Tax Planning Made Easy

FY 2008-09
Palak
Sheth
B.Com, A.C.A, D.I.S.A (ICAI)
Introduction
• Nobody likes the tax man, but income tax
has to be paid.
• Salaried Employees are paying more
taxes because of lack of awareness.
• With proper information you can save as
much tax as you are allowed to under the
income tax Act.
• Proper and effective tax planning is the
route to a financially secure future.

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3 Easy Steps for Tax Planning

• 80C Deductions
• Beyond 80C Deductions
• Restructuring the Salary Package

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Salient features of Section 80C

• The amounts invested in the qualifying

investments under Section 80C will be 100%
deductible from the taxable income upto a
maximum of Rs 1,00,000 or actual investment
whichever is lower.
• The maximum amount deductible under section
80C and 80CCC put together cannot exceed Rs
1,00,000.
• 80CCC is the deduction in respect of any
amount paid or deposited in pension fund of Life
Insurance Corporation.

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Salient features of Section 80C

Qualifying investments –

 The Spending 80C Products

 The Low Risk 80C Products with taxable returns
 The Low Risk 80C Products with tax-free returns
 The Risky 80C Products

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The Spending 80C Products

 School fees :
Tuition fees for up to 2 children and up to Rs. 1
lakh is exempt every year.
 Life Insurance Premium paid
 Principal Repayment of Home Loan :
Repayment of principal amount of home loan up
to Rs 1 lakh. (We're not talking about the
deduction you get on the interest paid on
housing loan. That is different and gets
deducted from your total earnings.)

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The low risk 80C Products
with taxable interest
Product Rate of Tenure Tax Consideration
Return

Notified Tax Average 7–9 % 5 Years Interest is taxable.

Savings
Bank Fixed
Deposits

National Average 8% 6 Years Interest is taxable but

Savings is considered for
Certificate
deduction U/s 80C.

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The low risk 80C Products with
tax-free interest
Product Rate of Tenure Tax Consideration
Return
Public 8% 15 Interest is tax-free
Provident Years (Maximum Limit –
Fund
(PPF) Rs. 70,000/-)

Provident 8.5% Till you Interest is tax-free

Fund retire

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The Risky 80C Products

Product Rate Tenure Tax Consideration

of
Return
Tax Saver Mutual Not Lock in Dividend is tax-free &
Fund –Equity Fixed period there is no Long Term
Linked Savings
Scheme 3 Years Capital Gain Tax

Unit Linked Not As per the Any sum received is

Insurance Plans Fixed policy tax-free.
(ULIPs)

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Beyond 80C

 Mediclaim Premium -
Mediclaim premium of Self, Spouse & Dependent Children upto Rs. 15,000
(Rs. 20,000 in case of Senior Citizen)
Additional deduction for mediclaim premium of parents upto Rs. 15,000
(Rs. 20,000 in case of Senior Citizen)
 Donations -
Donation to Approved Charitable Organisations subject to conditions.

 Education Loans -
Repayment of Educational loan deduction –
Deduction is available allowed for interest repayment with no limit on loan
taken for his/her higher education or of spouse and children.

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Restructuring Salary Package

 Medical expenses which are reimbursed by the

employer are exempt upto Rs 15,000 annually.
 Individuals living in a rented accommodation
should have House Rent Allowance (HRA) as
part of their salary.
 Transport allowance is exempt upto Rs 800 per
month
 Leave Travel Allowance (LTA) can be claimed
twice in a block of four years to the extent of
airfare/train for travel within India.

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Interest on Housing Loan
 Interest paid on Housing Loan is deductible up
to Rs. 1,50,000/- for self occupied House
Property, which is restricted to one house.

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Pitfalls:

• Tax planning should not be the only factor

in the investment decision. It is only one of
the factors.
• Financial returns, risk appetite, liquidity,
actual benefit needed are key factors to
your tax planning decisions
• Do not rely only on agents from home
loan, insurance and mutual fund company
for your tax planning needs.
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Income Tax Slabs

Net Income Range Income Surcharge Education

Senior Women Others Tax Rates (S.C.) Cess
Citizen (I.T.)

Upto Rs. Upto Rs. Upto Rs. Nil Nil Nil

2,25,000/- 1,80,000/- 1,50,000/-
Rs. 2.25- Rs. 1.80- Rs. 1.50- 10% Nil 3% of I.T. &
3.00 lakhs 3.00 lakhs 3.00 lakhs S.C.
Rs. 3.00- Rs. 3.00- Rs. 3.00- 20% Nil 3% of I.T. &
5.00 lakhs 5.00 lakhs 5.00 lakhs S.C.
Rs. 5.00- Rs. 5.00- Rs. 5.00- 30% Nil 3% of I.T. &
10.00 lakhs 10.00 lakhs 10.00 lakhs S.C.
Above Above Above 30% 10% of 3% of I.T. &
Rs. 10 Rs. 10 Rs. 10 Income Tax S.C.
lakhs lakhs lakhs
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 Thank You

Disclaimer:
This presentation is for information purposes and private circulation only and should not be
regarded as investment or taxation advice. Contact your Tax Advisor for appropriate decision.

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