Prajna Capital

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• How to save Tax by Investing in National Pension Scheme? - NPS Tax Saving
• Best Tax Saving Investments for Deductions
• Education Cess on Income Tax

How to save Tax by Investing in National Pension Scheme? - NPS Tax Saving Posted: 16 Feb 2014 03:20 AM PST Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Investing in National Pension Scheme - NPS If you are a salaried individual, I am quite sure that you would be aware of Section 80C tax deductions where you get a maximum tax deduction of Rs 1,00,000. So for a person coming under 30% tax bracket, it is a healthy savings of Rs 30,000 of his annual income or Rs 2500 per month when he would calculate his tax in 2013   But not many people in India are aware of what is NPS scheme and Section 80CCD (2) where 10% of the basic salary of the employee gets a tax deduction by investing the corpus in National Pension Scheme (NPS). This contribution towards NPS on an annual basis is tax deductible even if the contributions are made by employer on the behalf of employee. Basic salary here means basic salary plus dearness allowance   What is NPS Scheme? National Pension Scheme is launched by Govt of India on 1 April, 2009 which allows the people of unorganised to save regularly and utilise their savings at the time of retirement. There are three different investment styles available with NPS scheme, namely high risk which invest upto 50% in equity, medium risk and low risk investemt style. There are two types of accounts under NPS scheme i.e Tier- 1 and Tier-2. You can withdraw the amount anytime from Tier-2 but not allowed to withdraw your wealth from Tier-1. You can’t have a Tier-2 NPS account till the time you have Tier-1 NPS account. The minimum investment required under NPS Tier-1 is Rs 6000 annually and Rs 500 one time contribution. The minimum age requirement for opening a NPS account is 18 years and maximum is 60 years   Saving Tax by Investing in National Pension Scheme Example No.1: For a Person whose Total Income is Rs 10 Lakhs If your total income is Rs 10 Lakhs which is chargeable to income tax including basic salary of Rs 7,50,000 and other allowances of Rs 2,50,00 and after 1 lakh tax deduction under Section 80C, his taxable income comes out to be Rs 9,00,000. The total calculated tax for a men would be Rs 1,10,000 . Now if he invests Rs 75,000 (10% of basic salary) in National Pension Scheme (NPS), his taxable income would reduce down to Rs 8.25 Lakhs which was Rs 9 Lakhs earlier. Now this would give him a tax calculation of Rs 95,000 which is a saving of Rs 15,000 in the form of taxes. These figures of saving taxes are calculated by taking into consideration the Financial Year 2012-13 income tax rate slabs.   Example No.2: For a Person whose Total Income is 6 Lakhs Now in this case, if your total income is Rs 6 Lakh annually which is chargeable to tax where the basic salary is Rs 4,50,000 and other allowances constitutes Rs 1,50,000. Now after 1 Lakh tax deduction under Section 80c, your taxable salary would be Rs 5,00,000. The total income tax calculated as per 2012-13 income tax rate slabs is Rs 30,000. Now if you invest Rs 45,000 (10% of basic salary) in NPS pension, your taxable income would reduce to Rs 4.55 Lakhs as per Section 80CCD (2), Now the tax liability for you would be Rs 25,500 (a reduction of Rs 4500 in the tax liability)   National Pension Scheme Comparison with PPF In Public Provident Fund (PPF), you can invest a minimum of Rs 500 per year where as NPS Tier- 1 account requires a minimum investment of Rs 6000 annually and Rs 500 per transaction in the form of investment made. You can’t withdraw the PPF amount till the age of 60 in National Pension Scheme account. Even at the age of 60, you have to invest 40% of the wealth accumulated to purchase life annuity from IRDA. Rest 60% of the amount can be withdrawn lump sum or in a phased manner till the age of 70. But in PPF, there is a lock in period of only 5 years. After that you can make some partial withdrawals     For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call     Leave a missed Call on 94 8300 8300   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 Invest Any Mutual Fund Online   Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------   Best Performing Mutual Funds Largecap Funds             Invest Online DSP BlackRock Top 100 Fund ICICI Prudential Focused Blue Chip Fund Franklin India Bluechip ICICI Prudential Top 100 Fund B. Large and Midcap Funds         Invest Online ICICI Prudential Dynamic Plan HDFC Top 200 Fund UTI Dividend Yield Fund Birla Sun Life Front Line Equity Fund Franklin India Prima C. Mid and SmallCap Funds          Invest Online Reliance Equity Opportunities Fund DSP BlackRock Small & Midcap Fund Sundaram Select Midcap IDFC Premier Equity Fund Birla Sun Life Dividend Yield Plus SBI Emerging Businesses Fund HDFC Mid-Cap Opportunities Fund ICICI Prudential Discovery Fund D. Small and MicroCap Funds   Invest Online DSP BlackRock MicroCap Fund 2.       Franklin India Smaller Companies E. Sector Funds          Invest Online Reliance Banking Fund Reliance Banking Fund ICICI Prudential Banking and Financial Services Fund F. Tax Saver Mutual Funds      Invest Online 1. ICICI Prudential Tax Plan 2. HDFC Taxsaver DSP BlackRock Tax Saver Fund Reliance Tax Saver (ELSS) Fund G. Gold Mutual Funds        Invest Online Relaince Gold Savings Fund ICICI Prudential Regular Gold Savings Fund HDFC Gold Fund Birla Sun Life Gold H. International funds         Invest Online 1. Birla Sun Life International Equity Plan A 2. DSP BlackRock US Flexible Equity 3. FT India Feeder Franklin US Opportunities 4. ICICI Prudential US Bluechip Equity 5. Motilal Oswal MOSt Shares NASDAQ-100 ETF Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now

Best Tax Saving Investments for Deductions Posted: 16 Feb 2014 12:35 AM PST Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Tax Deductions Through Investments According to Section 80C of the Income Tax Act, you can reduce your taxable income by Rs.1 lakh by investing in certain investments. These investment can be from any one source or a combination of sources such as Public Provident Fund(PPF), National Savings Certificate(NSC), Tax saving mutual funds(ELSS), Pension plans, Fixed Deposits with natiolised Bank and Post Office and Life Insurance Policies. Since, the returns on investment, risk factors, term of deposit and entry load or commissions vary for each type of investment, here is some information about each type to help you select the best according to your needs. They are arranged as the best investments for young salaried tax payers as well as a enterprenuer in India according to the ones which they prefer the most – 1. Equity Linked Savings Scheme (ELSS) High Risk High Return, Also known as tax saving mutual funds, an ELSS has the lowest lock in period of 3 years. As the money invested in an ELSS is invested by mutual funds in diversified stocks in the stock market, there is no guaranteed return. Dividends and profits from redemption of units after the term period is Tax Free. Remember, in the long run, the stock markets always see a rise, and an Equity Mutual Funds have given highest returns compare to any other asset class.   2. Bank or Post Office Fixed Deposits Low Risk Low Return. Only investments made in scheduled banks for a period of five years or more can be counted as a Bank Fixed Deposit. The interest on such fixed deposits is around 6 to 8 percent.Income from interest is Taxable. Forms are available at bank and post office counters.   3. National Savings Certificate Low Risk Low Return. It comes in denominations of Rs.100, 500, 1000, 5000 and 10,000. The forms are available at any post office. The maturity period is six years while the interest rate is 8 percent compounded half yearly. If you pay in cash, you will be given the National Savings Certificate then and there. If you pay by cheque, you will have to wait a week before you can collect the NSC certificate from the post office. Interest is Taxable.   4. Life Insurance Policy If you are looking for life insurance cover along with savings, then you should choose one such Participating Policy that offers a decent return on maturity. If you have a huge loan to pay off and a family it is better to go for a Cheap Traditional Term Insurance where you don’t get the premium back but have a huge insurance cover in case of any untoward incident. Premiums can vary and may be paid monthly, quarterly, annually or in a lump sum depending on the policy you choose. Term of the policy can vary from five years till twenty years and more. Money received from an insurance company as proceeds of an insurance policy (by way of an insurance claim, or by maturity) is generally exempt from tax.   5. Infrastructure Bonds – (U/S- 80CCF of Income Tax) It is discontinued for 2012-2013 Low Risk Low Return. The major institutions that offer these bonds are IDFC, IFCI, L&T, LICI ETC. Term periods can range from Five to Ten years and interest may vary from 7 to 8 percent per annum. Forms for Tax Saving Infrastructure Bonds are available with us.   7. Public Provident Fund Low Risk Low Return.. The investment limit is Rs.500 to Rs.70,000 per year - in multiples of Rs.5. The main problem about this scheme, is that you have to remember to invest an amount of at least Rs.500 annually for 15 years or your account will become defunct. Interest rate is 8 percent per annum compounded while the lock in time period is15 years. Another negative point is that as interest rates are on the downside and they are routinely changed by the government they may see a further fall. As interest for the financial year is calculated on the lowest balance after March 5th, make sure you invest before that date. PPF Accounts may also be made in name of your spouse or kids for tax benefit. You can open a Public Provident Fund Account at main post offices, branches of the State Bank of India and some nationalised banks   8. Pension Plans Moderate Risk Moderate Return. Life insurance companies such as LIC, Met Life, Tata AIG Life, Aviva, ICICI Prudential and Bharti Axa Life offer such pension plans. On maturity, the investor receives one-third of the amount while the remaining 2/3rd goes into an annuity that provides regular income in the form of pension. Only premiums till Rs.10,000 per year are eligible for deductions from total income. Like Unit Linked Insurance Plans (ULIP’s), a substantial amount of the money invested into Pension Plans goes into paying ‘fund charges’ and commissions. Plus, the annuity received by the insured investor is taxable. Terms can extend from 10 years upwards. Though some return may be guaranteed – a large part depends on the debt market, share market and inflation.   9. Unit Linked Insurance Plan Moderate Risk High Return. A Unit Link Insurance Policy (ULIP) is one in which the customer is provided with a life insurance cover and the premium paid is invested in either debt or equity products or a combination of the two. In other words, it enables the buyer to secure some protection for his family in the event of his untimely death and at the same time provides him an opportunity to earn a return on his premium paid. In the event of the insured person’s untimely death, his nominees would normally receive an amount that is the higher of the sum assured or the value of the units (investments). To put it simply, ULIP attempts to fulfill investment needs of an investor with protection/insurance needs of an insurance seeker. It saves the investor/insurance-seeker the hassles of managing and tracking a portfolio or products. ULIPs have been selling like proverbial ’hot cakes’ in the recent past and they are likely to continue to outsell their plain vanilla counterparts going ahead   10. Senior Citizens Saving Scheme – Only people over the age of 60 years and retired personnel over 55 years are allowed to invest in this scheme. This scheme is available at all public sector banks in the country. Investments have to be made in multiples of Rs.1000 till a maximum of 15 lakhs for a period of five years. The deposit made gets an interest of 9 percent per year from the date of deposit which is computed quarterly. Interest is taxable and is deducted at source     For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call     Leave a missed Call on 94 8300 8300   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 Invest Any Mutual Fund Online   Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------   Best Performing Mutual Funds Largecap Funds             Invest Online DSP BlackRock Top 100 Fund ICICI Prudential Focused Blue Chip Fund Franklin India Bluechip ICICI Prudential Top 100 Fund B. Large and Midcap Funds         Invest Online ICICI Prudential Dynamic Plan HDFC Top 200 Fund UTI Dividend Yield Fund Birla Sun Life Front Line Equity Fund Franklin India Prima C. Mid and SmallCap Funds          Invest Online Reliance Equity Opportunities Fund DSP BlackRock Small & Midcap Fund Sundaram Select Midcap IDFC Premier Equity Fund Birla Sun Life Dividend Yield Plus SBI Emerging Businesses Fund HDFC Mid-Cap Opportunities Fund ICICI Prudential Discovery Fund D. Small and MicroCap Funds   Invest Online DSP BlackRock MicroCap Fund 2.       Franklin India Smaller Companies E. Sector Funds          Invest Online Reliance Banking Fund Reliance Banking Fund ICICI Prudential Banking and Financial Services Fund F. Tax Saver Mutual Funds      Invest Online 1. ICICI Prudential Tax Plan 2. HDFC Taxsaver DSP BlackRock Tax Saver Fund Reliance Tax Saver (ELSS) Fund G. Gold Mutual Funds        Invest Online Relaince Gold Savings Fund ICICI Prudential Regular Gold Savings Fund HDFC Gold Fund Birla Sun Life Gold H. International funds         Invest Online 1. Birla Sun Life International Equity Plan A 2. DSP BlackRock US Flexible Equity 3. FT India Feeder Franklin US Opportunities 4. ICICI Prudential US Bluechip Equity 5. Motilal Oswal MOSt Shares NASDAQ-100 ETF   Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now

Education Cess on Income Tax Posted: 15 Feb 2014 11:30 PM PST Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300       In addition to the income tax calculated according to the above income tax TDS rates, a 3% Education Cess will also be charged on the total Income tax paid (not on the total taxable income). If your taxable income exceeds Rs. 10 lacs, a 10% surcharge on the total income tax (not on the total taxable income) is also charged.     For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call     Leave a missed Call on 94 8300 8300   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 Invest Any Mutual Fund Online   Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------   Best Performing Mutual Funds Largecap Funds             Invest Online DSP BlackRock Top 100 Fund ICICI Prudential Focused Blue Chip Fund Franklin India Bluechip ICICI Prudential Top 100 Fund B. Large and Midcap Funds         Invest Online ICICI Prudential Dynamic Plan HDFC Top 200 Fund UTI Dividend Yield Fund Birla Sun Life Front Line Equity Fund Franklin India Prima C. Mid and SmallCap Funds          Invest Online Reliance Equity Opportunities Fund DSP BlackRock Small & Midcap Fund Sundaram Select Midcap IDFC Premier Equity Fund Birla Sun Life Dividend Yield Plus SBI Emerging Businesses Fund HDFC Mid-Cap Opportunities Fund ICICI Prudential Discovery Fund D. Small and MicroCap Funds   Invest Online DSP BlackRock MicroCap Fund 2.       Franklin India Smaller Companies E. Sector Funds          Invest Online Reliance Banking Fund Reliance Banking Fund ICICI Prudential Banking and Financial Services Fund F. Tax Saver Mutual Funds      Invest Online 1. ICICI Prudential Tax Plan 2. HDFC Taxsaver DSP BlackRock Tax Saver Fund Reliance Tax Saver (ELSS) Fund G. Gold Mutual Funds        Invest Online Relaince Gold Savings Fund ICICI Prudential Regular Gold Savings Fund HDFC Gold Fund Birla Sun Life Gold H. International funds         Invest Online 1. Birla Sun Life International Equity Plan A 2. DSP BlackRock US Flexible Equity 3. FT India Feeder Franklin US Opportunities 4. ICICI Prudential US Bluechip Equity 5. Motilal Oswal MOSt Shares NASDAQ-100 ETF   Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now

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