Individual Portfolio Of Mr.

X
Scenario
Mr. X earns a yearly income of Rs. 24 Lakhs out of which his monthly consumption is Rs. 10,20,000 Lakh i.e Rs. 13,50,000 Lakhs p.a. He wishes to invest the rest of his income and also reduce his income tax liability to the maximum. Current Income and Tax Income = Less : Consumption Total Savings : 13,50,000 Tax to be paid by Mr. X : 0-2,00,000 = 2,00,000 5,00,000 @ 10% = 5,00,000 10,00,000 @ 20% = 10,00,000 24,00,000 @ 30% = 4,20,000 Total Tax to be paid : Add : 3% Education Cess : 15,500 Total tax liability : Rs. 5,65,500 24,00,000 (10,20,000)

Nil 30,000 1,00,000 5,50,000

His disposable income of Rs. 13,50,000 would be Invested into various Investment Avenues including his tax to be paid.

Pure Risk Avenue :

Life Insurance
Term Insurance with a Sum Assured Of Rs. 2 crores :18,000 ( In case of a pre-mature death of Mr. X his family would Be able to sustain the current housing expenses for the next 16 years)

General Insurance
Health Insurance A family Floater insurance with a : 15,000 With a Sum Assured of Rs. 5 lakhs ( If any medical emergency in the family arises then they can be Reimbursed or may avail a cashless facility upto the Sum Assured)

Mr. X is now covered against the possible contingencies that could arrive in the Family.

Equity
Rajiv Gandhi Equity Saving Schemes ( : 70,000

Gold Etf : 1,20,000 ( As an emotional attachment to Gold as many Indians have, We have considered it as an alternative to physical gold which is a Much better investment in terms of making charges and various other Factors involved ) Equity Mutual Fund : 2,40,000 ( This is a monthy SIP plan started with an investment of Rs. 10000 which would enhance his habit of savings giving him exposure to the Equity Markets)

Total amount invested in Equity : 4,10,000

Debt
Public Provident Fund
( A long term risk-free investment of 15 years which provides a return of 8.8% p.a)

: 1,00,000

Debt MF

: 1,20,000

( This is a monthy SIP plan started with an investment of Rs. 5000 which would enhance his habit of savings giving him exposure to the Debt Instruments)

Total Amount invested in Debt : 2,20,000

Real Estate
An investment into a Property by taking a loan of 36 Lakhs for 20 years @ 10% which is let - out for rupees 15,000 monthly thus increasing his yearly
income by Rs 1,80,000.

Yearly Installments : 4,16,890. - Interest : 3,57,320. - Principal : 59,570.

Savings Bank Account : 1,60,000

( Some amount is retained in savings bank to meet the immediate liquidity needs which gains an interest @ 6% p.a )

House Rent Allowance : 2,40,000

We are showing that Mr.X pays rent to his father to save his taxes. (which he actually does not). In his books of Accounts this HRA would be treated as expenses, so we can show a counter-effect to square off his net position. He Received a Gift from his Father of Rs.2,40,000 The gift received from relatives is Tax-Free.

Hence, In practical terms there was no money going in and no money going out but we still save up on taxes and also increase the investible surplus.

Incomes
Dividend on Equity MF @ 12% 28,800 Dividend on Debt MF @ 8% 9,600 PPF @ 8.8% 8,800 Savings Bank @ 6% 9,600 Toal Income 56,800 : : : : :

Taxation
Income From Salary : 24,00,000 House Rent Allowance 10 % of Salary (2,40,000) Income From House Property Rent (15000 x 12) : Less : S.D @ 30% : IOC (LOP) : (2,31,320) Income From Other Sources Savings Bank Interest : 9,600 Gift Received From Father (Exempt) : 2,40,000 Dividends on Equity MF (Exempt) : 28,800 Dividends on Debt MF (Exempt) : 9,600 Interest On PPF (Exempt) : 8800 Gross Taxable Income : 19,38,280 Less : Deductions 80 C (Insurance & PPF) : 80 CCE (RGESS 50% ) : 80D (Mediclaim) : 80 TTA : Total : (1,49,600) Net Taxable Income : 17,88,680

1,80,000 (54,000) (3,57,320)

1,00,000 25,000 15,000 9,600