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INVESTMENTS STOCKS MUTUAL FUNDS STOCK STRATEGIES IT RETURNS
INCOME TAX REBATE FOR FY 2018-19
& POPULAR TAX SAVING SCHEMES
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3,00,000 PAGE VIEWS THANK ALL READERS , WELL WISHERS WHO HAVE HELPED US TO REACH THE MILESTONE BUDGET PROPOSALS FOR FY 2018-19 AFFECTING PERSONAL FINANCE , CLICK HERE The Article on " TAX PLANNING FOR FY 2018-19 CONTAINS 5 PARTS
PART I: MAJOR CHANGES IN TAX RULES FOR FY 2018-19 CLICK HERE PART 2: TAX RATES / SLABS FOR FY 2018-19 CLICK HERE PART 3: INCOME TAX REBATES AND POPULAR TAX SAVING SCHEMES READ THIS PART BELOW PART 4 : ESTIMATE YOUR INCOME TAX /ADVANCE TAX FOR FY 2018-19 CLICK HERE : PART 5: TAX ON RETIREMENT BENEFITS CLICK HERE FOR INCOME TAX NEWS CLICK HEREADVT
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INSTRUMENTS QUALIFYING UNDER 80CCC, 80CCG AND 80D
Instruments qualifying under 80CCC
Payment of premium for annuity plan of LIC or any other insurer.
Instruments qualifying under 80 CCG
Listed Equity shares or listed units of a fund in accordance with Rajiv Gandhi Equity Savings Scheme Subject to following conditions :
Resident Individual being a new retail investor with not more than 10.00 lakhs income and investing with a lock in period of 3 years
Instruments qualifying under 80 D
Health Insurance policies
Payment of premium for annuity plan of LIC or any other insurer.
Instruments qualifying under 80 CCG
Listed Equity shares or listed units of a fund in accordance with Rajiv Gandhi Equity Savings Scheme Subject to following conditions :
Resident Individual being a new retail investor with not more than 10.00 lakhs income and investing with a lock in period of 3 years
Instruments qualifying under 80 D
Health Insurance policies
POPULAR TAX SAVING SCHEMES
For the current interest rate on various SMALL SAVINGS Instruments , visit our page " NEWS ON INTEREST RATES "
Array of products from
1.Guaranteed return schemes like PPF AND NSC
2.Insurance schemes which cover life risks with units linked to market or otherwise
3.Equity linked mutual funds which have high risk and return probabilities like ELSS
are available for the investors to utilize the rebates on income tax offered by the government .
PPF is a fixed income long term investment while NSC is fixed return medium term investment .Insurance policies which cover life risk are available in unit linked market related schemes and otherwise also .On the other hand ELSS is totally market related mutual fund which carry all the risks of an equity market and have given good returns
Details of Each scheme is given below :
PUBLIC PROVIDENT FUNDS
SALIENT FATURES :
NATIONAL SAVINGS CERTIFICATES
SOURCE OF INFORMATION INDIA POST
NSC VIII Issue
NSCS ARE AVAILABLE ONLY IN POST OFFICES ALL OVER INDIA
LIFE INSURANCE POLICIES
Life insurance policies are the financial instruments which cover Life Risks of the insured along with Tax relief . Various types of life insurance policies are available with wide ranging terms . Some are unit linked policies whose Net Asset value depends up on the equity market and hence carry market risks . For full details on Life Insurance and tips for purchasing such policies , please go the page LIFE INSURANCE
Under 80 C of Income tax Act , life insurance premium paid on life insurance policies is one of the eligible instruments for total tax exemption up to Rs 1,50,000 only . However be cautious and confirm with policy issuers whether the contribution made to the particular policy is eligible for such exemption . The reason is there are riders for contributions made to be eligible for exemption .
As per Income tax law ,
quote ; "
Life Insurance premium is part of gross qualifying amount for the purpose of deduction under section 80 C . Payment of premium which is in excess of 10 percent ( if policy is issued on or after 1-4-2013 , 15 % in case of insurance on life of person with disability referred to in section 80U or suffering from disease or ailment specified in section 80 DDB/ rule 11DD ) of actual capital sum assured shall not be included in gross qualifying amount . The value of any premiums agreed to be returned or of any benefit by way of bonus or otherwise , over the sum actually assured , which is to be or may be received under the policy by any person , shall not be taken in to account for the purpose of calculating the actual capital sum assured .The limit of 10 per cent will be applicable only in the case of policies issued on or after 1-4-2012. In respect of policies issued prior to 1-4-2012, the old limit of 20 per cent of actual sum assured will be applicable.
With effect from 1-4-2013, 'actual capital sum assured' in relation to a life insurance policy shall mean the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account--
(i) the value of any premium agreed to be returned; or
(ii) any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person. " unquote
For full page of Income tax website relevant to the above rule , CLICK HERE
Hence premia paid one time premium policies may not be eligible to qualify for exemption as the insured amount may not be ten times the premium . Further amount received under those policies may be treated as Taxable Income and tax calculated . Hence double check with insurance companies before purchasing as selling agents may not reveal you correctly .
EQUITY LINKED SAVING SCHEME ( ELSS )
Is another popular scheme under which investors can invest in stock market mutual fund while enjoying tax benefits under 80C of Income Tax act .
TAX SAVING FIXED DEPOSITS ISSUED BY COMMERCIAL BANKS :
Key highlights of Tax Saver FDs:
Array of products from
1.Guaranteed return schemes like PPF AND NSC
2.Insurance schemes which cover life risks with units linked to market or otherwise
3.Equity linked mutual funds which have high risk and return probabilities like ELSS
are available for the investors to utilize the rebates on income tax offered by the government .
PPF is a fixed income long term investment while NSC is fixed return medium term investment .Insurance policies which cover life risk are available in unit linked market related schemes and otherwise also .On the other hand ELSS is totally market related mutual fund which carry all the risks of an equity market and have given good returns
Details of Each scheme is given below :
PUBLIC PROVIDENT FUNDS
SALIENT FATURES :
- Ideal investment option for both salaried as well as self employed classes.
- Non-Resident Indians (NRIs) are not eligible.
- Investment up to INR. 1,50,000 per annum qualifies for IT Rebate under section 80 C of IT Act.
- The rate of interest varies quarter to quarter as per announcements made by Government .
- Loan facility available from 3rd financial year upto 5th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2011.
- Withdrawal permitted from 6th financial year.
- Free from court attachment.
- An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons.
- Public Provident Fund(Individual account on his behalf or on behalf of minor of whom he is the guardian)INR. 500/- in a financial yearINR. 1,50,000/- in a financial year
- The public provident fund is established by the central government.
- One can voluntarily open an account with any nationalized bank,selected authorized private bank or post office.
- SAFE , SECURE , TAX EFFICIENT AND LIMITED LIQUIDITY AVAILABLE FROM 3RD YEAR BY WAY OF LOAN FACILITY
NATIONAL SAVINGS CERTIFICATES
SOURCE OF INFORMATION INDIA POST
NSC VIII Issue
- Scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses.
- No maximum limit for investment.
- No Tax deduction at source.
- Certificates can be kept as collateral security to get loan from banks.
- Investment up to INR 1,00,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act.
- Trust and HUF cannot invest.
- No maximum limit for investment.
- Minimum INR. 100/- No maximum limit available in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-.
- A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor.
- Buy National Savings Certificates (NSCs) every month for Five years – Re-invest on maturity and relax - On retirement it will fetch you monthly pension as the NSC matures.
NSCS ARE AVAILABLE ONLY IN POST OFFICES ALL OVER INDIA
LIFE INSURANCE POLICIES
Life insurance policies are the financial instruments which cover Life Risks of the insured along with Tax relief . Various types of life insurance policies are available with wide ranging terms . Some are unit linked policies whose Net Asset value depends up on the equity market and hence carry market risks . For full details on Life Insurance and tips for purchasing such policies , please go the page LIFE INSURANCE
Under 80 C of Income tax Act , life insurance premium paid on life insurance policies is one of the eligible instruments for total tax exemption up to Rs 1,50,000 only . However be cautious and confirm with policy issuers whether the contribution made to the particular policy is eligible for such exemption . The reason is there are riders for contributions made to be eligible for exemption .
As per Income tax law ,
quote ; "
Life Insurance premium is part of gross qualifying amount for the purpose of deduction under section 80 C . Payment of premium which is in excess of 10 percent ( if policy is issued on or after 1-4-2013 , 15 % in case of insurance on life of person with disability referred to in section 80U or suffering from disease or ailment specified in section 80 DDB/ rule 11DD ) of actual capital sum assured shall not be included in gross qualifying amount . The value of any premiums agreed to be returned or of any benefit by way of bonus or otherwise , over the sum actually assured , which is to be or may be received under the policy by any person , shall not be taken in to account for the purpose of calculating the actual capital sum assured .The limit of 10 per cent will be applicable only in the case of policies issued on or after 1-4-2012. In respect of policies issued prior to 1-4-2012, the old limit of 20 per cent of actual sum assured will be applicable.
With effect from 1-4-2013, 'actual capital sum assured' in relation to a life insurance policy shall mean the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account--
(i) the value of any premium agreed to be returned; or
(ii) any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person. " unquote
For full page of Income tax website relevant to the above rule , CLICK HERE
Hence premia paid one time premium policies may not be eligible to qualify for exemption as the insured amount may not be ten times the premium . Further amount received under those policies may be treated as Taxable Income and tax calculated . Hence double check with insurance companies before purchasing as selling agents may not reveal you correctly .
EQUITY LINKED SAVING SCHEME ( ELSS )
Is another popular scheme under which investors can invest in stock market mutual fund while enjoying tax benefits under 80C of Income Tax act .
TAX SAVING FIXED DEPOSITS ISSUED BY COMMERCIAL BANKS :
Key highlights of Tax Saver FDs:
- Deposits are opened for a period of 5 years.
- Maximum tax deduction up to Rs.1, 50,000.
- Deduction is available to individuals, members of Hindu undivided family (HUF), senior citizens and NRIs.
- The interest earned from tax saver fixed deposits is taxable. Tax will deducted at source.
- Premature withdrawal is not allowed .
- No loan against tax saver fixed deposits.
- Tax saver deposits can be opened both singly and jointly. In case of a joint account, tax benefit will be availed by first holder of the deposit as per the section 80C of the Income Tax Act, 1961.
WHAT IS AN ELSS SCHEME ?
Subscription to certain notified securities/notified deposits schemes are eligible instruments under section 80C for claiming deductions from taxable income . One such popular investment is tax saving mutual funds or Equity Linked Savings Scheme (ELSS). In this equity diversified fund , investors enjoy the benefits of capital appreciation as well as tax benefits. With recent positive movements in equity market , more interest is being generated in the public on the scheme .
ELSS is basically an equity based diversified Mutual Fund with a lock in period of 3 years . It has got same risk and reward function of any other equity based mutual fund .While under national saving certificate , funds are locked in a period of 6 years , ELSS has lock in period of 3 years only .One who is willing to take market risk , ELSS is a good option as investment is tax free under 80C as also all the returns .Some ELSS funds have been reported giving good tax free returns over a long period of time . One has to carefully study the past performance of the fund as well as fund manager's performance before investing . As returns or principal is not guaranteed and classified as high risk investment ,Risk averse persons may avoid such investment .
Persons interested in investing in ELSS may understand Mutual Funds and go to the websites of Mutual fund Issuers
ELSS is basically an equity based diversified Mutual Fund with a lock in period of 3 years . It has got same risk and reward function of any other equity based mutual fund .While under national saving certificate , funds are locked in a period of 6 years , ELSS has lock in period of 3 years only .One who is willing to take market risk , ELSS is a good option as investment is tax free under 80C as also all the returns .Some ELSS funds have been reported giving good tax free returns over a long period of time . One has to carefully study the past performance of the fund as well as fund manager's performance before investing . As returns or principal is not guaranteed and classified as high risk investment ,Risk averse persons may avoid such investment .
Persons interested in investing in ELSS may understand Mutual Funds and go to the websites of Mutual fund Issuers
For Tax on Retirement Benefits CLICK HERE
The Article on " TAX PLANNING FOR FY 2018-19 CONTAINS 5 PARTS
PART I : MAJOR CHANGES IN TAX RULES FOR FY 2018-19 CLICK HERE
PART 2: TAX RATES / SLABS FOR FY 2018-19 CLICK HERE
PART 3: TAX REBATES FOR FY 2018-19 READ THE ABOVE PART
PART 4: ESTIMATE YOUR INCOME TAX / ADVANCE TAX FOR FY 2018-189 CLICK HERE
:
PART 5: TAX ON RETIREMENT BENEFITS CLICK HERE
PART I : MAJOR CHANGES IN TAX RULES FOR FY 2018-19 CLICK HERE
PART 2: TAX RATES / SLABS FOR FY 2018-19 CLICK HERE
PART 3: TAX REBATES FOR FY 2018-19 READ THE ABOVE PART
PART 4: ESTIMATE YOUR INCOME TAX / ADVANCE TAX FOR FY 2018-189 CLICK HERE
:
PART 5: TAX ON RETIREMENT BENEFITS CLICK HERE
FOR DETAILS ON AAYKAR SETHU ,
NEW MOBILE APPLICATION FROM INCOME TAX DEPT , CLICK HERE
NEW ARTICLES ON
SMALL FINANCE BANKS PAYMENT BANKS
UNIFIED PAYMENT INTERFACE BHARAT BILL PAYMENT SYSTEM
BHIM APP AADHAR
e-INSURANCE Account ( eIA )
NEW MOBILE APPLICATION FROM INCOME TAX DEPT , CLICK HERE
NEW ARTICLES ON
SMALL FINANCE BANKS PAYMENT BANKS
UNIFIED PAYMENT INTERFACE BHARAT BILL PAYMENT SYSTEM
BHIM APP AADHAR
e-INSURANCE Account ( eIA )
FOR INTEREST RATE NEWS , CLICK HERE FOR INCOME TAX NEWS , CLICK HERE
TO READ OUR POPULAR ARTICLE ON FINANCIAL PLANNING FOR YOUNG ,CLICK HERE PLAN YOUR INVESTMENTS
SYSTEMATIC INVESTMENT PLANS ( SIP ) TOOL TO AVOID MARKET HICCUPS
CLICK HERE TO KNOW
TO READ OUR POPULAR ARTICLE ON FINANCIAL PLANNING FOR YOUNG ,CLICK HERE PLAN YOUR INVESTMENTS
SYSTEMATIC INVESTMENT PLANS ( SIP ) TOOL TO AVOID MARKET HICCUPS
CLICK HERE TO KNOW
FOR AUTHENTIC INFORMATION AND TIPS ON INCOME TAX MATTERS
Income tax dept of Govt of India has a very useful portal which churns out valuable guidance for tax payers . One can go through and understand the basics .
Link to the portal is http://india.gov.in/spotlight/filing-income-tax-returns#itr2
Further there are practical tips for computing tax which can be read and used . For example , the link how to compute other income. One can make use of the portal in understanding law, making payment and also to file returns .
Link to the portal is http://india.gov.in/spotlight/filing-income-tax-returns#itr2
Further there are practical tips for computing tax which can be read and used . For example , the link how to compute other income. One can make use of the portal in understanding law, making payment and also to file returns .