandatory provisions to have a gift deed (a registered legal document with appropriate witnesses) in case of transfer by way of gifts. However, it is always preferred to have a gift deed so as to avoid any gift being considered as taxable or being considered as unexplained cash, investments or assets," says Sonu Iyer, partner, tax and regulatory services, Ernst & Young, India. Though there is no tax on gifts, all gifts in excess of Rs 50,000 (other than those from relatives) and income generated through them get clubbed with the recipient's taxable income. However, income earned by assets gifted to minor children, spouse and son's spouse are included in the income of the donor for taxation.
If your parents are above 80, they are entitled to tax-free income up to Rs 5 lakh per year for "very senior citizen" category introduced in the 2011-12 Union Budget. You can invest up to Rs 50 lakh through each of your "very senior citizen" parents in instruments that give 10% annual return and avoid the taxman for interest income up to Rs 10 lakh earned by both of your parents together. Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
Happy Investing!!
We can help. Call 0 94 8300 8300 (India)
Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest Mutual Funds Online Download Mutual Fund Application Forms from all AMCs Download Mutual Fund Application Forms Best Performing Mutual Funds
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