Tax Planning Solutions

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Efficient tax planning can increase disposable income without increasing actual income. List below is of different tax slabs for men and women:


For Men Below 60 Years of Age


Income Tax Slab Income Tax Rate
Income uptoRs. 2,50,000 Nil
Income between Rs. 2,50,001 - Rs. 500,000 10% of Income exceeding Rs. 2,50,000
Income between Rs. 500,001 - Rs. 10,00,000 20% of Income exceeding Rs. 5,00,000
Income above Rs. 10,00,000 30% of Income exceeding Rs. 10,00,000


For Women Below 60 Years of Age


Income Tax Slab Income Tax Rate
Income uptoRs. 2,50,000 Nil
Income between Rs. 2,50,001 - Rs. 500,000 10% of Income exceeding Rs. 2,50,000
Income between Rs. 500,001 - Rs. 10,00,000 20% of Income exceeding Rs. 5,00,000
Income above Rs. 10,00,000 30% of Income exceeding Rs. 10,00,000


For Senior Citizens (Age 60 years or more but less than 80 years)


Income Tax Slab Income Tax Rate
Income uptoRs. 3,00,000 Nil
Income between Rs. 3,00,001 - Rs. 500,000 10% of Income exceeding Rs. 3,00,000
Income between Rs. 3,00,001 - Rs. 500,000 10% of Income exceeding Rs. 3,00,000
Income between Rs. 500,001 - Rs. 10,00,000 20% of Income exceeding Rs. 5,00,000
Income above Rs. 10,00,000 30% of Income exceeding Rs. 10,00,000


For Senior Citizens (Age 80 years or more)


Income Tax Slab Income Tax Rate
Income uptoRs. 5,00,000 Nil
Income between Rs. 500,001 - Rs. 10,00,000 20% of Income exceeding Rs. 5,00,000
Income above Rs. 10,00,000 30% of Income exceeding Rs. 10,00,000


Various Instruments through which tax can be saved:


Life Insurance: Every income-tax payer should have a life insurance policy not just for tax exemption, but for securing his/ her family’s future in his absence. According to the new budget, life insurance plan offers tax benefit of Rs. 1.5 lakh under section 80C of the Income Tax Act. Also, in case of the death of the insured, the lump sum offered to the beneficiary as death benefit is not taxable under section 10(10D).


Health Insurance: Apart from the tax benefit under section 80C, you can also try other tax saving instrument options such as health insurance. It does not offer high returns, but you can enjoy tax deduction on the premium paid under section 80D. Health insurance premium up to Rs 25,000 will be subject to tax deductions. For senior citizens, the limit is increased from Rs 20,000 to Rs 30,000. If you purchase a health insurance plan for yourself and your parents then you are eligible for a deduction of up to Rs 35,000. The lump sum received in case of a disability (under the personal accident rider) is not taxable.

  • Maximum tax savings
  • Low cost of investment
  • Minimum risk
  • Substantial returns

ULIPs: If you are looking for long-term investment, then ULIP is a good investment option. It offers insurance to your investment. Your premium is invested in debt and equity market, offering you tax-free returns. You can expect good results from a ULIP only if you invest for 10–12 years. There is no premium holiday in case of ULIP and your policy is likely to get discontinued if you fail to pay the premium. ULIP is a tax saving investment tool that allows you to switch between equity and debt.


New Pension Scheme (NPS): If you are concerned about your retirement and are looking forward to a plan with tax saving benefits, then NPS is the best tax saving instrument. NPS is known for its investor- friendly features, low-cost structure and flexibility. Here, you can invest a minimum amount of Rs. 6000 in installments of at least Rs.500 or as a lump sum. Being the investor, you get to decide how to allocate money for investment in gilts, corporate bonds and equity.


Equity-linked Tax Saving Scheme (ELSS): It is the best option for people willing to invest in short-term plans as its lock-in period is three years. Also, this equity fund generates good returns over the long term, with the flexibility of investing just Rs 500. Here, you are not bound to continue investing further after the lock-in period as in the case of a pension plan, insurance plan or a ULIP. It is better to invest your money over a period of time instead of investing a lump sum amount in a single go.


Public Provident Fund (PPF): PPF is one of the most preferred options for tax benefits under section 80C. This long-term saving scheme has a lock-in period of 15 years and can be extended in blocks of 5 years. According to the new Budget, the annual investment limit has been increased to Rs. 1.5 lakh from Rs 1 lakh. A PPF account can be started in a bank or a post office branch. You can invest anything from Rs. 500 to Rs. 1.5 lakh (maximum) as instalment or as a lump sum amount. PPF is one of the best tax saving tool for people who are not covered under EPF, are self employed professionals, or are risk-averse investors.


Every penny saved is every penny earned, efficient use of disposable income in tax saving instruments creates higher disposable income.


 

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