Tax & Investment Planning

8/8/2019 Tax & Investment Planning

1/31

Welcometo

Tax & Investment Planning Seminar


2/31

Income Slab Income Tax Rates

Upto Rs 1,00,000 NIL

Rs 1,00,000 - Rs 1,50,000

No Surcharge

10% of the amount

exceeding

Rs 1,00,000

Rs 1,50,000 - Rs 2,50,000

No Surcharge

Rs 5,000 + 20% ofthe amount

exceeding

Rs 1,50,000

Above Rs 2,50,000

10% Surcharge

Rs 25,000 + 30%of the amount

exceeding

Rs 2,50,000/-


3/31

OptionsMaximum

amountTax Saving Lock-in Period Returns Tax on Returns

Option under section

80CCC

LIC Jeevan Suraksha Rs 10,000 10% to 33% Term of the policy 5 to 6% Applicable rate

Options under section 88

Equity Linked Saving

Scheme (ELSS)Rs 10,000

3 Years > 10% 10%

Mutual Fund Pension Plan Rs 70,000 Till the age of 58 yrs > 8% 10%

Infrastructure Bonds Rs 1,00,000 3 Years 6.75 % to 7% Applicable rate

Public Provident Fund

(PPF)

Rs 70,000

6 years minimum

8 % compunded

yearly Tax Free

National Saving Certificate

(NSC) Rs 70,000 6 years minimum

8% compounded

half yearly Applicable rateULIP of UTI Rs 70,000 10 or 15 years > 6 % Applicable rate

LIC premiums Rs 70,000 Term of the policy > 6 % Tax Free

Return of Principal of

Housing LoanRs 20,000

N/A N/A N/A

Maximum amount eligible

for tax relief under section88 and 80CCC.

Rs 1,10,000

15% or 20%

COMPARISON BETWEEN VARIOUS TAX SAVING OPTIONS


4/31

Section 88

100,000/=

Rs. 30,000/=Infrastructure bond

LIC, PPF, CPF, and

pension plan..etc-40K

40,000/=ELSS-10K

Repayment of Housing

loan principal-20K


5/31

Other Deductions

Section 80 CCC: Jeevan Suraksha

upto Rs. 10,000/=

Section 80 D : Upto Rs. 10,000/= towards

mediclaim

Section DD: Handicapped dependant expenses

upto Rs. 40000/=

Section 80 DDB: Medical expenses towards

chronic disease - upto Rs. 40,000/=


6/31

Section 24 (I) Upto Rs 1,50,000/- paid towards

interest on housing loan is

deductible from taxable income.

Recommendation

Make a house - dont just live in it.


7/31

Myths:Insurance is just another tax saving instrument.

I do not need an insurance now. May be later...

Why wait for 30 years? - let me take a policy for 15

years (or may be 10).

Insurance

The Facts:Lower the age, lower the premium, - higher the age

higher the premium.As we get older - Health becomes a major impediment to

getting high insurance cover.

Longer the duration of policy - lesser is the premium.


8/31

A THIEF CALLED INFLATION

2020

104

960

286

290

310

Items 1980 2001

TOOTHPASTE 4.05 19

LPG GAS 26.25 250

MASALA DOSA 1.5 15

PETROL 7.9 32

MOVIE TICKET 5 50


9/31

Inflation .The silent killer!

Present cost of living RS. 20,000 p.m

30 yrs from now Rs.3,83,887 p.m.

Retire today Rs. 20 lacs @ 12%

Retire 30 yrs from now Rs.3.83 crores


10/31

Value Of Re. 1 Invested In 1980

Apr-80 Oct-82 Apr-85 Oct-87 Apr-90 Oct-92 Apr-95 Oct-970

10

20

30

40

(Rs.)

Rs. 33.52

Rs. 4.81

Rs. 11.21

Stocks

Co. Deposits

Bank Deposits

Period - April 1980 to December 1997


11/31

Value Of Re. 1 After Taxes

(Rs.)

Rs. 13.80

Rs. 3.00

Rs. 5.44

Stocks

Co. Deposits

Bank Deposits


5

10

15Period - April 1980 to December 1997


12/31

(Rs.)

Rs. 3.16

Re. 0.68

Rs. 1.24

Stocks

Co. Deposits

Bank Deposits


2

4

Period - April 1980 to December 1997

Value Of Re. 1 After Taxes & Inflation


13/31

Value Post-tax Posttax & Inflation

Bank 4.8 . .6

Co. Deposit . .44 1. 8

Equity . 13.8 3.18

Post inflation & TaxesRecap - value of1 Rupee in 17years.


14/31

EQUI IES A E HE BEST LONG TERM BET% OF STUDIED PERIOD IN WHICH

56% 63% 86%

37%

14%

44%

1year 3year 5year

Other

investment

outper ormed

tocks

outper ormed

ource : R I Report on urrency and inance (1997-98)

ensitive Index o quity rices -


15/31

Equities are the best long term bet

Investment avenues

9.19%

7.62%

9.74%

14.47%

20.16%

Inflation Gold Bank FD Co. FD Equities


16/31

Carry out extensive research and identify

the right share/company.

Identify a reliable broker.

Track your investment regularly.

How do we invest in equities or

Company Fixed Deposits?

Time is money


17/31

MUTUAL FUND

AS ANENTITY - IT IS A TRUST

AS A CONCEPT - IT IS A SERVICE

AS A FUNCTION - IT IS INVESTMENT MANAGEMENT


18/31

What Is A

Mutual

Fu

nd?

It is an investment company throughwhich an investor can pool his

money with other investors who have

a similar objective.


19/31

Mutual Funds:

A Pack

aged Prod

uct

Diversification

Liquidity

Professional

Management

Convenience

Tax

Benefits


20/31

Mutual Funds & Tax Benefits

INCOME TAX

BENEFITS

CAPITAL GAINSBENEFITS

Section 112

Section 88

Section 88 (2)


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Bank F.D. Vs.Mutual Funds

Section 112

PTR -Rs .7000

Tax 30%

Re tur s - Rs .10000

Bank Fixed Depos its

PTR -Rs .9000

Tax 10%

PTR -Rs .9400

Rs .3000 20%

Indexa tion 7%

Re turns - Rs .10000

M utua l Funds

Amoun t invested Rs .100000


22/31

RISK Vs RETURNS

RETURN

Time

RISK

BALANCED FUND

DIVERSIFIED

EQUITY

SECT R

INCOME FUND

BANKFD

EQUITY


23/31

Mutual Fund - The Top Scorer

FDs FI Bonds Open-ended

Mutual Funds

Accessibility Low Low High

Tenor ixed (Medi m) ixed (Long) No Lock-in

Min. Investment Rs. 1000 Rs. 5000 Rs. 500

TaxBenefits None 80L 80L , 112

Liquidity Low Very Low Very High

Convenience Medi m Tedio s Very High

Transparency None None Very High


24/31

WhatIs Wrong With The WayWe Save?

Over 50% of our household savings are invested in

assets that are

poor inflation fighters

not tax efficient.

Our saving habits are not disciplined and

systematic in approach

We face the possibility of outliving our savings.


25/31

5% 10% 15% 20% 25%

EFFECT OF COMPOUNDING

(Re. 1 invested for 30 yea

rs)

Rs. 4R

s. 17

Rs. 67

Rs. 234

Rs. 808

SB

LIC

PPF

NSC

Bk FD

COM

FD

BUSINESSOREQUITY


26/31

Invest Early

Anu starts investing at 25 years age

Invests Rs. 5000 monthly for 10 ye

ars

Total Investment : Rs. 6 lakhs

Prakash starts investing at 35 years age

Invests Rs. 5000 monthly for 25 ye

ars

Total Investment : Rs. 15 lakhs

Who has more money at the age of 60?

BOTH ARE OF

SAME AGE


27/31

Invest Early

It costs Prakash Rs. 3.1 crores to wait 10 years

Anu has Rs. 4.6 crores Pr akash has Rs. 1.5 crores

At the age of 60.

Assumed 15% p.a. compoundedannually


28/31

START EARLY; SAVE REGULARLYEvery Year ounts

* Return of15 p.a.

7,643,653

330,000

10,133,456

350,000

Saves from age 25 to 60 Saves from age 27 to 60 Saves from age 30 to 60

Savings Returns *

300,000

4,999,569

Rs. 10000/= p.a. orRs.833.33 p.m.


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Identify Objectives Harness the power of compo nding

Start early Focus long-term - Stay invested

Be aware of the effects of inflation

& taxes iversify

Strategy To Smart Investing


30/31

SUMMARY Banks effectively destroy purchasing power.

Manage salary pro-actively and get that raise in

salary.

Insure adequately - 5 times annual gross.

Have liquidity in Income Funds.

Use all products - judiciously and maximize yourwealth.

Be disciplined.


31/31

MUTUAL FUNDS

LIFE INSURANCE

GENERAL INSURANCE

PRIMARY AND SECONDARY MARKET OPERATIONS

RBI BONDS, POST OFFICE DEPOSITS, NSC

54EA INVESTMENTS

HOUSING LOANS (IDBI BANK)

REAL ESTATE (BUYING AND SELLING OF PROPERTY)

INVESTMENT OPTIONS

Documents

Tax & Investment Planning