Prajna Capital

VRL Logistics IPO
Split Your Rent and Save on Income Tax
Transfer of PPF account from Post Office to Bank

Posted: 09 Apr 2015 02:23 AM PDT

VRL Logistics Ltd is coming up with an Initial Public Offer (IPO) of its Equity Shares. The issue is opening for subscription between 15th April 2015 to 17th April 2015. The Price Band is fixed at Rs.195/- to Rs.205/-.Minimum bid lot is 65 equity shares and in multiples of 65 equity shares thereafter.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

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For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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Leave a missed Call on 94 8300 8300

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Split Your Rent and Save on Income Tax

Posted: 08 Apr 2015 05:43 PM PDT

Go through the procedural hurdles that can prevent you from claiming tax gains

Sharing is caring is saving. If you extend the habit of sharing to split tax benefits with your spouse, it would result in higher tax savings. Keep this in mind while declaring investments and expenses to your employer for the new financial year. The deductions you claim will decide how much tax your employer will deduct from your monthly pay. Those living as tenants should avail of the tax exemption offered on house rent allowance (HRA), which forms a sizeable component of the salary. In some circumstances, you can claim the entire HRA for which you are eligible as tax-exempt. But, if both you and your spouse are eligible for HRA as part of your salaries, it may work out better if you split the claim. Here's how.

When splitting works better

While calculating HRA exemption, the employer considers the least of the following amounts:

(1) HRA received

(2) 50% of basic salary if living in metros, otherwise 40% of basic and

(3) rent paid above 10% of basic salary.

An individual can claim the entire HRA as exemption if the rent paid works out to at least 60% of the basic pay in metros, and 50% otherwise. In other cases, the exemption will be less than the actual HRA component of the salary, implying that the tax savings will also be less.

To optimise your HRA exemption, consider splitting it with your spouse. If your spouse is also working and is eligible for HRA, then you save more tax by splitting the HRA claim. Consider a married couple paying a monthly rent of `24,000, with the husband earning a basic pay of `24,000 and the wife `16,000. If the husband stakes claim to the entire rent paid for HRA exemption, he will be able to save `14,400 in taxes for the year. His wife will have to pay tax of `9,600 on unclaimed HRA. However, if the couple were to split the HRA claim 50:50 between themselves, the tax saving would be `21,120 (see chart).

How much you should split

A couple may choose to split the rent in any proportion depending on their salary structure to save more tax. The question is in what proportion should one split the HRA claim? If the couple is not in the same tax slab, the partner in the higher tax slab should ideally claim a larger chunk of the rent paid for exemption. The rent should be split in such a way that the spouse in the higher bracket pays 1.2 times or 120% of HRA received by him as rent and the balance rent is paid by the person in the lower tax bracket. This will help maximise the HRA exemption for the spouse in the higher tax slab. For the same couple mentioned earlier, if the husband is assumed to be in the 20% tax bracket, a 50:50 split in rent payment would translate into tax savings of `32,640. However, if the husband were to claim rent payment of `14,400, while the balance `9,600 is claimed by the wife, the total tax savings for the couple would be `38,400. Even when both partners are in the same tax slab, but one partner is eligible for higher HRA, it would be more tax-efficient for the latter to claim a higher contribution towards rent.

Practical hurdles

There are, however, some hurdles involved in the plan. To claim the HRA exemption, both partners need to show a rent receipt in their name. This can either be two different receipts with respective amounts or a single receipt for the full amount bearing both names. In the latter case, legally you are free to claim exemption in any proportion. However, some employers may not agree to this arrangement, so you must check with your employer before filing the investment declaration. To be on the safe side, ask the landlord to specify the proportion in which the rent is paid by both in the common receipt. If you want to split HRA claim, it is better to have documentation that specifies sub-division in rent payment. No employer will accept a rent receipt made out only in the name of the spouse. Also, the landlord may only be able to include both names in the rent receipt if the rent agreement mentions both.

A rent receipt may not be enough. It will suffice at the time of claiming HRA exemption from your employer, but if the taxman picks up your income tax return for scrutiny, both partners must be in a position to prove actual payment of the rent amount claimed. This is not a problem where both partners are paying their share separately to the landlord. But in many cases, one of the partners is likely to make the entire rent payment to the landlord. In such a scenario, the spouse can pay hisher share to the other, who can in turn pay the entire sum to the landlord.The only issue is that such a transfer to the spouse should be in the form of cheque or bank transfer, not cash.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

Leave a missed Call on 94 8300 8300

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

Transfer of PPF account from Post Office to Bank

Posted: 08 Apr 2015 10:03 AM PDT

A PPF account can be opened either with a post office or an authorised bank. A subscriber can take a consolidated view of his accounts if he has a PPF account with a bank where he has his savings current accounts. You can shift a PPF account from the post office to the bank by following a simple procedure.

Identifying a branch

The subscriber can approach the desired bank branch to check whether it accepts PPF deposits. On identifying the branch, the subscriber needs to complete a format for application to transfer the PPF account to the bank.

Application

The application form must be submitted to the post office where the subscriber has the account. Details of the bank branch where the account is proposed to be transferred along with signature of the account holder are required. The application must be supported with the original passbook.

Process

Upon verification of the documents, the post office will close the account and pass on the account details, documents such as nomination form, a pay order of the amount standing to the credit of the account as on date of closure, to the proposed branch. Intimation is sent to the subscriber with cc to the bank informing about the request for transfer.

Account opening

It takes about a week to 10 days to transfer the account from the post office to the bank branch. Once intimation is received, the subscriber can go to the bank to carry out account opening formalities. A new passbook is issued carrying the past credits shown as balance transfer.

The PPF rules also allow transfer of PPF account from one post office to another post office or one bank to another authorised branch or bank.

On transfer, the PPF account is considered as a continuing account and not a new account.

The subscriber can now avail internet banking facility offered by the bank to manage his PPF account.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund