Presentation on tax Planning A unique tax saving & wealth creation tool

1. Presentation on tax Planning A unique tax saving & wealth creation tool

2. Wondering about ways to save tax? All that is required is an effective and optimised tax planning.

3. Is Tax Evasion a Crime? YES Is Tax planning a Crime? NO Tax Planning is the judicious use of income tax provisions to reduce ones tax liability

4. Modus Operandi for Tax Planning Exemptions Deductions

5. Let us know more … Deductions Deductions refer to those investments or payments which will be deducted from total income. e.g. Contribution to ELSS, ULIPs, PPF, EPF children’s tuition fees paid, interest on home loan etc. Exemptions Exemptions refer to those incomes which are earned but not taxable. e.g. Dividend income, proceeds from an Insurance company, etc.

6. Now lets draw our focus onto deductions (pertaining to salaried individuals only) • Section 24 • Section 80C • Section 80D • Section 80E • Section 80G Exemptions are as available under Section 10 of the Income Tax Act

7. Section 24: Interest on borrowed capital used for construction/purchase of a house is allowed as a deduction under section 24 subject to a maximum limit of Rs.150000. Section 80C: A maximum amount of Rs.100000 can be claimed as a deduction under this section. The deduction is subject to certain investments made in products like Insurance, ELSS, NSCs PPF, EPF, ULIPs or any other notified pension funds. Also principal on borrowed capital used in construction of house can be claimed as a deduction under section 80C.

8. Section 80D: Deduction can be availed on any medical insurance premium paid subject to a maximum of Rs.15000. However, an individual can claim another Rs.15000 paid if any on his parents . The same will be Rs.20000 incase parents are senior citizens. Section 80E: Deduction can be availed on any interest reimbursements, the principal amount of which was originally used for education of assessee himself, spouse or children.(Spouse is covered under this provison from AY:2009-10. Section 80G: Deduction can be availed on donations made to a few charitable institutions subject to a few limits..

9. Now that we understand deductions lets grill further into avenues available to claim these deductions

10. Last but not the least Few FAQs • I am a salaried employee and pay interest on my home loan. Is there still a need for me to invest in products eligible under section 80 C? • Every individual with a taxable income can claim deduction by investing in products eligible under section 80C. The interest paid on home loan is deductible from taxable income under Section 24. Hence, an individual paying interest on home loan should also invest in financial products eligible for deductions under Section 80C.

11. 2. What are the tax rates applicable for financial year 2008-09? • Current tax slabs for a normal assessee are: • Upto Rs.150000# Nil • Rs.150000 – Rs.300000 10% • Rs.300000 – Rs.500000 20% • 500000 and above 30% Note: The slabs specified above are for an individual. However, the basic permissible tax free salary in case of a women under 65 years would be Rs.1,80,000 and the same in case of any senior citizen would be Rs. 2,25,000.

12. 3. Can I invest in any mutual fund to claim a deduction under section 80C? No, one needs to invest only in ELSS to claim the deduction under section 80C. 4.What is the difference between Mutual Funds and ELSS? ELSS are just a subset of Mutual funds. There are lot of varieties in mutual funds like liquid funds, equity diversified funds, gilt funds, etc. All mutual funds will not attract a lock in period. Only ELSS funds have a lock in period of 3 years.

13. Tax Planning should aim at optimum utilization of the deductions available under various sections. • Section 80C of the Income Tax Act being the most prominent one for Tax Planning, the allocation for the Rs.1 lakh limit should be done with considerable thought. This will include the consideration for wealth creation over the long term horizon as well as best liquidity. • With this background, ELSS schemes are the winners, as: • these invest in equities the returns for which outperform the returns from various other asset classes • the lock-in period for these is the least, providing the best liquidity.

14. Its Understood that tax planning is important but why should one OPT for Karvy • Presence of 22 regional offices • Baroda, Hyderabad, AP-1(Rayalaseema & Telangana), Nasik, Bangalore, Bhopal, Cochin, Chandigarh, Chennai, Coimbatore, Delhi, Indore, Jaipur, Kolkota, Lucknow, Ludhiana, Mumbai, Pune, Nagpur, Vijayawada & Vizag. • A spread across 309 branches all over India. • Existence of 104 Franchisees. • A strength of 11000 subbrokers.

15. Our vast experience in the domain of financial planning. • Research based advice on ELSS and ULIPS. • Online access of ones investment status. • One stop shop for all investment avenues, which range from equities, commodities, insurance, etc to reality. • E-return filing service.

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