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Plan IT Smartly…. Pay IT Honestly……
Some Facts….
You will be surprised to know that only 2% population of India file their Income Tax
Return. Either people are scared to disclose their income to Department or they
think it is a bit stressful job.
We work 3 to 4 months to pay the Income Tax in a year.
YOU PAY MORE TAX BECAUSE YOUR NEIGHBOR DON’T PAY TAX…
Let’s encourage people to file their Income Tax Return.
Q 1. When we pay Tax ? Ans. When there is Income.
Q 2. What are the various sources of income ?
Sources of Income
Income From Salary
Income From House Property
Income From Business and Profession
Income from Capital Gain
Income From Other Sources
What are Tax Rates ?
Income Range Male & Female
(Below 60 years)
Senior Citizens (Male
& Female above 60
years of age), but
below 80 years
Very Senior Citizens (Male
& Female above 80 years
of age)
Up to Rs. 2,50,000 Nil Nil Nil
Rs. 2,50,001 to 3,00,000 10% Nil Nil
Rs. 3,00,001 to 5,00,000 10% 10% Nil
Rs. 5,00,001 to 10,00,000 20% 20% 20%
Above Rs. 10,00,000 30% 30% 30%
Note- Tax Credit of Rs 2,000/- is allowed as a credit whose Income is less than Rs 5,00,000/-
Tax Rates for Capital Gains
LTCG STCG
Sale of units of Equity Oriented Funds Through recognized stock exchanges
Exempt u/s 10(38) 15% tax u/s 111A
Any other case 20% Tax 30% for companies (If individualsas per slab rates)
Tax Planning
• Tax Planning, NOT Tax Evasion.
• Taking
maximum benefits of
Deductions &Exclusions.
• Optimizing the Investment
through after tax returns.
Financial Hospital "A complete wealth planner"
By Tax Evasion - Hiding of Income
By Tax Planning – Systematic Planning with proper compliances of tax laws.
Tools of Tax Planning
Section 10 – Benefit of Various AllowancesDeduction Chapter VI A Housing Loan and Tax BenefitCapital Gain from sale of House Property or any other
assetsGift and Tax Implication Tax Planning through Spouse, Mom and DadPoints you should keep in mind. Document Checklist for Declaration.
Section 10 - Benefit
1.What is Section 10 benefit ? Ans. Tax Friendly Allocation of CTC.
2.Is it Important for Tax Planning ? Ans. Yes, for maximizing your tax savings.
Q3. Is it affects the Gross CTC? Ans. No.
Salary Component
Expenses incurred for- Exempt (Amount)P.A.
Transportation Allowances
NO NEED FOR BILLS Rs. 19,200/-( Rs. 1,600/- p.m.)
HRA Paying rent for residence As per calculation
LTA Vacations As per calculation
Reimbursement of Expenses
Office purpose only As per Actual expenses incurred
Benefit of various allowances u/s 10.
Salary Component
Expenses incurred for- Exempt (Amount)P.A.
Uniform Allowance
Purchase or maintenance of uniform As per Actual expenses incurred
Medical Expenses Medical Treatment Rs. 15,000/-
Daily Meal Allowance
Refreshment Rs. 15,600/-( Rs. 50/- per day)
Children Allowance
NO NEED FOR BILLS Rs. 2,400/-
Children Hostel Allowance
NO NEED FOR BILLS Rs. 7,200/-
Benefit of various allowances u/s 10.
Section 10 - Benefit
Leave Travel Allowance (LTA) Amount of exemption is-
Where journey is performed byAir- Economy class of Air
Where journey is performed byRail – First class rail fare
Family means- Himself, spouse, two children and dependent brother, sister, parents;
Exemption available for 2 Journey in a block of 4 calendar years;
Current block is 2014-2017 (January 1,2014 to Dec 31,2017).
Go on HOLIDAY to save your TAX
Amount of Exemption (HRA) - Least of Following-
50% or 40% of SalaryRent paid excess of 10% of SalaryHRA component in your PAY SLIP
HRA exemption is NOT AVAILABLE if employee-1. Resides in his/her own house.2. Does not incur any expenditure on rent.
House Rent Allowance (HRA)
YES…..There is no legal requirement but in such case rent has to be paid through bank transfer entry ( Cheque or NEFT).
YES…..There is no legal requirement but in such case rent has to be paid through bank transfer entry (Cheque or NEFT).
Can claim exemption even if he owns a house (in same city or in a different city)
YES…..If you actually pay rent (through Bank transfer) to reside in rented property and pay housing loan EMI as well.
Housing Loan & Tax Benefit
Most Popular tool for Saving Tax.
Repayment of Housing loan -
a)Principal – Chapter VI A (already covered)
b)Interest on Housing Loan
Payment of Interest on Housing Loan will be covered for Deduction up to
Maximum Rs. 2,00,000/- (In case of Self Occupied)
It is advisable to take loan on Joint name to take benefit of Rs. 2,00,000/-
each. It means we can claim a deduction of up to Rs 400,000/-.
Housing Loan & Tax BenefitTwo or more House Property and Loan
Interest Paid on Housing
Loan
Self Occupied Property
(SOP)
Max Benefit Rs 2,00,000/-
Let out Property (LOP)/ Deemed Let out Property (/DLOP)
Unlimited Amount
Housing Loan & Tax BenefitHaving Two or more House Property and Loan-
Hint for Tax Planning -
If both of house used for resident purpose than its upto you
to declare one house property as SOP and one as DLOP.
If both of property is actually let out
and staying on rent than we can claim-
Entire interest on loan of both of property
HRA exemption
Housing Loan & Tax BenefitPlanning to Buy Second Home
Go for housing loan if you are in higher
tax bracket because we can claim entire
amount of interest as a deduction.
Don’t vacant it, Let out your property
because-
It will generate cash revenue
Entire amount of interest will allowed
as a deduction
Sale of House Property/ Any other Asset- Save Capital Gain
Holding for more than 36 months
Long Term Capital Gain Tax arises
Sale of House Property/ Any other Asset- Save Capital Gain
Invest into another house property-Before one year or after two year from the date of original transfer
orConstruction with in three years
Invest in specified bond i.e. NHAI and REC within a 6 month from date of sale up to Maximum Rs 50 Lacs.
Chapter VIA Deduction
Investment in 80C (Max Rs 1,50,000/-)
Premium of Life Insurance/Term Plan/ULIP
Contribution to PF/PPF or National Saving Certificate (NSC)
Housing Loan Principal Re-Payment
FDR with 5 year lock in
Tuition Fee - paid for children (own, adopted, step) for full time education; Self Contribution to Pension scheme
Stamp duty & registration charges on house property purchased
ELSS-Mutual Fund ( Lock in period 3 years).
NPS (Addition Rs. 50,0000/-)
Chapter VIA DeductionBenefits above Rs 150,000/-
MEDICLAIM (Sec. 80D) Max. Benefit : 55,000/- Mediclaim for self 25,000/- A deduction of Rs 5,000/- for preventive
health check-up is available. Mediclaim for parents 25,000/- or 30,000/-
(in case of senior citizen) Even if your parents are not dependent,
you can pay for medical insurance and claim deduction.
“Health bhi aur Wealth bhi”
Beauty of Education Loan
Interest is eligible for deduction with
UNLIMITED amount.
Deduction available for seven year.
For full time studies or any vocational
studies after passing SSE.
Taken a loan from any FIIs.
Deduction eligible for repayment of
education loans made for spouse or
children also.
Chapter VIA DeductionsBenefits above Rs 150,000/-
Rajiv Gandhi Equity Savings Scheme (RGESS) u/s 80CCG
One can invest a maximum of Rs. 50,000/-;
Available for FY 13-14, 14-15 and 15-16
only;
Tax rebate of 50%;
Only for individuals whose annual income
is less than 12 lacs
Investing in stocks for the first time
Lock in of 3 year but can trade after 1 year.
Chapter VIA DeductionBenefits above Rs. 150,000/-
Chapter VIA DeductionBenefits above Rs 150,000/-
Expenses incurred in Medical treatment (Sec. 80DDB )
Specified disease for himself, spouse, children, parents, brother & sisters.
Maximum deduction Rs. 50,000/- (Senior Citizen Rs. 1,00,000/-)
Less amount of claim received from insurance companies.
Required actual bills and Certificate from specialist who is working in Govt Hospital.
Expenses incurred on maintenance of Handicapped (Sec. 80DD / 80 U)
Himself, spouse, children, parents, brother & sisters.
Amount of Deduction Rs. 50,000/-, In case of permanent disability Rs.
1,00,000/-
(Actual Expenses Irrelevant)
Required Certificate from
medical authority.
Chapter VIA DeductionBenefits above Rs 150,000/-
Chapter VIA DeductionBenefits above Rs 150,000/-
Donation or charity made to any NGO/Trust/Political Parties
Maximum 10% of Gross Total income (For 50% deduction).
How to Save TAX by Investing in
Spouse’s Name If you have some surplus to Invest somewhere – Yes
INCOME will arise Tax Planning needed Where you can Invest - In House Property - Rental
Income- PPF, LTCG on MF & Equity -Tax Free Income
To invest a house in wife’s name , loan her the money and in exchange, she can give you her jewellery.
If a couple is engaged, and the girl does not have any taxable income or pays tax at a lower rate, her fiancé can transfer money to her. The income from that won’t be included in his income because the transaction took place before they got married.
If you have some surplus to Invest somewhere – YesINCOME will arise Tax Planning needed
Where they can invest - Anywhere If your parents do not have a high income, you can
invest in their name.There is NO TAX on such giftsNo clubbing provisions come into play when
money is transferred to a parent.No limit on the amount you can give to your
parents.
How to Save TAX by Investing in MOM & DAD’s Name
BE CAREFUL, Income Tax is watching, if you
Cash deposits (10 lakh and above) Credit card bills (2 lakh and above) Mutual Fund purchase (2 lakh and above) Purchase of bonds/debentures (5 lakh and
above)Purchase of shares of a company (1 lakh and above)Purchase of immovable property (30 lakh and above)Sale of immovable property (30 lakh and above)Purchase of RBI bonds (5 lakh and above)
Other points you should keep in mind
Most ImportantAlways advisable- If you switch the job in middle of the
financial year then inform the new company about the income from the old company, so that new company will deduct the actual TDS on that.
If You have FD Interest more than Rs 10,000/- then inform your company and submit the income details so that the company will deduct the actual TDS on that.
Benefit- It can save the Interest on Tax that can be huge.
BUDGET HIGHLIGHTS
Personal Taxation
Tax Rates
• No change in income slabs or tax rates
• Increase in surcharge from 12% to 15% on individuals, HUFs having income
exceeding Rs. 1 crore.
• Rebate of income tax for resident individuals with total income not exceeding
Rs. 5 lakh enhanced from Rs. 2,000 to Rs.5,000.
House Property
• An additional deduction of Rs. 50,000 in respect of interest payable on home loan taken
by an individual during the financial year 2016-17. This deduction is available to a person
not owning a house property and where the cost of house does not exceed Rs. 50 lakhs
and the loan does not exceed Rs. 35 lakhs.
• Maximum deduction for house rent paid by individuals not receiving House Rent
Allowance increased from Rs. 2,000 per month to Rs. 5,000 per month.
• The period within which the construction or acquisition of a self occupied house
property is to be completed, to claim a deduction of interest on housing loan, increased
from 3 years to 5 years reckoned from the year in which the loan is borrowed.
• The permissible deduction limit continues to be Rs. 200,000.
Personal Taxation
Capital Gains
• Deposit certificates issued under ‘Gold Monetization Scheme 2015’ will not be considered as capital assets. The interest thereon would also be exempt from tax.
• Gains from redemption of gold bonds issued by the Reserve Bank of India under ‘Sovereign Gold Bonds Scheme 2015’ shall not be subject to capital gains tax in the hands of the individual.
• Additional tax at the rate of 10% of gross amount of dividend will be payable by the
recipients receiving dividend in excess of Rs. 10 lakh per annum.
• Tax to be deducted at source at the rate of 1 % on purchase of luxury cars exceeding
value of ` ten lakh and purchase of goods and services in cash exceeding ` two lakh.
• Securities Transaction tax in case of ‘Options’ is proposed to be increased
from .017% to .05%.
• Equalization levy of 6% of gross amount for payment made to nonresidents
exceeding Rs. 1 lakh a year in case of B2B transactions.
• Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016. Proceeds
would be exclusively used for financing initiatives for improvement of agriculture and
welfare of farmers. Input tax credit of this cess will be available for payment of this
cess.
Other Imp Points
PM’s 3 New SchemesPRADHAN MANTRI SURAKSHA BIMA YOJANA Renewable one year accidental death cum disability Cover Age group between 18 to 70. Rs. 12 per year for 2 lacs
PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA Renewable one year Life Cover Age group between 18 to 50 Rs. 330 p.a. for 2 lacs
THE ATAL PENSION YOJANA Guaranteed Pension At the age of 60 Rs. 1000,2000, 3000, 4000 and 5000 depending on the corpus.
Donate and Educate..
Documents Check List For Declaration
In case you live in a rented apartment: 12 months rental receipt from owner In case you have home loan: Statement of housing loan with details of
principal and Interest components Medical bills for the year if any Tuition fee receipt paid for your
children if any Flight & train tickets for LTA
claims Insurance premium receipts paid
for the year NSC purchased in the year Mutual fund (ELSS) statement Mediclaim premium receipt Parents’ mediclaim premium
receipt Education loan statement
(mentioning the interest component)
Bank Fixed deposit receipts (the 5 year lock-in thing)
