1. 15th Edition
TAX
PLANNING
GUIDE
SAVINGS
TAXES
For the Financial Year 2012-13
YOUR GUIDE TO TAX EFFICIENT LIVING
2. Tax Planning Guide::Your Guide to Tax Efficient Living
Proper tax planning is the basic duty of every person, which should be carried out
religiously. Basically, there are three steps in the tax planning exercise. You need not
consult an Income Tax Practitioner or a Chartered Accountant for this matter. In fact, you
can do it yourself. These three steps of tax planning are:
Calculate your Taxable Income for the Financial Year (from April 1 to March 31) from all sources
such as salary /pension, interest etc.
Calculate tax payable on Annual Taxable Income using a simple tax rate table, given on the next
page.
After you have calculated the amount of your tax liability, you have two options to choose from:
a. Pay your tax (no tax planning is required)
b. Minimize your tax through Prudent Tax Planning.
Most people should and do choose Option ‘b’. Here, you have to compare the advantages
of several tax saving schemes and depending upon your age, social liabilities, tax slab and
personal preferences, decide on the right mix of investments/insurance plans, which
shall reduce your tax liability to Zero or to the “Minimum” possible. You may consult your
Financial Planner for distributing your savings in various tax saving schemes.
The following rates are applicable for computing tax liability for the current Financial Year
ending on March 31, 2013, i.e. Assessment Year 2013-14.
::A Bajaj Capital Publication::
3. Tax Planning Guide::Your Guide to Tax Efficient Living
For Individuals below 60 years of age (born after April 1, 1953) and HUFs
Net Income Range Income Tax Plus Education Cess
Up to Rs. 2,00,000 Nil Nil
Rs. 2,00,001 to 10% of income above
Rs. 5,00,000 3% of income tax
Rs. 2,00,000
Rs 5,00,001 to Rs. 30,000 + 20% of the
3% of income tax
Rs 10,00,000 income above Rs. 5,00,000
Above Rs. 1,30,000 + 30% of 3% of income tax
Rs. 1000000 income above Rs. 10,00,000
For a Resident Senior Citizen (who is 60 years or more at any time during the current
Financial Year 2012-13 but not more than 80 years on 31st March 2013 (born after
April 1,1933 and before March 31,1953)
Net Income Range Income Tax Plus Education Cess
Up to Rs. 2,50,000 Nil Nil
Rs.2,50,001 to 10% of the income above
Rs.5,00,000 3% of income tax
Rs. 2,50,000
Rs. 5,00,001 to Rs 25000 + 20% of the income
3% of income tax
Rs. 10,00,000 above Rs. 5,00,000
Above Rs.125000 + 30% of the income 3% of income tax
Rs 1000000 above Rs.10,00,000
For a Resident Super Senior Citizen ( who is 80 years or more at any time
during 2012-13 (born before April 1, 1933)
Net Income Range Income Tax Plus Education Cess
Up to Rs. 5,00,000 Nil Nil
Rs. 5,00,001 to 20% of the income
Rs. 10,00,000 3% of income tax
above Rs. 5,00,000
Above Rs.100000 + 30% of the income
3% of income tax
Rs 10,00,000 above Rs.10,00,000
::A Bajaj Capital Publication::
4. TAX LIABILITY
For Senior
Taxable Citizens( >60 but <80 For Super Senior
income For Individual(<60 yrs) yrs ) Citizens( >80 yrs)
Income Ed Total Income Ed Total Income Ed Total
tax Cess tax Cess tax Cess
200000 NIL NIL NIL NIL NIL NIL NIL NIL NIL
250000 5000 150 5150 NIL NIL NIL NIL NIL NIL
300000 10000 300 10300 5000 150 5150 NIL NIL NIL
500000 30000 900 30900 25000 750 25750 NIL NIL NIL
800000 90000 2700 92700 85000 2550 87550 60000 1800 61800
1000000 130000 3900 133900 125000 3750 128750 100000 3000 103000
1500000 280000 8400 288400 275000 8250 283250 250000 7500 257500
Filing of Income Tax Return
1. Filing of income tax return is compulsory for all individuals whose gross annual
income exceeds the maximum amount which is not chargeable to income tax i.e. Rs.
2,50,000 for Senior Citizens, Rs. 5,00,000 for Super Senior Citizens and Rs.
2,00,000 for other individuals and HUFs.
2. The last date of filing income tax return for individuals is July 31, with one exception
covered in point 3 below.
3. Where accounts of the assessee are required to be audited under any law , the last
date for filing the return is September 30.
4. If income tax return is filed after the due date,a penalty of Rs. 5,000/- will be levied.
Tax Free Incomes
The following incomes are completely exempt from income tax without any upper limit.
1. Interest on PPF/GPF/EPF.
2. Interest on GOI/other approved tax free bonds.
3. Dividends on Shares and on Mutual Funds.
4. Any sum received under a life insurance policy (including the sum allocated by way of
bonus on such policy) either on death of the insured or on maturity of life insurance
plan. However, in case of life insurance policies issued after March 31, 2004,
exemption on maturity payment u/s 10(10D) is available only if the premium paid in
any year does not exceed 20% of the sum assured. This provision has been further
amended from current financial year and now maturity proceeds from Life Insurance
Plan will be exempt from Income Tax only when the annual premium paid is not higher
than 10% of sum assured. This is applicable to policies issued on or after 1st April
2012.
5. Interest on savings bank account in a post office.(Exempt up to Rs 3,500 in an
individual account and Rs 7,000 in a joint account under section 10 (15) (i) )
6. Long term capital gain on sale of shares and equity mutual funds if the security
transaction tax is paid/imposed on such transactions.
5. Dividend Income
Dividend income from companies /equity-oriented Mutual Funds is completely exempt in
the hands of investors. Dividend is also tax-free in the hands of investors in case of debt-
oriented Mutual Fund schemes.
Gift Tax: Gift tax was abolished with effect from October 1, 1998. The gifts are no longer
taxable in the hands of donor or donee. However, with effect from September 1, 2004, any
gift received by an individual or HUF will be included in taxable income, provided the
amount of gift exceeds Rs 50,000.
However, gifts received from any of the following will continue to remain tax free:
1. Spouse
2. Brother or sister
3. Brother or sister of the spouse
4. Brother or sister of either of the parents of the individual
5. Any lineal ascendant or descendant of the individual
6. Any lineal ascendant or descendant of the spouse of the individual
7. Spouse of the person referred to in (2) or (6)
Also, gifts received on the occasion of marriage or under a will by way of inheritance
are also tax free
Computation of Gross Taxable Income
As per Income Tax , Income of a Person is Computed under the following 5 Heads :
1. Income from Salaries
2. Income from House Properties
3. Profit & Gains of Business & Profession
4. Capital Gains
5. Income from Other Sources
Now we will discuss in detail about the taxability of these sources of income.
1. Salary or Pension Income
Salaried employees are issued a certificate of tax deducted at source from salary income
by their employers in Form No. 16. It also gives the Net Taxable Salary figure.
2. Income from House Property
If the property is self occupied then the Income from House Property is treated as NIL. If
any loan is taken for the purchase of the property then the amount paid towards interest
upto a maximum of Rs.1,50,000/- is deducted from taxable income.
In case property is given on rent,then we have to find out the
A Annual Rental Income
B From this deduct Property Tax/Municipal tax if any paid by the owner.
C From balance amount – deduct 30% towards repairs & maintenaince
D From the residual figure – deduct the amount of interest paid on loan taken for the
purchase of the property.(upto 1,50,000)
E The resultant figure is the Income from House Property.
6. 3. Profit from Business / profession
Income as arrived on the basis of Profit & Loss A/c
4. Income from Other Sources
Interest Income from the following sources is also required to be included in the Gross
Taxable Income:
1. Interest on company deposits.
2. Interest on debentures/bonds.
3. Interest on savings bank account/ fixed deposits with banks.
4. Interest on post office savings schemes like MIS, NSC, Time Deposit etc.
5. Interest on private loans given to relatives, friends or any other entity.
6. Interest on government securities.
Tax Deduction at Source (TDS)
Interest payments by companies on Fixed Deposits .
Income tax is deducted @10% in case the interest exceeds Rs 5,000 in a financial year.
Interest payments by Financial Institutions /Banks.
Income Tax is deducted @10% in case the interest amount exceeds Rs. 10,000 in a
financial year.
Interest payments by Post office on notified deposit scheme with post office, i.e., Senior
Citizen Savings Scheme,2004
Income Tax is deducted @10% in case the interest amount exceeds Rs. 10,000 in a
financial year.
Interest payments by Housing Finance Companies /Banks .
Income tax is deducted @10% in case the interest exceeds Rs. 10,000 in a financial year .
NOTE:
1) TDS rate is 10 per cent (no surcharge, education cess, etc.).If the recipient does not
furnish his PAN to the deductor, tax will be deducted at the rate of 20 per cent.
2) Deduction of income tax at source can be avoided by filing Form 15G in duplicate (15
H for senior citizens). However, such forms can be submitted only by individuals
whose total income in the financial year is expected to be below the maximum
amount not chargeable to tax.
5. Capital Gains
Capital gain arises when certain assets like property (plot or a built up commercial /
residential unit) or shares/mutual fund units/bonds etc are sold for a profit. The
treatment of capital gains is slightly different from other sources of income as listed
above. It mainly depends upon whether the capital gain (profit on sale) is short term or
long term.
5A. Short Term Capital Gain
Capital gain is considered to be short term if immovable property is sold /transferred
within three years of acquisition. Similarly, if shares or other financial securities such as
mutual fund units are sold within one year of purchase, the profit earned is treated as
7. short term capital gain.
Short term capital gain is included in the gross taxable income like other sources of
income and normal rates of tax apply, which depend on the gross taxable income from all
sources including short term capital gains. With effect from October 1, 2004, the only
exception is short term capital gains from sale of equity shares or units of equity oriented
mutual fund schemes. In this case, short term capital gains are taxed at a flat rate of 15%
plus education cess, irrespective of the tax slab on other sources of income, provided
securities transaction tax is paid on such sale.
5B. Long Term Capital Gain
If immovable property is sold after three years of purchase, or financial securities such as
shares, deep discount bonds, units of open - ended or close - ended schemes of mutual
funds are disposed of (sold/redeemed/transferred) after holding the same for more than
twelve months, then the gain is considered to be long term capital gain.
With effect from October 1, 2004, long term capital gain on transfer of listed shares/units
of equity oriented mutual funds schemes has been exempted from tax, provided
securities transaction tax has been paid on such sale.
For assets other than listed shares/units of equity oriented mutual fund schemes, tax is
payable in respect of long term capital gains at a flat rate of 20% and the amount of gain
has to be adjusted for inflation. This inflation adjustment is known as indexation benefit.
Every year the Government of India announces inflation adjustment rate for the purpose
of long term capital gain. A detailed chart is given below:
9. Long-Term Capital Gains arising from sale/ transfer of bonds and debt securities (including units
of debt-oriented mutual fund schemes)
Long-Term Capital Gains tax in respect of bonds and debt securities is payable at a flat
rate of 10% plus education cess of the capital gains amount. But it should be noted that
this lower rate of tax @ 10% plus education cess will be applicable in respect of such
bonds and debt securities, which are listed on any recognized stock exchange and also
for units of debt-oriented mutual fund schemes. However, there is an option to avail the
indexation benefits, but in that case tax will have to be paid at the normal Long-Term
Capital Gain tax rate of 20% plus education cess.
But how do you choose between the two options - pay capital gain tax @ 20% plus
education cess with indexation benefit or @ 10% plus education cess without indexation
benefit? We can make this choice clearer with the help of an example.
Example 1:
Mr Singhal had invested Rs. 2,00,000 in a Bond Fund (debt-oriented Mutual fund
Scheme ) on March 20, 2010. He redeemed his investment on September 15, 2012 and
received redemption proceeds of Rs 2,75,000. Thus, Mr. Singhal has earned a Long Term
Capital Gain of Rs 75,000. He has an option to pay tax @ 10% of the capital gain amount
i.e Rs 7,500 plus education cess. On the other hand, he can consider the second option of
claiming indexation benefit. In that case, the current value of his investment with
indexation benefit will be:
852 ( CII of 2012-13)
Rs.2,00,000 X ______________________________ = 2,69,620
632 (CII of 2009-10 )
In this case, the Long-Term Capital Gain amount is Rs (2,75,000-2,69,620) = Rs. 5,380 on
which he is required to pay capital gains tax of Rs 1,076 only @ 20% Plus education cess.
Thus, through the above example, we can see that the second option is better for Mr.
Singhal, as he needs to pay only Rs 1,076 Plus education cess as Long-Term capital gains
Tax on Rs 75,000 of gain amount.
Section 54 EC
In order to save capital gain tax, the total amount of Long -Term Capital Gain (after availing
indexation benefit) has to be invested in any of the following two schemes specified under
section 54EC (upto Rs.50 lakhs only):
1. Bonds issued by Rural Electrification Board (REC)
2. Bonds Issued by NHAI (National Highways Authority of India)
NOTE: These bonds have a minimum lock-in period of three years. If 100% capital gain
amount is invested in the above-mentioned bonds, 100% tax is saved. Similarly, if 60% of
capital gain amount is invested, in that case only 60 % of capital gain tax will be saved and
on the balance 40% tax has to be paid.
10. Points to Ponder:
In case of sale/ transfer of residential house, the same must have been held for at least
three years. Only in that case, the gain (profit on sale) shall be considered as Long-Term
Capital Gain. Tax on Long Term Capital Gain can also be saved by buying another house
within a period of two years from the date of sale or by constructing a new residential
house within three years of sale.
Example 2:
Mr. Subramaniam bought a flat for Rs 10,00,000 in June 1998. He sold this flat in
September 2012 for a net consideration of Rs 30,00,000. Income tax payable on capital
gain of Rs 20,00,000 earned by him shall be as follows:
Adjustment of purchase price:
Purchase Price x (Cost inflation index in the year of sale/ cost inflation index in the year of
purchase)
10,00,000 x (852/351) = 24,27,350
Thus, Mr. Subramaniam has earned a Long Term capital gain of Rs 5,72,650 (Rs.
30,00,000-Rs. 24,27,350). Now, if he decides to pay tax, he has to pay 20% of Rs 572650
(i.e Rs 1,14,530) along with education cess. Alternatively, he can save this tax liability by
investing Rs 5,72,650 in either of the capital gain bonds as explained while discussing
section 54EC
Important point to note:
1. Short Term Capital Loss can be set off against any capital gain, whether Short Term
or Long Term.
2. However, Long Term Capital Loss can only be set off against Long-term Capital Gain.
3. Unabsorbed Short-Term Capital Loss can be carried forward for eight years.
4. Similarly, unabsorbed Long Term Capital Loss can also be carried forward for eight
years and can be set off only against Long Term Capital Gain.
Deductions from Taxable Income:
Deduction under section 80C
This new section was introduced from the Financial Year 2005-06.
Under this section, a deduction of up to Rs. 1,00,000 is allowed from Taxable Income in
respect of investments made in some specified schemes.
Specified Investment Schemes u/s 80C and u/s 80CCC (1)-
1. Life Insurance Premiums
( in case of life insurance policies issued after March 31, 2004, exemption on
maturity payment u/s 10(10D) is available only if the premium paid in any year does
not exceed 20% of the sum assured.
The above provisions has been amended with effect from the assessment year
2013-14 to reduce the threshold of premium payable to 10 per cent of the actual
sum assured from 20 per cent of the actual capital sum assured .(Applicable only in
case of policies issued on or after April 1,2012)
2. Employee’s Contributions to Employees Provident Fund/GPF
3. Public Provident Fund (Maximum Rs.1,00,000/- in a year)
11. 4. NSC (National Savings Certificates)
5. Unit Linked Insurance Plan (ULIP)
6. Repayment of Housing Loan (Principal)
7. Equity Linked Savings Scheme (ELSS) of Mutual Funds
8. Tuition Fees including admission fees or college fees paid for full-time education of
any two children of the assessee (Any development fees or donation or payment of a
similar nature shall not be eligible for deduction).
9. Interest accrued in respect of NSC VIII issue.
10. Pension scheme of LIC of India or any other insurance company.
11. Fixed Deposit with Banks having a lock-in period of 5 Years
12. Amount deposited under Post Office Senior Citizens Scheme. (Current Rate of
interest is 9% P.A.)
13. Amount deposited in Five Year Time Deposit Scheme in Post Office
14. Amount deposited in the NABARD (Rural Development Bonds of NABARD)
Notes:
1. There are no sectoral caps on investment in the new section and the assessee is free
to invest Rs. 1,00,000 in any one or more of the specified instruments.
2. Amount invested in these instruments would be allowed as deduction irrespective of
the fact whether (or not) such investment is made out of income chargeable to tax.
3. Section 80C deduction is allowed irrespective of the assessee’s income level. Even
persons with taxable income above Rs. 10,00,000 can avail the benefit of section
80C.
Please note that because the deduction is allowed from taxable income, the exact savings
in tax will depend upon the tax slab of the individual. Thus, a person in the 30% tax slab
can save income tax up to Rs. 30,900 ( Tax plus education cess ) by investing Rs.
1,00,000 in the specified schemes u/s 80C.
Deduction under section 80CCF.
No deduction will be available under section 80CCF from the assessment year 2013-14.
This section has been withdrawn/discontinued.
Deduction under section 80CCG.
(In respect of investments made under approved equity saving scheme by a resident individual
assessee)
Section 80CCG has been introduced with effect from the assessment year 2013-14.
Conditions-Deduction under this section is available only if the following conditions are
satisfied
a) Gross total income does not exceed Rs. 10 Lacs.
b) Assessee has acquired listed shares in accordance with a notified scheme.
c) The assessee is a new retail investor as specified in the above notified scheme.
d) The investment is locked in for a period of 3 years from tha date of purchase in
accordance with the above scheme.
12. Amount of deduction- The amount of deduction is 50% of amount invested in notified
equity shares provided all the above conditions are satisfied. However, the amount of
deduction under this section cannot be more than Rs. 25,000.If any deduction is claimed
by a taxpayer under section 80CCG in any year, he shall not be entitled for any deduction
under this section for any subsequent year.
(As on the date of printing of this “Tax Planning Guide”no such scheme has been notified.)
Deduction under section 80D.
Under this section, deduction of up to Rs 40,000 can be claimed in respect of premium
paid by any mode other than cash* towards health insurance policy of various General
Insurance companies like Apollo Munich’s easy health and optima plus(top up plan),Max
Bupa health companion ,Star Health’s Senior Citizen-Red Carpet etc.. Such premium can
be paid towards health insurance of spouse, parents as well as dependent children. as
per following table:
Individual taxpayer,
his/her spouse, and Additional Deduction
On whose life health Dependent for parents of the Individual
Insurance Policy is taken Children Rs. Whether dependent or not Rs. Total
General Deduction 15000 15000 30000
(including payment
on account of preventive
health check-up of self,
Spouse, dependent
Children and parents
Up to Rs 5000/-
Aditional Deduction if one 5000 5000 10000
of the Insured is Senior
Citizen (60 year of Age)
Total 20000 20000 40000
* Payment should be made by any mode other than cash. However payment on account of preventive
health check up can be made by any mode (including cash).
Accordingly a person who falls in the 30% tax bracket can save income tax up to Rs 12,360/- ( Tax
plus education cess ) by paying Rs 40,000/- as premium for “Health Insurance” policy in a year.
Deduction under section 80TTA
Section 80TTA has been introduced with effect from the assessment year 2013-14. It
provides a maximum deduction up to Rs.10,000 to an assessee ( being an individual or a
HUF) in respect of any income by way of interest on Saving Accounts with Banks/Post
Office.
Deduction under section 24(b)
Under this section, interest on borrowed capital for the purpose of house purchase or
construction is deductible from taxable income up to Rs. 1,50,000 with some conditions
to be fulfilled.
13. An Example of Prudent Tax Planning
Mr Abhay, 35, a manager in a software company, earns an annual salary income of Rs.
12,90,000/-. He has existing investments of Rs 2 lacs in 8% GOI Bonds and Rs 2 lacs in
6.5% Tax-Free Bonds. He has also taken housing loan. In the F.Y. 2012-13, he shall pay a
total sum of Rs 1,20,000/- towards the refund of Housing Loan and the break-up will be Rs
10,000/- as principal and Rs 1,10,000/- as Interest. His contribution to PF has been Rs
20,600/-. He also has earned Rs 18,500/- from interest of his Savings Bank Account. He
visits his Financial Planner at Bajaj Capital Investment Centre for tax planning. His
Financial Planner at Bajaj Capital Investment Centre suggests the following:
1. Contribution to a Ulip Plan (Birla Classic Life) for Retirement with a premium of
Rs 20,000/-
2. Contribution to a Child Plan (Kotak AIP) for Child’s education with a premium of
Rs 20,000/-
3. SIP Contribution into Reliance Tax Saver (ELSS Fund) worth Rs 3,000/ monthly
4. Contribution into Apollo Munich's( Health Insurance) worth Rs 15,000/-
14. Particulars Amount
Salary 1290000
Income from other sources (Interest on Taxable GOI
Bonds) 16000
Interest Income from Savings Bank Account 18500
Taxable Income 1324500
LESS:
1. Deduction u/s 24(b)
Interest on Housing Loan 110000
2. Deduction u/s 80C and 80CCC(1)
Ulip Plan (Birla Classic Life) 20000
Child Plan (Kotak AIP) 20000
Contribution to PF 20600
Housing Loan Repayment 10000
Mutual Fund Investment into Reliance Tax Saver (ELSS
Fund) 36000
1,06,600
Restricted to 100000
4. Deduction u/s 80TTA
Intrest Income from saving bank Account 18500
Restricted to 10000
4. Deduction u/s 80D
Apollo Munich's( Health Insurance) 15000
TOTAL DEDUCTION 235000
Net Taxable Income 1089500
Income Tax Liability:
0-2,00,000 0
2,00,001-5,00,000 @ 10% 30000
5,00,001-10,00,000 @ 20% 100000
10,00,001-10,89,500 @ 30% 26850
Total Income Tax 156850
Education Cess @ 3% 4706
Total Income Tax payable by Mr. Abhay 161556
The total tax liability of Mr. Abhay without Tax Planning investments under section 80C
and 80D is Rs. 1,98,636 (tax-Rs 1,92,850, education cess Rs. 5,786) The tax liability
after investments under section 80C, and 80D is reduced to Rs. 1,61,556. Hence, Mr.
Abhay has saved Rs 37,080 in taxes (Rs.1,98,636-Rs. 1,61,556) and also has secured his
future by Planning for his retirement and children eduction etc.
15. Example of Prudent Investment cum Tax Planning for a ‘Just retired’ person.
Professor Ramesh Kumar retired at the age of 65 years as Dean of a University on April 1,
2012 after a long and rich academic career. He received total retirement benefits
amounting to Rs.35.5 lacs, including Provident Fund, Gratuity, Leave encashment etc.
Prof.Kumar is entitled to a life long monthly pension of Rs.15,000/-. Also he has a PPF
Account where the accumulated balance is Rs.7 lacs. Besides, 15 years ago he bought a
mediclaim plan covering himself, his wife and he is regularly paying health insurance
premium of Rs.20,000/- per annum, to New India Assurance Company Ltd.
Just after retirement, Prof. Kumar consults his Financial Planner at Bajaj Capital and
decides to invest his retirement benefits of Rs.35.5 lacs as per details given below:.
Name of the Scheme Amount
a) 10% Fixed Deposit with his Bank 1700000
b) Post office MIS
450000
c) Investment in Templeton India short term income plan 250000
d) Equity Mutual Funds ( Dividend Option) 600000
e) Contribution toPPF Account 40000
f) Systematic Investment Plan (SIP) in ELSS scheme 60000
(HDFC Tax Saver) @ Rs.5000/- per month.
g) Premium of Mediclaim 20000
h) Balance in Post Office Saving Bank a/c 100000
Balance left in Saving Bank a/c with his bank for day - to
i) - day needs and Emergency purpose 330000
3550000
16. Tax liability of Prof. Ramesh Kumar for Financial Year 1st April 2012 to 31st March 2013
will be computed as under:-
Total Tax free Taxable
Particulars Income Income Income
Pension ( 15000 x 12 )
180000 180000
Intrest Income on 10% Fixed Deposit from
Bank 170000 170000
Intrest Income on Post office MIS
38250 38250
Dividend from Templeton India short term
income plan (Assuming annual return to be
6% per annum) 15000 15000
Dividene @ 10% from Equity Mutual Funds
60000 60000
Intrest on PPF Account (Intrest @ 8.8% on
740000/-) 65120 65120
Intrest on post office Saving Bank a/c 4000 3500 500
Balance left in Saving Bank a/c with his
bank for day to day needs and Emergency
purpose @ 4% pa 13200 13200
Total : 545570 143620 401950
Computation of Taxable Income Amount(Rs.) Amount(Rs.)
Total taxable Income 401950
Less: Deduction u/s 80 C
(for contribution to PPF & ELSS) 100000
Deduction u/s 80D
(Mediclaim premium) 20000
Deduction u/s 80TTA ( Intrest on saving bank
10000
account upto Rs.10000/-)
Total Deduction from taxable income 130000
Net Taxable Income 271950
Calculation of Income Tax:-
First 2,50,000/-
Balance 21950/-@ 10% 2195
Add: Education Cess @ 3% 66
Total Tax payble 2261
::A Bajaj Capital Publication::
15
17. Thus, Prof. Kumar has to pay total tax of Rs.2,261/- only on his Total Income of Rs
5,41,820/- with the help of prudent planning rendered by the Financial Planner at Bajaj
Capital.
Important Note:
1. Out of the total retirement benefits of Rs.35.5 lacs, Rs.21.50 lacs have been invested
in fixed income interest bearing safe investment schemes to ensure regular flow of
assured income.
2. An amount of Rs 6.00 lacs has been invested in Mutual Funds to ensure proper Asset
Allocation,
3. An amount of Rs.2.50 lacs is invested in short term scheme of Mutual Fund to
ensure
a) Liquidity b) Tax free dividend.
4. Rs.60,000/- is invested in ELSS scheme through SIP
a) To save tax u/s 80 C
b) To reap the benefits of stock market by disciplined investments.
5. Return from investment in ELSS Scheme can be received either as dividend or as
long term capital gain after 3 years.
Dividend as well as long term capital gains from ELSS scheme are exempt from income
tax.
Please remember that there is a lock-in of 3 years in ELSS Scheme. Also investments in
ELSS Schemes are subject to market risks.
Conclusion: Every citizen has a fundamental right to avail all the tax incentives provided by
the government. Therefore, through prudent tax planning, not only is the income tax
liability reduced, but also a better future is ensured due to compulsory savings in highly
safe government schemes. We sincerely advise all our readers and clients to plan their
investments in such a way that the post-tax yield is the highest possible keeping in view
the basic parameters of safety and liquidity.
Disclaimer: Bajaj Capital Limited (BCL) has taken due care and caution in compilation and
presenting factually correct data contained hereinabove. While BCL has made every effort
to ensure that the information /data being provided is accurate, BCL does not guarantee
the accuracy, adequacy or completeness of any data/information in the guide and the
same is meant for the use of the recipient and not for circulation. Readers are advised to
satisfy themselves about the merits and details of each investment scheme before taking
any investment decision. BCL does not hold themselves liable for any consequences, legal
or otherwise, arising out of use of any such information / data and further states that it has
no financial liability whatsoever to the recipient /readers of this guide. BCL nor any of its
directors /employees /representatives accept any liability for any direct or consequential
loss arising from the use of the information/data contained in the guide or any
information/data generated from the guide .Any dispute arising in future shall be, subject
to the exclusive jurisdiction of court(s) at Delhi.
18. Bajaj Capital Network
DELHI ZONE Ph: 42730057/ 58, 64640915 Gurgaon-122001. Ph. 0124-
6468101, 4062590
Corporate & Regional office (Delhi
Janakpuri: Shop No 11 & 12, 7-A
& North)
Janakpuri Dist. Centre (Opp. Noida-Sec-29: A-2, First Floor,
Nehru Place: Bajaj House, 97,
Janakpuri Transport Authority), Brahmputra Commercial
Nehru Place, New Delhi - 110
New Delhi - 110058. Ph: Complex, Near Union Bank
019 Ph: 41693000 Call Centre:
64736912, 64640917, ATM, Sec. 29, Noida-201301
011 - 39881010
25552675 Ph: 0120- 6494075,
CENTRAL DELHI
2451496, 2450100
Kirti Nagar: Shop No. 3, Ground
Connaught Place: United India
Floor, B-5, Tagore Market (Near Noida-Sec-41: C-20, C Block
Life Building, F-Block,
Metro Pillar no.338), Kirti Market, Sector-41, Noida-
Connaught Place, New Delhi –
Nagar,New Delhi-110015 Ph: 201301. Ph:0120-4340111,
110001. Ph.: 41790444 (30
25113659, 25117531, 6494077
Lines), 23356158, 41790400
64736922
Faridabad: 5R/1 Ground Floor,
Rajendra Place: 9, Ground Floor,
Paschim Vihar: G-8&9, Ground B.K. Chowk, Near HDFC Bank,
Rajendra Bhawan, Rajendra
Floor, Bhanot Tower, A-Block NIT Faridabad - 121001 Ph:
Place (Opp. Rachna Cinema),
Opp. Jawala Heri Market, 0129 -6466566, 6466564,
New Delhi-110008
Paschim Vihar, New Delhi- 4035241
Ph:64640938, 25734989,
110063. Ph: 64640929,
41538597
64736947, 25265909 Ghaziabad: G-5 & 6, Ansals
Satyam Building, Raj Nagar,
NORTH DELHI
Ashok Vihar: Shop no. 15, SOUTH DELHI District Centre, Ghaziabad-
Bhikaji Cama Place: 112, 1st 201002,
Ground Floor, Deep Cinema
Floor, Ansal Chamber-1, Bhikaji Ph: 0120-2822407,0120-
Complex, Ashok Vihar,Phase-I,
Cama Place, New Delhi-110066 2824330.
Delhi -110052
Ph: 26164343, 26188644,
Ph: 64640908, 27461651
64736916 Vaishali: Shop No. 4, 1st Floor,
Pitampura: DDA Shop No. 4, FD Lajwanti Plaza, Sector-4, Main
Defence Colony: F-1, Ist floor, B- Market, Vaishali,
Market(DDA), Near Madhuban
87, Defence colony, New Delhi- Ghaziabad.(u.p.)
Chowk, Pitampura, Delhi-
110024. Ph: 64736930, Ph:(0120)4349460-61,
110088
Ph: 64640933, 27312742, 64640912 – 341553182 6494072, 6493212
27315056
Yusuf Sarai: 18, DDA NORTH ZONE
EAST DELHI Market,Commercial Complex, Sonepat: Ground Flr, Opp. Old
Patparganj: DDA Shop No. 24, Yusuf Sarai, New Delhi-110016 Civil Hospital, Railway Road
Ground Floor, Rama Krishna Ph: 41841143, 26863789, ,Sonepat-131001
Market, No.1, I. P. Extension, 26523166 Ph: 0130- 6451297, 6451256
Patparganj ,Delhi-110092
Kalkaji: N-10, Upper Ground, PUNJAB
Ph. 64640931, 22233120,
Kalkaji, New Delhi-110019 Ph: Chandigarh: SCO 341 - 342,
Karkardooma: G-14, Sachdeva 26223507, 64736914, First Floor, Sector 35B,
Tower, Plot No.17, Community 64640919 Chandigarh 160036.
Ph: 0172-6451612 – 13
Center, Near HDFC Bank,
Karkardooma, New Delhi- Vasant Kunj: 15 LGF Central
110092 Ph: 011-64736909 Market Masoodpur Vasant Kunj Ludhiana: Ground Floor, SCO-
New Delhi-110070 Tel No: 137, Feroze Gandhi Market,
and 011-42420905.
26897632, 26136319 Ludhiana-144001. Ph:0161-
6451629-30
WEST DELHI
Dwarka: F-4, HL Square, Above NATIONAL CAPITAL REGION
MADHYA PRADESH
ICICI Bank , Plot No. 6, Sector-5, Gurgaon: Sec 14, 102, AKD
Tower, Upper Ground Floor, Bhopal: Shop No. 6 & 7, First
Dwarka, New Delhi – 110075
Near HUDA Office, Sector-14, Floor, Jyoti Cinema Complex,
::A Bajaj Capital Publication::
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