Tax Planning

 Understand current laws and regulations

 Make complete and appropriate tax
records
 Make purchase and investment decisions
that can reduce your tax liability
WHY TAX PLANNING??


 To reduce your tax liability

 Tax Planning is not
 Tax Planning is NOT tax evasion. It
involves sensible planning of your
income sources and investments.
Tax evasion is illegal under Indian laws.


 Tax Planning is NOT just putting your

money blindly into any 80C
investments.
 Tax Planning is NOT difficult. You need to
be organized and well planned.
 Taxes In India
Others:


 Tax on income from house property

 Tax on income from business or profession
 Tax on income from Capital Gains
 Tax on income from other sources
 Some Concepts
 Avoidance of Double Taxation
 Income Tax Exemptions
 Tax Avoidance
 Tax Evasion
 Tax Discount at Source
 Tax Audit
 Tax Deferred Investments
 Standard Deduction
 Income Tax Rates/Slabs for
Assesment Year 2011-12
Income Tax Rates/Slabs Rate (%)


 Up to 1,60,000
 Up to 1,90,000 (for women) NIL
 Up to 2,40,000 (for resident individual of
65 years or above)
NIL
 1,60,001 – 5,00,000 10
 5,00,001 – 8,00,000 20
 8,00,001 upwards 30
 SECTION 80C
 Section 80C.Under this section one can claim up to Rs. 1 lakh in
deductions. The options in this section include
 * Employee Provident Fund (EPF),
 * Public Provident Fund (PPF) - up to Rs.70, 000 per annum,
 * National Savings Certificate (NSC),
 * 5-year bank fixed deposits,
 * Life insurance policies,
 * Equity-Linked Savings Schemes (ELSS),
 * Unit Linked Insurance Plans (ULIPs),
 * School fees, and
 * Home loan principal repayment.
 SECTION 80D


One can claim deductions up to Rs 15,000



incase you have taken a medical insurance

plan for yourself or your spouse or
dependant parents or children (and an
additional Rs.15, 000 for your parents'
medical insurance) under Section 80D for
premiums paid. This limit has now been
enhanced to Rs 20,000 for senior citizens
on the condition that the premiums are paid
via cheque.
 SECTION 80E
 You can claim a deduction on the interest
paid on loans taken for higher
education for yourself, your spouse
and children. There is no limit on the
amount of deduction you can claim.
 The only thing to keep in mind is that the
program for which the loan is taken
should be a graduate or post-graduate
program.
 Section 80 G


You can get a tax relief if you donate to institutions that



are approved under 80G of the Income Tax Act. The

rate of deduction is either 50 or 100 %, depending
upon the type of the charity fund. There is no upper
limit on the amount given to a charity. However,
donations should be made only to the specified trusts
and only donations of up to 10 per cent of the total
income qualify for such deduction. Please note that
tax exemption is only an added advantage of charity
and this should not be the primary reason for doing
so.
 Interest on Home Loan


Interest component of a home loan is allowed



as a deduction under the head ‘income

from house property' U/s 24(b) up to a limit
of Rs 1.5 lakhs a year for a self-occupied
house. The claim can also be made on
loans taken for repair, renewal or
reconstruction of an existing property.
 SECTION 80CCC


Pension Funds – Section 80CCC:



An investment in pension funds is eligible for



deduction from your income.

Section 80CCC investment limit is clubbed


with the limit of Section 80C

The total deduction available for 80CCC and


80C is Rs. 1 Lakh.

 SECTION 24
Interest paid on housing loan


 Under Section 24, a maximum of Rs

1,50,000 can be deducted from your
taxable income as interest repayment
for a self occupied house. Please note
that this deduction is not available if
you the house is still under
construction and you do not have
occupation of the house.
 Items under Wealth Tax
 Guesthouse, farm-house, commercial complex, shopping mall and
residential complex are subjected to the wealth tax.
 Valuable items like jewelry and any items made up of precious
metals like gold, silver, platinum or any other precious metals.
 Aircrafts, yachts, boats that is used for non-commercial purpose
 Cash in hand that is more than 50,000, for individual and Hindu
undivided families.
 Any cash that is not recorded on the account log book is subjected
to the wealth tax.
 Motor car that is owned by an individual.
 Any urban land situated in the jurisdiction where the total population
is ten thousand as per last census is subjected to the wealth
tax.

 Summary
 Combine Tax Planning with your Financial Plan for the year
 There's no need to consider a home loan as a bad debt.
Consider getting a loan for buying a home.
 Charity is good for both – the receiver as well as the giver. Do
check on the validity and the receipts before claiming
deduction u/s 80G
 Take advantage of the tax benefits under sections 80C, 80D
and 80DD
 Insurance policies provide tax benefits on the premiums paid
as well as on the returns received.
 By way of medical insurance, you not only take care of your
medical expenses, but also receive a tax deduction u/s
80D
 Remember to file taxes on time