1

PUNJAB TECHNICAL UNIVERSITY

Jalandhar

A PROJECT REPORT

ON

TAX AND FINANCIAL PLANNING FOR SALARIED

INDIVIDUALS AT

MONEY PLANT CONSULTING

Pune

SUBMITTED

TO

PUNJAB TECHNICAL UNIVERSITY (PTU) BY

ANAND PRATAP SINGH

Roll No: 11213310198

IN PARTIAL FULFILLMENT OF

MASTER OF BUSINESS ADMINISTRATION

PUNJAB TECHNICAL UNIVERSITY

2011-2013

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DECLARATION

I, the undersigned, hereby declare that the Project Report entitle “Tax and

Financial Planning For Salaried Individuals” in Money Plant Consulting, written

and submitted by me to the MIT College of Management (MITCOM), Pune, in partial

fulfillment of the requirement for the award of degree of Post Graduate Programme

under the project guidance of Prof. Bijur in my original work and the conclusions

drawn therein are based on the material collected by myself.

Place: Pune

Date: Signature of Students

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4

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CERTIFICATE

This is to certify that Mr. ANAND PRATAP SINGH of MAEER’s MIT

College of Management (MITCOM) has successfully completed the

project work titled “TAX AND FINANCIAL PLANNING FOR SALARIED

INDIVIDUALS” in partial fulfillment requirement for completion of PGP

course as prescribed by the MAEER’s MIT College of Management

(MITCOM).This project is the record of authentic work carried out by

him/her during the period from May to June.

He /she have worked under my guidance.

Signature-

Name- Prof. Bijur

Project guide (internal)

Date-

Counter signed by __

Signature-

Name-

Director

Date:

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Acknowledgement

First of all I would like to place on record my gratitude to all concerned respectable

Director of Money Plant Consulting (CA Rishabh Parakh) for giving me this

opportunity of internship which has been a pure learning experience and which have

enlightened my knowledge and skills about the Finance and Marketing [livestock]

industry.

I would also like to express my gratitude toward MIT College of Management for

giving me the opportunity to undergo summer internship at Money Plant Consulting.

I am specially thankful to my mentors Sir and money plant consulting director CA

Rishabh Parakh for guidance and cooperation during this internship and in fact without

their navigational assistance life would have been very difficult as far as structuring the

projects are concerned. I would always greateful to them for their help and support.

Lastly but not the least I would like to thank MBA department for inducting the module

of internship programme at Money Plant Consulting without which I shouldn’t have

ever learnt.

Place: Pune ANAND PRATAP SINGH

Date :

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TABLE OF CONTENT

CHAPTER No. TITLE PAGE.NO

Declaration form student

Certificate from company /organization

Certificate from guide

Acknowledgement

List of tables

List of Charts

Executive summary

I INTRODUCTION

1.1 Background of the study

1.2 Company profile

1.4 Need of study

1.5 Scope of study

1.6 Objectives of study

1.7 Introduction To Tax

1.8 Tax Planning

II RESEARCH METHODOLOGY

2.1 Research methodology

2.2 Data Collection

2.3 Primary data

2.4 Secondary data

Testing of Questionnaire

Limitations

III DATA PROCESSING AND ANAYSIS

IV FINDINGS

V CONCLUSIONS

VI RECOMMENDATIONS

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BIBLIOGRAPHY

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INDEX OF CHART

Chart No. Page No.

Analysis 1 32

Analysis 2 33

Analysis 3 34

Analysis 4 35

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EXECUTIVE SUMMARY

DESK MANAGEMENT

I use to visit various company’s like cognizant, TCS, SunGard, Syntel, etc and

arrange desk at their company for investment purpose.

PORTFOLIO MANAGEMENT

After arranging the desk at the company clients use to come and I use to prepare

portfolio.

INSURANCE AGENTS

I was also dealing with various insurance products and according to the needs of

the customer I give him advice.

MUTUAL FUNDS ADVISOR

I also give advises of mutual funds regarding their correct investments.

TAX PLANNING

While preparing their portfolio I was taking into consideration of tax planning

and help them to make proper tax planning and increase their wealth by correct

investments products.

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CHAPTER -1

INTRODUCTION

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INTRODUCTION

BACKGROUND OF STUDY

A salaried person is required to pay some portion of his income as tax to the

government. This portion depends on the tax slab of the concerned financial year’s

slabs which may change at the end of the financial year.

To enhance the investment habits of the individual’s government has given some areas

of investment as tax free investments (which are discussed in detail in this project) i.e.

by investing in these sections an assesses is barred from paying tax. That means he/she

can save tax.

But every salaried individual was not aware of these tax saving investment avenues by

investing in which he can save the tax.

This problem laid down the need of tax planner to guide the assesses about the various

tax saving avenues.

Hence above said problem laid down the importance of the study.

OBJECTIVES OF STUDY

To understand the importance of tax and financial planning

To understand the importance of tax and financial consultant

To gain knowledge about outsource of tax and financial services

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SCOPE OF STUDY

This study is conducted as internship training at “Money Plant Consulting”, a leading

Chartered Accountant Firm in Pune from “May 2012 to June 2012”. Salaried

Individual employees are taken as sample for the study. It includes:

a. Male employees

b. Female employees and

c. Senior Citizens

For the survey a sample of 1000 people are considered, out of which around 400

individuals responded properly. Analysis is made based on the actual response.

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COMPANY PROFILE

1) ABOUT MONEY PLANT CONSULTING

Moneyplant Consulting Group facilitates outsourcing the non-core activities and

provides knowledge-driven financial services. Moneyplant Consulting Group is a

premier outsourcing & a financial services provider which aims to offer solutions for

financial needs and queries of individuals. They are a leading wealth management,

capital markets and advisory company with over 100 man years of consulting &

investing experience.

Moneyplant Consulting Group was promoted by Mr. Rishabh Parakh (Director). He

holds a professional degree of CA from the Institute of Chartered Accountants of India.

He started Money Plant Consulting with an aim to outsource the non-core activities of

corporate clients and to offer personal income tax/ financial market related services to

individual clients.

Since its Inception they have been successful in providing seamless service and

significant advantage for clients with their extremely competent team of qualified

professionals comprising CA's and MBA's & in house Knowledge pool of financial

markets, instruments and products. Their aim is to ensure that clients benefit from the

professional expertise, technical knowledge and experience. They have been recognized

for expertise in the financial arena by highly reputed institutions and clients. They strive

to provide transparent, ethical and research-based investments and wealth management

services.

2) Organization Hierarchy

The organization is headed by Rishabh Parakh who is the founder and director.

The organization has 3 departmental heads vis-à-vis HR & Admin

Operations and Products & Services.

The Finance department is headed by the director himself.

The organization is 50 employee strong

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Employees are from diverse backgrounds like CAs, MBAs and Software

professionals

3) CORE FUNCTIONS OF MONEY PLANT CONSULTING GROUP

a) Fund management

1. Loan syndication & project Appraisal

2. Deployment of surplus funds

3. Decision on short/long term investment planning

b) Insurance:

The firm has experience in Life & General Insurance advisory, which covers

following types of risks:

a. Online Health & Marine insurance

b. Commercial & Liability insurance, etc

c. Group gratuity & group term insurance

c) Taxation

1. Consultation on income tax & fringe benefit tax

2. Assessment and Appellate proceedings

3. Transfer pricing

d) Employees’ Taxation and Investments

a. Conducting seminar, orientation and induction program for the

employees

b. Preparation & Submission of income tax returns for corporate

employees

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c. Tax & Financial planning

e) Investment Advisory services:

The firm has rich experience in advising clients in:-

1. Mutual fund investments / Financial planning

2. Deployment of surplus funds

3. Decision on short/long term investments

f) Taxation

1 Expert advice on tax planning and salary structuring

2. Assessment and appellate cases

3. Preparation & submission of Tax returns

g) Loans

Home loans / Personal loans / Car loans / Credit cards

h) Insurance (Life & General)

1. Health, travel & Car insurance

2. Term insurance / Traditional plans/ ULIP / Pension Plans

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4) Some of the Corporate Clients with whom Money Plant Shares Professional

Relationships with!!!

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INTRODUCTION TO TAX

1) HISTORY OF TAX

The Income-Tax was introduced in India for the first time in 1860 by British

rulers following the mutiny of 1857.The period between 1860-1886 was period

of experiments in the context of Income-Tax. This period ended in 1886 when

first income tax act came into existence. The pattern laid down in it for levying

of tax continues to operate even to-day though in some changed form. In 1918

another Act-Income Tax act was, 1918 was passed but it was short lived and

was replaced by income-tax Act, 1922 and remained in existence and operations

till 31st March 1961.

2) PRESENT ACT

On the recommendation of the law commission and direct tax enquiry

committee and in consultation with Law Ministry a bill was framed. This bill

was referred to a select committee and finally passed in sep. 1961. This act came

into force from 1st April 1962 in whole of the country. Income tax Act 1961 is a

comprehensive Act and consists of 298 section, sub-section running into

thousands, schedules, rules, etc. and is supported by other acts and rules. This

act has been amended acts since 1961. The annual finance bill represented to

Parliament along with budget make far-reaching amendments in this acts every

year.

3) IMPORTANCE OF TAX

The taxes levied by government from the pool of resources to be used for the

collective benefit of the public. The Taxation is an exercise in the collective

solution of individual problems. The state takes upon itself the duty of solving

the problem of the underprivileged and needs finances for this purpose. The

government can mobilize resources by imposing taxes on the privileged ones.

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The taxation structure of the country can play a very important role in the

working of our economy. Some time back the emphasis was on higher rates of

tax and more incentives. But recently the emphasis has shifted to the decrease in

the rates of tax and withdrawal of incentives. While designing the taxation

structure it has to be seen that it is in conformity with our economic and social

objectives. it should not impair the incentives to personal savings and

investment flow and on the other hand it should not result into decrease in

revenue to states.

In our present day economic structure income tax plays a vital role as a source

of Revenue and a measure of economic disparity. Our taxation structure

provides for two types of taxes-direct and indirect: the income tax, wealth tax

and gift tax are direct taxes whereas sales tax and excise tax are indirect taxes.

According to section 14 of Income-Tax Act 1961 provides for the

computation of total income of an assessee which is divided into five heads

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of income. Each head of the income has its own method of computation.

These five heads are:

1) Income From SALARIES;

2) Income from HOUSE PROPERTY;

3) Income From PROFITS AND GAINS OF BUSINESS AND PROFESSION;

4) Income from PROFITS AND GAINS; and

5) Income from OTHER SOURCES.

THE CONCERNED HEAD OF THIS PROJECT IS “INCOME FROM

SALARY”

To understand the study the most important question is:

Ques .1 what is salary?

Ans: u/s 15 the following incomes are chargeable under the head salaries:

(a) Any salary due from an employer or a former employer to an assessee in the

previous year or whether paid or unpaid

(b) Any salary paid or allowed to him by or on behalf of an employer or a former

employer though not due or before it become due to him

(c) Any arrear of salary paid or allowed to him in the previous year by or on behalf

of an employer if not charged to Income Tax for any earlier previous year.

4) COMPUTATION OF SALARY INCOME

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+=+ + + +

Less

+

5) INCOME TAX SLABS FOR THE FINANCIAL YEAR 2012-2013 FOR

SALARIED INDIVIDUALS

Tax Computation Table

Salary

Section 15, 16&17

Salary

[17(1)]

Allowances

[17(3)(ii)]

[17(1)]

Perquisites

[17(2)]

Profit in lieu of

salary

[17(3)]

Tax on employment

[16(iii)]

Entertainment allowances

[16(ii)]

Income under the head salary

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1. In case of individuals (other than women and individuals who are of the age of 65 years

of more at any time during the Financial year 2012-13),

INCOME (in Rs) TAX LIABILITY (in Rs.)

Up to Rs 200000 Nil

Between Rs. 200000 – 5,00,000 10% of income in excess of Rs.200000

Between Rs. 5,00,001 – 10,00,000 Rs.30,000 + 20% of income in excess of

Rs.5,00,000

Above Rs. 10,00,000 Rs.100000 + 30% of income in excess of

Rs.10,00,000

2. In case of women (other than women who are of the age of 65 years of more at any

time during the Financial year 2010-11)

INCOME (in Rs) TAX LIABILITY (in Rs.)

Up to Rs 200000 Nil

Between Rs. 200,001 – 5,00,000 10% of income in excess of Rs.1,90,000

Between Rs. 5,00,001 – 10,00,000 Rs.30,000 + 20% of income in excess of

Rs.5,00,000

Above Rs. 10,00,000 Rs.10,00,000 + 30% of income in excess

of Rs.10,00,000

3. In case of Individuals who are of the age of 65 years or more at any during the time

Financial year 2012 – 13.

INCOME (in Rs) TAX LIABILITY (in Rs.)

Up to Rs 2,40,000 Nil

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Between Rs. 2,40,001 – 5,00,000 10% of income in excess of Rs.2,40,000

Between Rs. 5,00,001 – 8,00,000 Rs.24,000 + 20% of income in excess of

Rs.5,00,000

Above Rs. 8,00,000 Rs.86,000 + 30% of income in excess of

Rs.8,00,000

A surcharge of 10 per cent of the total tax liability is applicable where the total income

exceeds Rs. 1,000,000.

Income Tax Returns Filing Process

To comprehend the business model, it is necessary to understand

According to Income Tax Laws, all salaried individuals have to file their IT

returns for the financial year just ended by the 31st Day of July of every Year.

Now, it is the responsibility of the Individual to file his returns on or before the

due date and ensure that he has no tax liability and that all his taxes have been

paid on time to the Central Government

Now, the Central Government has authorized all employers to deduct the taxes

before giving salaries to its employees and credit the same to the treasury on

behalf of the individual employee

This is called Tax Deducted at Source or TDS

In accordance to the laws, every employer has to issue a Form 16, which shows

the net income and tax payable by the individual

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In most cases, the tax payable is equal to the Tax cut i.e. the individual has paid

all his taxes and does not owe the Central Government anything but there are

situations wherein, there may be a case of Refund or Tax Payable.

For filing, various forms are available namely ITR 1, 2….all the way up to ITR

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But most salaried individuals have to contend with only ITR 1, ITR 2, ITR 4 or

ITR V

These forms are easily available over the internet as well as House of Forms.

Then each individual must fill in the details accordingly and submit the same to

the IT Department

Once this is done, the Assessing Officer must acknowledge the Form with a

stamp containing the date and range of the officer and had it over to the

individual

This is entire process of Filing IT returns

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Need to file IT returns

Now, one may wonder that if an individual has paid all the taxes on time and he/she

doesn’t owe the Central Government any money, then what is the purpose of filing

returns as the Form 16 has all the details there is pertaining to the income received

during the Financial Year, but then filing of returns indicates that all the income earned

during the financial year has been completely accounted for and the taxes on them has

been paid duly to the Central Government

But apart from that, the stamped acknowledgement is a very strong proof and is a must

for: -

1. Visa Processing for Professionals

2. Application for House Loans

3. Work Permits in foreign Countries

4. As seen above, that entire process of filing returns is a simple one for people

who have some basic knowledge of taxation.

5. But it does require time on behalf of the individual to personally go to the IT

office and file his returns.

6. E-filing is an option for individuals who have a digital signature

7. Else even e-filing is partial online and partially manual

8. Also one needs to take a day off work to file returns as the IT office is closed on

weekends

9. Also organizations find it convenient to outsource this non core activity of tax

filing and financial planning

10. And hence herein lays the fundamentals of Money Plant Consulting, which

takes care of filing returns on behalf of Individuals and also providing

customized comprehensive, unique portfolio design based on individual clients,

his needs, his income and liabilities.

11. The concept of NEED BASED SELLING is the mantra followed at Money

Plant Consulting.

12. Clients needs to submit their Form 16s and other documents if necessary and

our team of CAs, ICWAs and MBAs in turn not only help filling up of ITRs and

filing but also help in assessment of the financial health of individuals and help

them plan their finances better all for absolutely free of cost.

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13. Being a Service provider, customer satisfaction and strict adherence to Service

Level Agreements is a foundation to our successful business model.

6) Documents needed to file IT return

(1) Annexure to Form 16, viz. Form 16 A and Form 12

(2) PAN

(3) ITR FORMS;

ITR-1

ITR-2

ITR-4

ITR-V

To be well versed with the project, one has to be aware of Form 16, various

sections under IT ACT 1961 and investment avenues

Form 16

1. The Form 16 is Certificate under section 203 of the Income-tax Act,

1961 for tax deducted at source from income chargeable under the head

“Salaries”

2. Every salaried individual at the end of the financial year (April – March),

gets a consolidated document called The Form 16

3. It has details regarding name and address of the employer and employee,

their TAN and PAN nos.

4. It also has the assessment year as well as the Financial Year

5. If Financial Year is April 2010 – March 2011 then Assessment Year is

2011-12

6. For all other details please refer to the annexure

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The following cases will help in understanding the difference between ITR

forms:

Case 1 (ITR-1)

When no additional income is reported by the employee like rent received

from any housing property or EMIs on housing loans or capital gains both

short and long term qualify an individual to file ITR 1

Case 2 (ITR-2)

In case an individual is repaying his housing loan or is receiving rent from

his/her housing property or has some sort of short term capital gain, then

accordingly ITR 2 is to used

Case 3 (ITR-IV)

Individuals, who are on a contract basis with the employer and not on the

payroll, he/she receives Form 16 A, then in that case ITR 4 is to used

Case 4 (ITR-V)

Now individuals who have filed their return online using the Income Tax

website are given ITR V

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TAX PLANNING

1) What is Tax Planning?

The goal of tax planning is to arrange your financial affairs so as to minimize your

taxes. There are three basic ways to reduce your taxes, and each basic method might

have several variations. You can reduce your income, increase your deductions, and

take advantage of tax credits.

(a) Reducing Income

Adjusted Gross Income (AGI) is a key element in determining your taxes. Lots of other

things depend on your AGI (or modifications to your AGI)-- such as your tax rate and

various tax credits. AGI even impacts your financial life outside of taxes: banks,

mortgage lenders, and college financial aid programs all routinely ask for your adjusted

gross income. This is a key measure of your finances.

Because your adjusted gross income is so important, you may want to begin your tax

planning here. What goes into your adjusted gross income? AGI is your income from all

sources minus any adjustments to your income. The higher your total income, the

higher your adjusted gross income. As you can guess, the more money you make, the

more taxes you will pay. Conversely, the less money you make, the less taxes you will

pay. The number one way to reduce taxes is to reduce your income. And the best way to

reduce your income is to contribute money to a 401(k) or similar retirement plan at

work. Your contribution reduces your wages, and lowers your tax bill.

You can also reduce your Adjusted Gross Income through various adjustments to

income. Adjustments are deductions, but you don't have to itemize them on the

Schedule A. Instead, you take them on page 1 of your 1040 and they reduce your

Adjusted Gross Income. Adjustments include contributions to a traditional IRA, student

loan interest paid, alimony paid, and classroom related expenses. A full list of

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adjustments are found on Form 1040, page 1, lines 23 through 34. The best way to

boost your adjustments is to contribute to a traditional IRA.

As you can see, two of the best ways to reduce your taxes is to save for retirement,

either through a 401(k) at work or through a traditional IRA plan. Contributions to these

retirement plans will lower your taxable income, and lower your taxes.

b) Increase Your Tax Deductions

Taxable income is another key element in your overall tax situation. Taxable income is

what's left over after you have reduced your AGI by your deductions and exemptions.

Almost everyone can take a standard deduction, and some people are able to itemize

their deductions.

Itemized deductions include expenses for health care, state and local taxes, personal

property taxes (such as car registration fees), mortgage interest, gifts to charity, job-

related expenses, tax preparation fees, and investment-related expenses. One key tax

planning strategy is to keep track of your itemized expenses throughout the year using a

spreadsheet or personal finance program. You can then quickly compare your itemized

expenses with your standard deduction. You should always take the higher of your

standard deduction or your itemized deduction.

c)Take Advantage of Tax Credits

Once we've tweaked our taxable income, we are ready to focus our attention on various

tax credits. Tax credits reduce your tax. There are tax credits for college expenses, for

saving for retirement, and for adopting children.

The best tax credits are for adoption and college expenses. Not everyone is in a position

to adopt a child, but everyone could take some college classes. There are two education-

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related tax credits. The Hope Credit is for students in their first two years of college.

The Lifetime Learning Credit is for anyone taking college classes. The classes do not

have to be related to your career.

You may also want to avoid additional taxes. If at all possible, avoid early withdrawals

from an IRA or 401(k) retirement plan. The amount you withdraw will become part of

your taxable income, and on top of that there will be additional taxes to pay on the early

withdrawal.

One of the best, and most abused, tax credits is the Earned Income Credit (EIC). Unlike

other tax credits, the EIC is credited to your account as a payment. And that means the

EIC often results in a tax refund even if the total tax has been reduced to zero. You may

be eligible to claim the earned income credit if you earn less than a certain amount

THE MOST COMMONLY USED METHOD OF TAX PLANNING IS

INCREASING THE TAX DEDCUTIONS.

In tax these deductions are commonly known as deductions under chapter VI-A. They

categorized in different heads. These heads are:

Deductions in respect of certain payments

80C

Deduction in respect of life insurance premium, deferred annuity,

contributions to provident fund, subscription to certain equity shares

or debentures, etc.

80CCA

Deduction in respect of deposites under National Savings Scheme or

payment to a deferred annuity plan.

80CCB

Deduction in respect of investment made under Equity Linked

Savings Scheme.

80CCC Deduction in respect of contribution to certain pension funds.

80CCD

Deduction in respect of contribution to pension scheme of Central

Govt.

80D Deduction in respect of Medical Insurance Premium.

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80DD

Deduction in respect of maintenance including Medical Treatment of

a dependent who is a person with disability.

80DDB Deduction in respect of Medical Treatment, etc.

80E Deduction in respect of intrest on loan taken for higher education.

80G

Deduction in respect of donations to certain funds, charitable

institutions etc.

80GG Deductions in respect of rents paid.

80GGA

Deduction in respect of certain donations for scientific research or

rural development.

80GGB

Deduction in respect of contributions given by companies to political

parties.

80GGC

Deductions in respect of Remuneration from certain foreign sources

in the case of professors, teachers, etc.

80RR

Deduction in respect of Professional income from foreign sources in

certain cases.

80RRA

Deduction in respect of Remuneration received for services rendered

outside India.

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OUT OF THE ABOVE MENTIONED SECTIONS THE MOST COMMONLY

USED SECTION IS SECTION 80C. ALONG WITH SECTION 80CCC AND

SECTION 80CCD. THEY ARE DISCUSSED IN DETAIL BELOW.

2) Section 80C. - Section 80C was inserted from assessment year 2006-

2007 It provides deductions from gross (total) income for qualified

amounts paid or deposited by the assessee in the previous year.

Scheme

particulars

Available to Can be for amount cap Holding

period

Life Insurance

premium

HUF Member of

family

20% of Sum

Assured

Two year

Individual Spouse, Self,

Children

(major or

minor,

dependent or

independent)

Do

Non -

Commutable

deferred

annuity

Individual Spouse, Self,

children

(major or

minor,

dependent or

independent)

No limit

No limit

Deferred

Annuity

deducted by

Govt

Individual Spouse, Self,

children

(major or

minor,

dependent or

independent)

20 % of salary No limit

Statutory

provident and

recognized

individual Individual

only on his

own name

No limit

In case of

RPF

5years

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Provident fund

Public

Provident Fund

Individual spouse,own,c

hildren

(major or

minor,

dependent or

indepdent)

70000

6years

National Saving

Certificate

individual

/huf

own name No limit

No limit

ULIP of UTI

and LIC mutual

fund(Dhanraks

ha)

Huf

Member of

family

No limit

5 years

Individual spouse,own,c

hildren

(major or

minor,

dependent or

indepdent)

Do do

Specified tax

saving mutual

fund

individual

/huf

own name No limit

3 year

Payment of

house loan

individual

/huf

own name No limit

5 year

Tution fees Individual any two

children

No limit

No limit

Specified fixed

deposit with

scheduled bank

individual

/huf

own name No limit

5 year

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Other points related to above:

1. Deduction for above schemes in total is available up to Rs.100000 /-

2. The limit of one lack as above is total limit u/s 80C for all type of savings, plus

section 80CCC (pension policy) plus u/s 80CCD (Contributory Pension

Plan).Means the aggregate amount of deduction under above referred sections

cannot exceed Rs. 1, 00,000.

3. PPF limit of 70000 is not as per income tax act but specified under PPF scheme

more over the limit is combined for individual plus minor child.

4. Accrued interest on NSC is also available for rebate for first five year.(you can

download NSC interest calculator from calculator section)

5. Holding period has been either defined under income tax or under scheme

qualified in for deduction u/s 80C

MAIN PROVISIONS OF THE SECTION:

1. The deduction is available only to an individual or a HUF from the gross total

income,

2. The deduction is allowed irrespective of whether such amount is paid or

deposited by the taxpayer out of his income chargeable to tax,

3. The deduction is available on the basis of specified qualifying

investments/contributions/payments made by the taxpayer during the previous

year,

4. The maximum amount deductible under section 80C is Rs. 1, 00,000. Also the

total amount of deductions under sections 80C, 80CCC and 80CCD is Rs. 1,

00,000.

THE COMMONLY USED INVESTMENT AVENUES OF 80/C ARE

(1) LIC

(2) MUTUAL FUND

(3) ULIP

LIC is the most common source of investment. But Mutual funds and ULIP are the

recent options for investment. A brief knowledge about the both is given below:

4) MUTUAL FUNDS

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A mutual fund is a professionally managed type of collective investment scheme

that pools money from many investors and invests it in stocks, bonds, short-term

money market instruments, and/or other securities. The mutual fund will have a

fund manager that trades the pooled money on a regular basis. Currently, the

worldwide value of all mutual funds totals more than $26 trillion

(1) OPEN ENDED FUNDS

(2) BOND FUND

(3) MONEY MARKET FUND

(4) FUND OF FUNDS

(5) HEDGE FUNDS

(6) EQUITY FUNDS

5) UNIT LINKED INSURANCE PLAN:

Unit linked insurance plan (ULIP) is life insurance solution that provides for the

benefits of protection and flexibility in investment. The investment is denoted as units

and is represented by the value that it has attained called as Net Asset Value (NAV).

The policy value at any time varies according to the value of the underlying assets at the

time.ULIP provides multiple benofots to the customers.

The benefits include :

Life protection

Investment and Savings

Flexibility

Adjustable Life Cover

Investment Options

Transparency

Options to take additional cover against :

Death due to accident

Disability

Critical Illness

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6) SECTION 80CCC. DEDUCTION FOR CONTRIBUTION TO PENSION

FUNDS

Section 80CCC provides deductions from gross (total) income for amounts paid or

deposited by the assessee to any annuity plan of Life Insurance Corporation of India or

any other insurer for receiving pension from the fund referred to in clause (23AAB).

Main Provisions.

1. The deduction is available to an individual who is resident or non-resident,

Indian citizen or foreign citizen

2. The deduction is allowed only if such amount is paid or deposited by the

taxpayer out of his income chargeable to tax,

3. The maximum amount deductible under section 80C is Rs. 1, 00,000. Also the

total amount of deductions under sections 80C, 80CCC and 80CCD is Rs. 1,

00,000.

4. Surrender value received is taxable in the year of receipt in the hands of the

assessee or nominee.

7) SECTION 80CCD. DEDUCTION FOR CONTRIBUTION TO PENSION

SCHEME OF CENTRAL GOVERNMENT. –

Deduction is allowed to an individual employed by the Central Government or any

other employer on or after the 1st day of January, 2004, has in the previous year paid or

deposited any amount in his account under a pension scheme notified or as may be

notified by the Central Government. However, the deduction is limited to 10 per cent of

his salary in the previous year.

Where, the Central Government or any other employer makes any contribution to the

employee’s account, the employee shall be allowed a deduction in the computation of

his total income. However, the deduction is limited to 10 per cent of his salary in the

previous year.

37

If after claiming the deduction, any amount together with interest or bonus accrued is

received by the assessee or his nominee in whole or in part, in any previous year, is

taxable of the assessee or his nominee, as the case may be, if it is received –

1. On account of the closure or opting out of the pension, or

2. As pension received from the annuity plan purchased or taken on such closure or

opting out.

Where any amount paid or deposited by the assessee has been allowed as a deduction

under section 80CCD —

1. No rebate with reference to such amount shall be allowed under section 88;

2. No deduction with reference to such amount shall be allowed under section 80C.

Explanation. For the purposes of 80CCD, “salary” includes dearness allowance, if the

terms of employment so provide, but excludes all other allowances and perquisites.

8) SECTION 80CCE. –

The aggregate amount of deductions under section 80C, section 80CCC and section

80CCD shall not, in any case, exceed Rs. 1, 00,000.

After considering all the above deduction a proper financial plan is made for the

assesses. Which can help in minimizing his/her amount of tax for the concerned

financial year.

38

CHAPTER -2

RESEARCH METHODOLOGY

39

RESEARCH METHODOLOGY

Research Methodology refers to search of knowledge .one can also define research

methodology as a scientific and systematic search for required information on a specific

topic. The word research methodology comes from the word “advance learner ‘s

dictionary meaning of research as a careful investigation or inquiry especially through

research for new facts in my branch of knowledge for example some author have

define research methodology as systematized effort to gain new knowledge.

In the internship I have to work in Primary data & a secondary data (both) source of

data has been used.

Research is defined as any systematic activity carried out in pursuit of truth

The process of research is follows

Survey Technique and collection of data

The survey conducted by me for a period of two months from 1st June 2011 to 31

st

July 2011, but I have made use of data for the month of May and August as well.

Even through the size of the population in the survey gambit was 10000 odd , work for

the collection of data was delegated to a team of 40 people who at various point of time

Definition Of problem

Hypothesis Formulation

Organizing and

Evaluation data

Inferences and

Conclusion

40

during the aforementioned month visited the organizations where Money plant has tie-

ups with and the required data was consolidated.

Hence the survey is an Incomplete Census survey rather than the sample survey as only

a about 50% of the people choose to participate in the survey.

I led the team MBAs and CAs to various companies during the survey and had the

opportunity to gauge the ground realities at a very fundamental level.

At the end of each working day, the data collected was sorted and analysis was done on

a weekly basis.

Being a service provider, it has paramount to Money Plant consulting that they stuck to

the commitments given to the client and customer satisfaction was of the highest level.

Data Collection

Once the research objective and design are through, the next and most important step is

collection.

Data are facts, figure and other parameters from both past and present which serves as a

basis for study and analysis

Data is classified as follows-

Primary

Data

Secondary

Data

Data

41

Primary Data

Primary data is that data is collected for a specific purpose.

It is customized according to the needs of the researcher and focuses exclusively on the

current problem. It requires a great deal of resources and skill sets in collection of

primary data.

In this particular research problem, it was a paramount importance to garner primary

data as there was very little available by way of previous of Secondary data.

Primary sources of data:

In the primary sources of data, Money plant consulting have data of over 1, 00,000

customer. We used this data for call back and follow-up by visiting at their place.

There were two methods employed for collection of primary data namely

1. Questionnaires

2. Interviews

With the majority being the latter

The data available before hand was that of a similar but no so extensive and exhaustive,

Hence data had to be collected first hand; hence primary data.

QUSTIONNAIRE

The questionnaire designed include various heads and Money plant Consulting wanted

analysis regarding

1. No. of return filed compared to the last year for the same period.

2. Bifurcation of computation and simple and simple returns.

3. Trifurcation of ITR 1, ITR 2 and ITR 4.

4. Knowledge of target population about investment.

5. Willingness to invest.

6. People who have invested through money plant.

7. The various avenues of investment.

8. Customer satisfaction.

42

Secondary Data

Secondary sources of data

In the secondary method we get new client by conducting seminar in respected

company. For the purpose of B2B we suppose to use internet as well as by personally

visiting at a company. I visited around 15 companies to get the number and other

details.

LIMITATIONS:

1) The respondents were not so easy to consider for sample

2) Most of the respondents were not ready to give details of the salary

3) Time was short to make a detailed study

4) Cost was a constraint.

43

CHAPTER -3

DATA ANALYSIS AND INTERPRETATION

44

DATA ANALYSIS AND INTERPRETATION

ANALYSIS # 1

Total performance of the MPG during the period of May 2011 of the August 2011

No of returns filed during the year 2011= 13954

No of returns filed during the year 2010= 9411

1. Maximum number of Tax Filing is done in the month of july.

2. The reason for this being the most companies issue the form 16 during June

and July.

3. July 31st being the decline for filing returns also adds up to the voluminous

growth during sad periods.

4. Performance of the last year has seen increased.

5. Word of Mouth is key to the successful growth of Money Plant.

6. Also tie ups with companies had increased four fold compares to the last year.

ANALYSIS # 2

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

May June July August

2010

2011

No of returns 2010 2011

May 453 900

June 3015 4050

July 5732 8654

August 211 350

45

Computation

Simple0

1000

2000

3000

4000

5000

6000

7000

8000

9000

may June JulyAugust

Computation

Simple

No of computation in relation of returns filed in year 2011

Months Computation Simple

may 500 900

June 1050 4050

July 4050 8654

August 110 300

No. of Computation returns filed in year 2011 = 8710

No. of Simple returns filed in year 2011 = 13904

1. The number of returns wherein some short of computation was requires was half

to that

of simple returns.

ANASYSIS # 3

46

68%

32%

Discussion

No discussion

People who were aware of investment avenues :-

Awareness Sales

Discussion 68%

No discussion 32%

Discussion of Investment avenues = 78%

No Discussion of Investment avenues = 32%

1. Out of 5000 odd people who took part in the survey , and among of them 82 %

of the people had some sort of clue about the various investment avenues

available.

2. This figure is not surprising in the age of internet and 24/7 news and

investment channels as well as going by the education level of the target

population most of whom are software professionals.

3. And other observation was that people had no clue about the investment avenues

were mostly fresher i.e. those who have recently joined the company straight

after graduation.

47

Investment

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

ANALYSIS # 4

People who had actully invested in Mutual fund ,unit linked plans, life insurance,

PPF,NSC etc during the financial year 2010-2011.

1. On the remaining had not utilized the provisions under the IT act to save up on

taxes.

2. While the remaining had not utilized the provisions under the IT act to save up

on taxes

3. The major reasons being lack of liquidity, other commitments.

Quarter Sales

1st Qtr 19

2nd Qtr 32

3rd Qtr 41

4th Qtr 8

48

INTERPRETATION

1. Majority of the population of the study was aware of the investment avenues.

2. There is lack of willingness to invest.

3. Least investments are done by fresher’s i.e. those who has recently joined the

job.

49

CHAPTER- 4

CASE STUDY

50

CASE STUDY

1. All cases are done in reference to income tax slab for accounting year 2008-

2009

2. All cases are illustrative

3. All suggestion are given for illustration and may not match the original choices

4.1 (CASE) where no investment is done

BELOW MENTIONED IS THE INCOME TAX DETAIL OF Mr.X

From the given detail we have to make a proper tax plan for Mr.X so that it can help

him in minimizing his tax amount.

GROSS TOTAL INCOME 4,50,000

Less: deductions under section VI-A Nil

Total income 4,50,000

(a) Tax payable* 29,000

(b)Education Cess (3% on tax payable) 870

Net tax payable (a+b) 29,870

In the above example we can see that Mr.X is paying Rs.29, 870 as tax.

Now the duty of tax planner is to minimize this amount. Now the various

options which are available to Mr.X are:

(a) Make investments in under section 80/C

(b) Can claim conveyance allowance u/s 10

(c) Can take medical policy

(d) Can make some donations.

NOTE:

*Donations are not generally suggested to individuals as they are like an

expense to them which do not provide anything in return

51

Let’s see if Mr.X make investment under section 80 C then what will

the effect on his tax amount.

Salary 4, 50, 000

Less :- deductions u/s 10 :

Conveyance allowance 10,000 10, 000

Gross total income 4, 40, 000

Less: deductions under chapter VI-A

Section 80C :

Provident fund 7, 500

Insurance premium 25, 000

Mutual funds 40, 000

Public provident fund 10, 000

National saving certificates 7, 500

Unit linked insurance plan 10, 000 1, 00, 000

Total income 3, 40, 000

Tax payable 18, 000

Education Cess (3% on tax payable) 540

Net tax payable 18, 540

From above solution one can see that by increasing investments in

section 80C Mr.X has saved Rs11, 330/-

52

4.2 (CASE) where partial investment is done

BELOW MENTIONED IS THE INCOME TAX DETAIL OF Mrs. Neeta

From the given detail we have to make a proper tax plan for Mrs. Neeta so that

it can help her in minimizing her tax amount.

Salary 4,00,000

Less deductions under section VI-A

Section 80C :

Provident fund 8,500

Insurance premium 30,000

Fixed deposit 10,000

Tution fees 4,500 53,000

Total Income 3,47,000

(a) Tax payable 15,700

(b)Education Cess (3% on tax payable) 471

Net tax payable (a+b) 16,171

In the above example we can see that Mrs. Neeta is paying Rs.16,171 as tax.

Now the various options which are available to Mrs. Neeta are:

(a) Increase his investments in section 80/C

(b) Can claim conveyance allowance u/s 10

(c) Can take medical policy

*tax calculated is 10% on the income

53

Let’s see if Mrs. Neeta what is the maximum amount of tax she can

save:

Salary 4,00,000

Less : deduction U/S 10

Conveyance allowance 10,000 10,000

Gross total salary 3,90,000

Less deductions under chapter VI-A

Section 80C

Provident fund 8,500

Insurance premium 30,000

Fixed deposit 10,000

Tution fees 4,500

Mutual funds 20,000

Public provident funds 12,000

Unit linked insurance plan 15,000 1,00,000

Total income 2,90,000

(a) Tax payable 10,000

(b)Education Cess (3% on tax payable) 300

Net tax payable (a+b) 10, 300

From above we can see that by increasing investments Mrs. Neeta is able to save Rs. 5,

871/-

*tax calculated is 10% on the income

54

4.3 (CASE)- where assessee has exhausted 80/c limit

The following are particulars of the income of the university teacher

Mrs. Meeta. (Senior citizen)

Salary 5, 00, 000

Less:

Income from house property 1, 50, 000

Gross total income 3, 50, 000

Less: deductions under chapter VI-A

Principal repayment toward housing loan 50, 000

Insurance premium 30,000

Provident fund 10, 000

Mutual funds 15, 000 1, 00, 000

Total income 2, 50, 000

Tax payable on total income 1, 000

Education Cess (3% on tax payable) 30

Net tax payable 1, 030

In the above case assessee has exhausted her 80C limit. Now the available

options for Mrs. Meeta are to:

(1) Can take medical policy u/s 80 D

(2) Can claim petrol allowance u/s 10

55

Let’s see the effect on Mrs. Meeta ‘s tax amount after taking certain

actions

Salary 5,00,000

Less: deduction u/s 10

Conveyance allowance 10, 000 10,000

4,90,000

Less:

Income from house property 1,50,000

Gross total income 3,40,000

Less: deductions under chapter VI-A

Principal repayment toward housing loan 50,000

Insurance premium 30,000

Provident fund 10,000

Mutual funds 15,000 1,00,000

2,40,000

Deduction u/s 80/D 15, 000 15, 000

Total income 2,25,000

Tax payable on total income NIL

Education Cess (3% on tax payable) NIL

Net tax payable NIL

After making the appropriate investments and claims one can see that Mrs. Meeta is

able to save the entire amount of tax.

56

CHAPTER- 5

FINDINGS

57

FINDINGS:

1) Most of the individuals only look into investments because they want to save TAX.

2) People fail to take into consideration the most important factor INFLATION.

3) Mostly all the fresher’s in a company, do not have any awareness regarding their

investments, tax savings Etc.

4) Today’s youth is earning more but their financial literacy is very negligible, While

many are unaware of how to manage their income for best returns , quite a number

don’t even realize the importance of savings and investment.

5) People in different localities show different perception towards investments

6) 30% of the individuals do not invest in the market because of many reasons-:

A) Parents decision

B) Lack of awareness

C) Lots of commitments. Hence less appetite for risk

7) Majority of the people do not have the knowledge of tax planning

8) Majority of the population was unaware about the reason for which we pay tax

9) Majority of the population does not opt for the services of C.A’s and Financial

Consultants

10) There is unawareness about the use of amount of tax paid as tax

58

59

60

61

CHAPTER - 6

CONCLUSIONS

62

CONCLUSION

It was my pleasure to work with CA Mr. Rishabh Parakh and a team of 50 people

from 3rd

May – 9th

July 2012 we all worked as a team towards the goal of the

company. I played a role in meeting people and making their Portfolio as a portfolio

manager which give me immense satisfaction and impulse amount of knowledge.

I am very thankful to MIT College of Management and specially Prof. Vaishali who

worked so hard for getting me placed for Summer Internship Programme.

I hereby conclude that this summer internship programme proved to be very helpful

to me, so I am thankful to all the people who are directly or indirectly involved in

this.

63

CHAPTER - 6

Recommendations

64

SUGGESTIONS:

Basic knowledge of tax should be given to each and every student during

educational duration whether of commerce background or not

People should opt the services of C.A’S and financial consultants

For sound financial condition one should have a financial portfolio from a C.A

or tax planner

For Moneyplant Consulting to stay ahead of its competitor it must emulate the

TAXSMILE model of online filing and hence it is necessary to keep up to date

with changing needs and technologies.

Acknowledgement distribution needs to be more streamlined as there were

instances of some clients not receiving them on time. Moneyplant Consulting

should take this up on a high priority basis.

Portfolio designing is the core activity and hence Moneyplant Consulting should

make sure that additional human resources should be allocated as there were

instances where Tax filing took precedence over financial planning.

Load Shedding was a genuine problem which made tax computations delayed

and hence it is suggested that Moneyplant Consulting should look to having a

24/7 power back up.

Employee attrition was also a problem faced by Moneyplant Consulting and

hence additional perks and commissions should be used as an incentive tool

for deal closing.

Form wastage should be avoided or at least minimized.

Moneyplant Consulting must make sure of giving existing clients a more

personalized and customized service should be one of the priorities.

65

The business model of Moneyplant Consulting is near perfect but reinvention is

the mantra to be followed to stay ahead of competition.

With changing times and economic conditions, it has been observed that the

disposable income of people have increased and so have the tax slabs been

modified by the Government of the Union of India and so people have never

had a better period to invest more and participate and reap in the benefits of a

strong and growing economy.

Section 80 G which deals with deductions with respect to donations to

charitable trusts, relief funds and political parties are subject to misuse as the

law leaves lot of ambiguities. Donations to political parties are totally tax

deductible while donations to certain trusts and charities are only 50 % tax

deductible.

Having a diverse financial portfolio helps one survive in an extremely volatile

economic atmosphere. Risk diversification makes the financial health of an

individual more or less stable even if a couple of sectors are badly hit.

Financial planning and portfolio designing has to be need based and is unique

depending upon the individual’s/family’s income and liabilities.

Suppose a married couple (DINK) are planning to buy a house property in a

couple of years then it doesn’t make any sense for them to invest in PPF or

NSC which are long term and they will be better off having their money in FDs

or the bank. They can choose to invest part of their savings in some sort of

ELSS.

66

CHAPTER - 7

BIBILOGRAPHY

67

BIBLIOGRAPHY

Reference books & Websites

1. Direct tax: Law and Practice Singhania

2. Research Methodology S. P. Kasande

3. Company Brochures

4. www.moneyplantconsulting.net

5. www.google.com

6. www.incometaxindia.gov.in

7. www.moneycontrol.com

68

ANNEXURE

Questionnaire

1. Name : ________________________________ DOB ____/____/______

2. Father’s Name : __________________________________________________________

3. E-mail: Official __________________________________________________________

Other (mandatory)

__________________________________________________________

4. Phone No.(M) ___________Off-No____________ (R) _____________

5. Bank Name & Branch (for refund cases)

Name:_____________________________________________________

Bank A/c No. ______________________ MICR No:________________