Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: VAT RATES :: empanelment :: due date for vat payment :: VAT Audit :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD :: form 3cd :: cpt :: list of goods taxed at 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4%
« News Headlines »
 India is moving towards a flawed GST
 ICAI to organise two-day international conference in Hyderabad
 Here's how to calculate tax payable on your capital gains
 Income Tax calculations for the financial year 2016-17
 CPE Events 17 October - 22 October 2016
 High Court raps I-T Department for wrong tax demand
  CBDT signs 5 advance pricing pacts with Indian taxpayers
 Finance ministry warns tax officials of action against GST protest
 Big changes for small units under GST
 Parliament’s winter session to begin on November 16 to expedite GST rollout
 Income-tax (27th Amendment) Rules, 2016 - 92/2016

How they saved on income tax
July, 06th 2015

Riya Bhattacharya, an investment professional based in Chennai, bats for fixed income instruments. “Though I track the stock market closely and understand equities well, I do not prefer to invest in equity schemes for tax saving purpose,” says Riya. Given the volatility in the market, she feels that locking into equity schemes for a period of three years may not always work in her favour. “I would prefer not to mix tax saving and investment when it comes to equities,” she adds. That said, Riya has invested in direct equities and open-ended mutual fund schemes, which offer the flexibility of withdrawal any time. So, where does she invest to save income tax? “Besides the mandatory provident fund contribution, I have invested a good portion of my surplus in PPF,” explains Riya.

Ask her why PPF and without a moment’s hesitation she says PPF is the best way to build a retirement corpus.

“I also recently took a home loan to avail the tax benefit on interest payments made towards housing loan,” Riya adds. However, it may be some time before she can avail the tax benefit as the property is under development. “According to the tax laws, I can get tax concession only after I get possession of the property,” she explains. She believes that investment in realty can fetch good returns in the long term. Riya banks on her rich experience to plan her investments.

Playing safe with PPF and FDs

Delhi-based Sheetal Kothari, who works for a private company, prefers to play it safe with fixed income instruments when it comes to saving tax. “To me, capital protection matters more than earning higher returns. I invest a large portion of my surplus in public provident fund (PPF) for two reasons. One, the principal is protected. Second, it is the most tax-efficient instrument. Here, the contribution, interest earned and withdrawal on maturity, are tax exempt,” explains Sheetal.

Does the lower flexibility in withdrawals worry her — what if she needs the entire sum invested in the interim period?

“I look at PPF as a long-term investment and am not worried about the lock-in period. I am confident that the proceeds will come in handy when I retire or when I need money to meet other long-term goals,” she says.

Besides PPF, Sheetal invests a portion of her income in tax saving FDs, locked in for five years. While she is very conservative in her investment approach, she has not shied away from equities completely. “I have put away a very small portion of my surplus in equity-linked saving schemes offered by mutual fund houses,” she says. She has also invested marginal sums of money in tax-saving infrastructure bonds and unit-linked insurance plans.

She does not feel the need to take advice from professional advisors. “I discuss the pros and cons of these investment options with my friends and family, before making an investment,” says Sheetal.

Helped by home loan

Vijay Rajagopal, who has had stints in consulting, investment banking and investing, spanning more than a decade, recently joined a Bangalore-based tech start-up. He has taken various routes to save on tax outgo — from equity-linked savings schemes (ELSS) to home loan. “During the initial years of my career, I used to invest a good portion of my savings in ELSS, besides the usual contribution to provident fund. And this would cover the total amount eligible under Section 80C. But then, over the years as my salary increased, provident fund deduction took care of a large portion of the limit available under Section 80C,” explains Vijay.

Additionally, the home loan he is servicing has helped him save tax, Vijay adds. Under Section 24 of the Income Tax (IT) Act, annual interest outgo up to ?2 lakh on home loan can be set off against taxable income, if the owner occupies the property. If the property is let out on rent, while the rental income is taxable, the entire interest paid on the loan can be claimed as deduction; a cap of ?2 lakh does not apply in such cases.

“Now that my first home loan is about to close, I am planning on taking another,” says Vijay. Besides, he has taken life and health insurance policies; the premium on these policies is exempted from tax.

So, does he avail of the services of professional tax and investment consultants to plan his investments? “Having spent more than six years in the investment industry, I do it myself,” says Vijay with a smile. He urges people to make investments early on. “If you are investing in instruments such as PPF, it is better to invest early in the year. Waiting till the last minute will deprive you of the compounding benefit,” he cautions.

He bats for systematic investment in mutual funds. “Many of us may not have the expertise to time the market. So, it is better to invest systematically over a period of time, rather than make lumpsum investments,”

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Website Ranking Website Ranking Company Website Positioning Alexa Ranking Website Promotion Website top 10 ranking website top 10 promotion search engine result promotion Strategic Internet Marketing Website Optimization Website Ranking Factors

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions