Plan IT Smartly. Pay IT Honestly..

9Some Facts..!
Taxes are your largest single annual
expense;
The average Indian works more than
2 or 3 months just to pay their taxes;
In short the less you pay to
Government (for a given level of
income), the more you have for your
personal and financial goals.

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

Exempt u/s 10(38)
Oriented Funds Through
recognized stock
exchanges

15% tax u/s 111A

Any other case

30% for companies

(If individuals
as per slab rates)

20% Tax

TDS on Sale of Property

A new section (194IA) is proposed to take effect from 1st June
2013
TDS @ 1 % on sale of immovable property
Paid by Transferee/ Buyer (Form 26QB).
Threshold limit Rs. 50 Lakh
Exemption- Agricultural land and compulsory acquisition.
Seller can take tax credit at the time of filing his/her return.

Why Tax Planning ?

You commute from Borivali to Churchgate for office purpose. One way ticket
rate is Rs. 15.

Do Nothing

Planning

Avoidance

Evasio
n

Tickets on daily basis. Monthly

pass

No ticket for the return

journey on the second day.

Without
ticket

Rs. 750 (Rs.

15*2ways*25 days)

Rs. 570 (Rs.750-Rs. 15 * 4

weeks * 3 day)

Nil

Rs. 185

Without Planning
Mr. X having
Basic Salary

`
(P.A.)
13,00,000/-

Investment under 80C

1,50,000/-

Tax (TDS)

1,75,100/-

Net in Hand Salary

Financial Hospital "A complete wealth planner"

11,24,900/-

With Tax Planning

Mr. Y having

Basic Salary

6,00,000/-

6,00,000/-

9,600/-

9,600/-

3,00,000/-

Nil

LTA

50,000/-

Nil

Uniform, Academic and

Reimbursement of Expenses

80,000/-

Nil

Medical Expenses

15,000/-

Nil

Daily Meal Allowances

15,600/-

Nil

9,600/-

Nil

2,20,200/-

220,200/-

13,00,000/-

8,29,800/-

Transport Allowance
HRA

Children and Hostel Allowances

Special Allowances
Total CTC
Investment u/s 80C
Tax (TDS)

Net in Hand Salary

Financial Hospital "A complete wealth planner"

`
Taxable

1,50,000/62,789/-

12,37,211

Why Tax Planning ?

Comparison

Mr. X
`

Mr. Y
`

CTC

13,00,000/-

13,00,000/-

1,75,100/-

62,789/-

11,24,900/-

12,37,211/-

TDS (Tax)
Net in Hand Salary

Difference (Due to Lack of Tax Planning)

Financial Hospital "A complete wealth planner"

1,12,311/-

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"

9 By Tax Evasion - Hiding of Income

9 By Tax Planning Systematic Planning with proper
compliances of tax laws.

Tools of Tax Planning

9 Section 10 Benefit of Various Allowances
9 Deduction Chapter VI A
9 Housing Loan and Tax Benefit
9 Capital Gain from sale of House Property or any other
assets
9 Gift and Tax Implication
9 Tax Planning through Spouse, Mom and Dad
9 Points you should keep in mind.
9 Document Checklist for Declaration.

Section 10 - Benefit
Q.1 What is Section 10 benefit ?
Ans. Tax Friendly Allocation of CTC.
Q.2 Is it Important for Tax Planning ?
Ans. Yes, for maximizing your tax savings.
Q3. Is it affects the Gross CTC?
Ans. No.

Benefit of various allowances u/s 10.

Salary
Component

Expenses incurred for-

Exempt (Amount)
P.A.

Transportation
Allowances

NO NEED FOR BILLS

Rs. 9,600/-

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/-

Section 10 - Benefit
Leave Travel Allowance (LTA)
9 Amount of exemption is9 Where journey is performed by
Air- Economy class of Air
9 Where journey is performed by
Rail First class rail fare
9 Family means- Himself, spouse, two
children and dependent brother,
sister, parents;
9 Exemption available for 2 Journey in a
block of 4 calendar years;
9 Current block is 2014-2017 (January
1,2014 to Dec 31,2017).

Go on HOLIDAY to save your TAX

House Rent Allowance (HRA)

Amount of Exemption (HRA) 9 Least of Following950% or 40% of Salary
9Rent paid excess of 10% of Salary
9HRA component in your PAY SLIP
9 HRA exemption is NOT AVAILABLE if employee1. Resides in his/her own house.
2. Does not incur any expenditure on rent.

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..There is no legal requirement but in such case rent has to

be paid through bank transfer entry (Cheque or NEFT).

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

9 Most Popular tool for Saving Tax.
9 Repayment of Housing loan a) Principal Chapter VI A (already covered)
b)Interest on Housing Loan
9 Payment of Interest on Housing Loan will be covered for Deduction up to
Maximum Rs. 2,00,000/- (In case of Self Occupied)
9 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 Benefit

Two or more House Property and Loan
Interest Paid
on Housing
Loan

Self Occupied
Property
(SOP)

Let out Property (LOP)

/ Deemed Let out
Property (/DLOP)

Max Benefit
Rs 2,00,000/-

Unlimited
Amount

Housing Loan & Tax Benefit

Having Two or more House Property and Loan-

Hint for Tax Planning 9 If both of house used for resident purpose than its upto you
to declare one house property as SOP and one as DLOP.
9 If both of property is actually let out
and staying on rent than we can claim9 Entire interest on loan of both of property
9 HRA exemption

Housing Loan & Tax Benefit

Planning to Buy Second Home
9 Go for housing loan if you are in higher
tax bracket because we can claim entire
amount of interest as a deduction.
9 Dont vacant it, Let out your property
because9 It will generate cash revenue
9 Entire amount of interest will allowed
as a deduction
9 It will avoid the wealth tax liability

Sale of House Property/ Any other Asset- Save Capital Gain

9 Holding for more than 36

months
9 Long Term Capital Gain Tax
arises

Sale of House Property/ Any other Asset- Save Capital Gain

9Invest into another house property9Before one year or after two year
from the date of original transfer
or
9Construction with in three years

9Invest 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 150,000/-)
9 Premium of Life Insurance/Term Plan/ULIP
9 Contribution to PF/PPF
9 National Saving Certificate (NSC)
9 Housing Loan Principal Re-Payment
9 FDR with 5 year lock in
9 Tuition Fee - paid for children (own, adopted, step) for full time education;
9 Self Contribution to Pension scheme

9 Stamp duty & registration charges on house property purchased

9 ELSS-Mutual Fund ( Lock in period 3 years).

Investment in 80C (Max Rs 150,000/-)

9 Mandatory Expenses9 Housing Loan Principal Re-Payment
9 Contribution to PF/PPF
9 Tuition Fee - paid for children (own, adopted, step) for full time education;
9 Stamp duty & registration charges on house property purchased
9 Investments9 ELSS-Mutual Fund ( Lock in period 3 years).
9 Premium of Life Insurance/Term Plan/ULIP
9 National Saving Certificate (NSC)
9 FDR with 5 year lock in
9 Self Contribution to Pension scheme

Chapter VIA Deduction

Benefits above Rs 150,000/-

MEDICLAIM (Sec. 80D)

9 Max. Benefit : 35,000/9 Mediclaim for self 15,000/9 A deduction of Rs 5,000/- for preventive
health check-up is available.
9 Mediclaim for parents 15,000/- or 20,000/(in case of senior citizen)
9 Even if your parents are not dependent,
you can pay for medical insurance and
claim deduction.
Health bhi aur Wealth bhi

Chapter VIA Deductions

Benefits above Rs 150,000/Beauty of Education

Loan

9 Interest is eligible for deduction with

UNLIMITED amount.
9 Deduction available for seven year.
9 For full time studies or any vocational
studies after passing SSE.
9 Taken a loan from any FIIs.

9 Deduction eligible for repayment of

education loans made for spouse or
children also.

Chapter VIA Deduction

Benefits above Rs. 150,000/Rajiv Gandhi Equity Savings Scheme
(RGESS) u/s 80CCG
9 One can invest a maximum of Rs. 50,000/-;
9 Available for FY 13-14, 14-15 and 15-16
only;
9 Tax rebate of 50%;
9 Only for individuals whose annual income
is less than 12 lacs
9 Investing in stocks for the first time
9 Lock in of 3 year but can trade after 1 year.

Chapter VIA Deduction

Benefits above Rs 150,000/Expenses incurred in Medical treatment (Sec. 80DDB )
9 Specified disease for himself, spouse, children, parents, brother & sisters.
9 Maximum deduction Rs. 40,000/- (Senior Citizen Rs. 60,000/-)
Less amount of claim received from insurance companies.
9 Required actual bills and Certificate from specialist who is working in Govt Hospital.

Chapter VIA Deduction

Benefits above Rs 150,000/-

Expenses incurred on maintenance of Handicapped (Sec. 80DD / 80 U)

9 Himself, spouse, children, parents, brother & sisters.
9 Amount of Deduction Rs. 50,000/-, In case of permanent disability Rs.
1,00,000/(Actual Expenses Irrelevant)
9 Required Certificate from
medical authority.

Chapter VIA Deduction

Benefits above Rs 150,000/-

Donation or charity made to any NGO/Trust/Political Parties

Maximum 10% of Gross Total income (For 50% deduction).

Total Benefit so far.

Allowances
Section 10 Benefit, Chapter
VI A, Housing Loan (Already
seen)
Capital Gain

Total Benefit

Amount
6,19,800/-(+) Actual Expenses (+)
Unlimited Amount
Any

6,19,800/- (+) Actual

Expenses(+) Unlimited
Amount (+) Capital Gain

Apply your tax

slab rate to know
tax saving

HUF
9HUF is created by not only to Hindus but it
can be formed by Jains, Sikh and bhudists.
9Source o income of HUF9Business
9Professional
9Capital Gain
9House Property
9Other Sources
9HUF can take advantage separately
9Basic Exemption -

Rs.250,000/-

9Chapter VIA Dedn Rs 170,000/-

HUF
9Documentation
9HUF is not a created entity. Only its existence has to be proved.
9How to prove the existence9HUF Affidavit
9PAN
9Bank Account
9Periodically filing your returns.
9Minors income generally are clubbed into the hands of the parent
whose income is greater. Care should be taken to make their income to
accrue in the name of a HUF/Private trust

Total Benefit so far.

Allowances
Section 10 Benefit, Chapter
VI A, Housing Loan, Capital
Gain (Already seen)

Amount
6,19,800/-(+) Actual Expenses (+)
Unlimited Amount

HUF - Separate Basic

Exemption

2,50,000/-

HUF Separate 80C benefit

1,50,000/-

HUF Separate Mediclaim

benefit

Total Benefit

20,000/-

10,39,800/- (+) Actual

Expenses(+) Unlimited
Amount (+) Capital Gain

Apply your tax

slab rate to know
tax saving

GIFT

Non Taxable Gift

9 Up to Rs. 50,000/- in cash & Gifts in Kind
9 Cash Gifts from any relative
9 On the occasion of marriage of the
individual
9 Under a will or by inheritance
9 In contemplation of death of the payer

Taxability of gift
9 Gift will be taxable in the hand of recipient
9 Limit- receipts of movable property, fair market
value of which exceeds 50,000 (Fifty thousand
rupees), without consideration or without
adequate consideration is taxable.
9 Who- as income in the hands of Individuals / HUFs.
9 Year: In the year of receipt

Total Benefit so far.

Allowances
Section 10 Benefit, Chapter
VI A, Housing Loan, Capital
Gain, HUF (Already seen)
Tax Free Gift from any
Tax Free Gift from relatives,
will, on occasion of
marriage, on contemplation
of death

Total Benefit

Amount
10,39,800/-(+) Actual Expenses (+)
Unlimited Amount(+) Capital Gain
Up to 50,000/Unlimited Amount

10,89,800/- (+) Actual

Expenses(+) Unlimited
Amount (+) Capital Gain(+)
Unlimited Gift

Apply your tax

slab rate to know
tax saving

TAX by Investing in
Spouses Name

How to Save

9 If you have some surplus to Invest somewhere Yes

INCOME will arise
9 Where you can Invest

Tax Planning needed

- In House Property - Rental Income
- PPF, LTCG on MF & Equity -Tax Free Income

9 To invest a house in wifes name , loan her the money and in exchange,
she can give you her jewellery.
9 If a couple is engaged, and the girl does not have any taxable income
or pays tax at a lower rate, her fianc can transfer money to her. The
income from that wont be included in his income because the
transaction took place before they got married.

How to Save TAX by Investing

in MOM & DADs Name

9 If you have some surplus to Invest somewhere Yes

INCOME will arise
9

Tax Planning needed

Where they can invest - Anywhere

9 If your parents do not have a high income, you can invest

in their name.
9 There is NO TAX on such gifts
9 No clubbing provisions come into play when money is
transferred to a parent.
9 No limit on the amount you can give to your parents.

Total Benefit so far.

Allowances

Amount

Section 10 Benefit, Chapter VI A,

Housing Loan, Capital Gain, HUF &
Gift (Already seen)

10,89,800/-(+) Actual Expenses (+) Unlimited

Amount(+) Capital Gain (+) Unlimited Gift

Separate Basic Exemption of

Spouse

2,50,000/-

Separate 80C and Mediclaim

benefit of Spouse

1,65,000/-

Separate Basic Exemption of Mom

and Dad (Senior Citizen Rs.
300,000/- each)

600,000/-

Separate 80C benefit of Spouse (Rs

1,70,000/- each)

3,40,000/-

Total Benefit

24,44,800/- (+) Actual

Expenses(+) Unlimited
Amount (+) Capital Gain(+)
Unlimited Gift

Apply your tax

slab rate to know
tax saving

Other points you should keep in mind

BE CAREFUL, Income Tax is watching, if you

9Cash deposits (10 lakh and above)

9 Credit card bills (2 lakh and above)
9 Mutual Fund purchase (2 lakh and above)
9 Purchase of bonds/debentures (5 lakh and above)
9Purchase of shares of a company (1 lakh and above)
9Purchase of immovable property (30 lakh and above)
9Sale of immovable property (30 lakh and above)
9Purchase of RBI bonds (5 lakh and above)

Other points you should keep in mind

9 Fact: A large number of assesses are filing their return

of income without payment of self assessment tax
under section 140A.
9 A Return of income filed without payment of self
assessment tax including interest to be treated as
defective return.

Most Important

Always advisable9 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.
9 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.

How Financial Hospital can help you ?

Fee based Tax Planning

We will help you in:
9 Plan your Income structure;
9 Help in submission of Declaration;
9 Income Tax Return Filing;
9 Refund related queries;
9 Submission in Income Tax department*.
(We have a team of dedicated CAs, CFPs and other technocrats who can advice
and restructure your salary, your portfolio to make it more tax efficient.)
* Other then Scrutiny matter whichwe will take care sperately.

Fee based Advisory Services

Different Shades of Consultancy
9 Comerenhsive Financial Planning
9 Tax Planning
9 Retirement Planning
9 Specific Goal Planning
9 Investment Planning

Documents Check List

For Declaration
9 In case you live in a rented apartment: 12 months rental receipt from owner
9 In case you have home loan: Statement of housing loan with details of
principal and Interest components
9 Medical bills for the year if any
9 Tuition fee receipt paid for your
children if any
9 Flight & train tickets for LTA claims
9 Insurance premium receipts paid
for the year
9 NSC purchased in the year
9 Mutual fund (ELSS) statement
9 Mediclaim premium receipt
9 Parents mediclaim premium receipt
9 Education loan statement (mentioning the interest component)
9 Bank Fixed deposit receipts (the 5 year lock-in thing)

CA Manish P.
manish@financialhospital.net