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04 KALEIDOSCOPE ERGO Monday, December 29, 2008

Crossword without the black spots!

Tax planning
Previously, we looked at the basics of tax and why the
government gives you tax benefits. Let us look at
various parts of income tax calculation
TAXABLE INCOME = SUM OF ALL Exempted Income benefit only on the amount actually
INCOMES – EXEMPTED INCOME – spent up to a maximum of Rs 1 lakh.
DEDUCTIONS – DEDUCTIONS These are those earnings which Apart from the above we get addi-
UPON REIMBURSEMENT will be subtracted from your total in- tional savings by spending on – med-
come. This will include- Earnings ical insurance premium(<15k),
Daily Investment Systematic In simpler terms from Agriculture, Pension received Interest on housing loan (Upto 1.5
The income on which the govern- (provided your age is >45 years and lakh), donations to registered char-
Investment Plan ment charges income tax is called as the pension is less than a third of ity, Persons with physical disability
Bharti Axa Investment Managers has come Taxable Income. This is different your total income), Insurance get a further deduction of Rs 50,000
out with what is probably the first Daily from your actual earnings. Although claims, House rent allowance (40% to 75,000 based on severity.
Investment Systematic Investment Plan. you earn X amount of rupees Go- of your basic or actual received whi-
The idea is to reduce your average vernment will only charge you on a chever is lower), Upto Rs 800 as con- Reimbursement based deductions
purchase cost by entering the markets portion of it and give you “discount” veyance, Profits from long term Only applicable if you show bills
everyday, with a small investment amount based on your contributions to na- investments (>3 years) in Shares/Eq- and get reimbursement. This in-
starting right from Rs 300. This could be a tion building activities directly or in- uity based mutual funds. cludes medical bills (upto 15K), LTA
good instrument for salaried employees directly. (twice in four years), Food coupons,
who have income flow through out the Deductions Actual expenses on higher
month. Sum of all incomes These are the amounts subtracted education.
People like sales professionals who get It is the total of all the kinds of from your salary provided you have
reimbursements every week could use this inflows into your kitty. This would spent money on them. Bottomline
instrument to get into the habit of include- Your salary, Rent from your These include – EPF, PPF, Chil- We need to try to make sure that
compulsive saving. property, Profit/loss from any busi- dren’s Fees, NSC, Principal compo- our taxable income is as low as pos-
For more details check ness you are involved in, Capital nent of housing loan, Insurance sible by using all the above “dis- gains (profit from any investment) premium, Pension plan premium, counts” given by our Government.
and all other types of incomes. ELSS Mutual funds, Bank deposits Next week we will look at how best to
with >5 years lock in. You will get do it. ■