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Tax planning and investment opportunity BY CA Arpit Yadav

Tax planning and investment opportunity

Tax planning and investment opportunity both are the big topics today time. Every investor wants to save their tax and invest their wealth in the right place.At this topic, AAINA discussed with KFA(Krishna foundation for All), CA Arpit Yadav.Arpit Yadav told us some key point about Tax and investment.Let’s look at Tax planning and investment opportunity.

What is ‘Tax Planning’

Tax planning is the analysis of a financial situation from a tax perspective. The purpose of tax planning is to ensure tax efficiency, with the elements of the financial plan working together in the most tax-efficient manner possible.

What is ‘Investment ‘

An investment is an asset that is purchased with the hope that it will generate income or will provide benefits in the future. According to economic, an investment is the purchase of goods or items that are not consumed today but are used in the future to create wealth.

TAX PLANNING AND INVESTMENT OPPORTUNITY

In Income tax act,1961 Taxable Income is divided into five parts

  • Income Under head salaries
  • All the money you receive while rendering your job as a result of an employment contract
  • Income under head house property
  • Income from house property you own;property can be self-occupied or rented out.
  • Income under head profession and business
  • Income/loss arising as a result of carrying on a business or profession.Freelancers incomecome under this head.
  • Income under head capital gains
  • Income earned from the sale of a capital asset(mutual funds or houseproperty).
  • Income under head other source
  • Income accrued from fixed deposits and savings account come under this head
Invest and claim Deduction from Taxable Income

Section 80C

  • LIMIT Rs. 1,50,000.00
  • Various Investment avenues are
  • PPF (Public Provident Fund)
  • EPF (EmployessProvident Fund)
  • Post office tax saving deposits
  • NSC (National Saving Certificate)
  • ELSS MutulFunds (Equity Linked Savings Scheme)
  • Kids TutionFee
  • Post office senior citizen savings scheme
  • Principle Amount of Home loan repayment
  • National Pension System
  • Life Insurance Premium paid
  • Sukanya Samridhi Account Deposit SchemeSection

Section 80CCD

  • Invest in National Pension Scheme
  • LIMIT of Rs. 50000
  • This deduction is over and above the limit of Rs. 1,50,000 under 80C

Section 80D

  • Medical Insurance Premium Paid for Self or spouse or dependent children then he can claim Rs. 25000 as deduction
  • Medical Insurance premium paid for Parents then he can claim the additional deduction of Rs. 25,000 and if parents are above age 60 then he can claim Rs. 30,000 instead of Rs. 25,00080D

Section 80DD

  • Medical Treatment , training & rehabilitation of Any dependent who is differently abledthen deduction is allowed for such expenses.
  • Normal Disability(40%)flat 75,000 irrespective of expenditure
  • Severe Disability(80%)flat 1,25,000 irrespectiveofexpenditure

Section 80DDB

  • Deduction is allowed for medical expenditure on specified diseases
  • Diseases are Dementia, Ataxia, Chorea, Hemiballismus, Aphasia, Parkinson Disease, Dystonia Musculorum Deformans,
  • Motor Neuron diseases, Maligants Cancers, Full Blown AIDS, Chronic Renal Failure, Hemophilia, Thalassaemia

MAXIMUM LIMIT OF TAX PLANNING THROUGH HOME LOAN

  • If you have home loan then you are allowed to claim deduction of principle amount as well as Interest amount of home loan
  • Repayment of Home loan has 2 component
  • Repayment of principle amount
  • Repayment of interest amount
  • Repayment of principle amount can be claimed as deduction us 80C, subject to maximum limit of section 80C i.e1,50,000
  • Repayment of Interest amount can be claimed as deduction subject to maximum limit of Rs. 2,00,000 if property is self occupied, if property is let out then no maximulimitTAX

TAX PLANNING THROUGH EDUCATION LOAN

  • If Any individual has taken the education loan for higher education of himself or spouse or children or the student to whom he is a local guardian, then he can claim deduction u/s 80E, Deduction is allowed for repayment of interest amount and not of the principal amount
    TAX PLANNING THROUGH EDUCATION LOAN

INCOME TAX DEDUCTION FOR DONATIONS U/S 80G

  • If a taxpayer makes a donation for charity, social or philanthropic purpose or makes a contribution towards National Relief Fund, the donation can be claimed as deduction u/s 80G of IT Act.
  • Donation made through cash, only Rs. 10,000 would be allowed to be claimed as a deduction if a taxpayer wants to claim more then donation id to be made by cheque or any mode other than cash.

TAX PLANNING THROUGH INVESTMENT IN EQUITY SHARE OR EQUITY ORIENTED MUTUAL FUNDS

  • The government has exempted income tax on long term capital gain arising from the sale of equity shares, provided that these shares were held for a period of more than 1 year.
  • Budget Proposal 2018 -To tax Long-term capital Gains on sale of Equity shares / units of Equity oriented Fundif more than Rs 1 lakhat @ 10% without the benefit of indexation.

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