JAN FEB MARCH THE SEASON OF WORRIES FOR TAX PLANNING

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Jeffery Grant
6 years ago
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2 JAN FEB MARCH THE SEASON OF WORRIES FOR TAX PLANNING How much tax I can save? Where do I invest to save tax? Do I invest only to save tax? I do not have enough money right now to invest.

Invest under sec. 80 C of IT Act to save tax Save up to Rs. 46,350/ upto Rs.

investing in under Section 80C of the Income Tax Act, 1961 Not Availed Availed Gross Income 5,00,000 5,00,000 10,00,000 10,00,000 15,00,000

13,50,000 Gross Tax Liability 25,000 10,000 1,25,000 95,000 2,75,000 2,30,000 Less: Rebate if Income is up to 5,00,000 Income Tax Rate Applicable

240 3,750 2,850 8,250 6,900 Total Tax Liability 23,690 8,240 1,28,750 97,850 2,83,250 2,36,900 Tax Saved Nil 15,450 Nil 30,900 Nil 46,350 Income

As per the present tax laws, eligible investors (individual/ HUF) are entitled to deduction from their gross total income, of the amount invested

3 Invest under sec. 80 C of IT Act to save tax Save up to Rs. 46,350/ upto Rs / Illustration on Investments across Tax Slab Not Availed Tax benefit under Sec 80C of IT Act, 1961 Availed Not Availed Availed Per annum by investing in under Section 80C of the Income Tax Act, 1961 Not Availed Availed Gross Income 5,00,000 5,00,000 10,00,000 10,00,000 15,00,000 15,00,000 Investment in ELSS under Section 80C - 1,50,000-1,50,000-1,50,000 Net Taxable Income 5,00,000 3,50,000 10,00,000 8,50,000 15,00,000 13,50,000 Gross Tax Liability 25,000 10,000 1,25,000 95,000 2,75,000 2,30,000 Less: Rebate if Income is up to 5,00,000 Income Tax Rate Applicable 2,000 2, % 10% 20% 20% 30% 30% Net Tax Liability 23, ,000 1,25,000 95,000 2,75,000 2,30, Education Cess at 3% ,750 2,850 8,250 6,900 Total Tax Liability 23,690 8,240 1,28,750 97,850 2,83,250 2,36,900 Tax Saved Nil 15,450 Nil 30,900 Nil 46,350 Income estimates for an individual less than 60 years of age. The above simulation is for illustration purpose only. As per the present tax laws, eligible investors (individual/ HUF) are entitled to deduction from their gross total income, of the amount invested in equity linked saving scheme (ELSS) upto `1,50,000/- (alongwith other prescribed investments) under Section 80C of the Income Tax Act, Tax benefits are subject to the provisions of the Income Tax Act, 1961 and are subject to amendments, from time to time.

WHAT YOU CAN ACHIEVE BY INVESTING TO SAVE TAX?

Linked Insurance Plan (ULIP) Equity Linked Savings Schemes

Senior Citizen Savings Scheme Protection Wealth Creation

Income Generation *As per the prevailing tax laws for Financial

family(huf)) are entitled to deduction from their gross total

(ELSS) upto 1,50,000/- (along with other prescribed

Tax benefits are subject to the provisions of the Income Tax

4 WHAT YOU CAN ACHIEVE BY INVESTING TO SAVE TAX? You can save tax and Hybrid Equity Others Fixed Income Unit Linked Insurance Plan (ULIP) Equity Linked Savings Schemes (ELSS) Insurance Premiums, Pension Premiums, National Pension Scheme etc. PPF/EPF/VPF/NSC Tax Saving Bank FDs, Post Office Time Deposits, Senior Citizen Savings Scheme Protection Wealth Creation Protection CHOOSE THE CORRECT OPTION? Income Generation *As per the prevailing tax laws for Financial year 2016, eligible investors (Individual/ Hindu Undivided family(huf)) are entitled to deduction from their gross total income, of the amount invested in equity linked saving scheme (ELSS) upto 1,50,000/- (along with other prescribed investments) under Section 80C of the Income Tax Act, Tax benefits are subject to the provisions of the Income Tax Act, 1961 and are subject to amendments, from time to time. PPF= Public provident fund, EPF= Employee provident Fund, VPF= Voluntary Provident Fund,NSC= National saving certificate, FDs= Fixed Deposits

Long Term Capital Gains High return Potential* Systematic Investment

**Tax free dividends as per the prevailing tax laws, pursuant to payment of

extent of payout and statutory levy (if applicable) ELSS Equity Linked Saving

5 WHAT MAKES ELSS RIGHT TOOL FOR YOU?? Tax Benefits under Section 80C Only 3 Years of Lock in period Benefit from Long Term Capital Gains High return Potential* Systematic Investment Plan(SIP) Facility Scope for tax free dividend** * Subject to market risk. **Tax free dividends as per the prevailing tax laws, pursuant to payment of dividend, the NAV of the respective options of the Schemes would fall to the extent of payout and statutory levy (if applicable) ELSS Equity Linked Saving Scheme, SIP Systematic Investment Plan Tax benefits u/s 80C under the Income Tax Act, 1961, exemptions are subject to prevailing tax laws

6 ELSS v/s OTHER INVESTMENT OPTIONS Tax Saving options Minimum Investment Amount Tenure / Lock Interest / Maturity Amount SIP Facility in period Return Taxability Equity Linked Savings Scheme (ELSS) 500/ 3 Years Market linked * Yes Dividends & Long Term Capital gains are tax free, subject to STT Public Provident Fund (PPF) Tax Saving Term Deposit with Scheduled Banks 500/ 15 Years** Fixed # Not available Interest accrued is Tax free Interest is added to 100/ 5 Years Fixed Not available income and Taxed accordingly Infrastructure Bonds 5000/ 3 10 Years Fixed Not available National Savings Certificate (NSC) 100/ 5 Years Fixed # Not available Interest is added to income and Taxed accordingly Interest is added to income and Taxed accordingly ## * Market linked Returns are subject to market risk. ** Premature withdrawal under PPF is available from 6th financial year. However, the full amount can be withdrawn after 15 years. # Reviewed periodically. ## The interest portion reinvested is also eligible for tax rebate u/s 80C of IT Act, 1961 Tax benefits are subject to the provisions of the Income Tax Act, 1961 and are subject to amendments, from time to time. For more information on the tax provisions, please refer to prevailing IT laws. SIP Systematic Investment Plan, STT- Securities Transaction Tax

7 DO I HAVE ENOUGH MONEY RIGHT NOW TO INVEST Choose the lump sum option to Invest in ELSS, up to Rs lakhs to avail the tax exemption u/s 80C of IT Act, 1961 If Yes, Invest Now! If No, Plan SIP! Invest small amounts at regular intervals rather than investing lump sum amount at one time.

PLAN YOUR TAX INVESTMENTS TODAY, NOT IN MARCH The Benefits of Systematic Monthly Investment through SIP Lighter on the wallet Takes out the risk of market timing

money negated in a worry Auto as you about debit treat when facility your to Investment with single more dose, units Plan, you being are available investment

up as for cash-strapped fund NAV is low in and the investments As systematic for Potential on investing through monthly month fewer or units two after.

8 PLAN YOUR TAX INVESTMENTS TODAY, NOT IN MARCH The Benefits of Systematic Monthly Investment through SIP Lighter on the wallet Takes out the risk of market timing Rupee Cost Averaging No Liquidity Crisis When The risk you of shell market out Saving One doesn t regularly have is easy to volatility lump-sum SIP is gets Simple money negated in a worry Auto as you about debit treat when facility your to Investment with single more dose, units Plan, you being are available investment considering across as part Banks, daily of more purchased than likely when to the be no take market your need monthly the movements, to SIP follow route budget. up as for cash-strapped fund NAV is low in and the investments As systematic for Potential on investing through monthly month fewer or units two after. being SIP a Wealth SIP reduces can basis. Creation be the as risks low as bought will help when you the to plan fund Rs. significantly. 500 per month NAV well. is high Ease of Investment

9 SIP BENEFIT FROM RUPEE COST AVEREGING For illustration purpose only Month Investment NAV Unit Accumulated Investment Amount Bought Units Value Total Average NAV per unit over 12 months = ( )/ )/12 or Rs Average Cost per unit over 12 months = 12000/708 or Rs Average Cost per unit will always be lesser than the Average NAV per unit, regardless of the market movements, when the SIP amounts are same in a given period

10 SIP BENEFIT OF STARTING EARLY. In the below case, Investment of Rs lakh invested in a year (FY) through SIP and cost of delay by each month is illustrated. Valuation at the end of 5 years at a growth rate of 12% is considered Dual Benefits of SIP Investment Investmen nt Value x x x x x x 7 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb x x x x x Cumulative Investment Value Installment Amount Being early helps to save less and also increases the return potential. Above is purely for illustration purposes, Investment Value is arrived at the growth rate of 12% p.a. at the end of 5 Years,. Please note in the actual scenario, returns may vary significantly. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

11 ACT NOW BE FEARLESS OF MARCH SAVE ON TAX AND MAKE YOUR LIFE GOALS COME TRUE INCREASE YOUR INVESTMENT VALUE EVERY YEAR MAKE IT EASY WITH SIP START YOUR INVESTMENT IN ELSS START TAX PLANNING EARLY

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You look for options in everything you do. Why not when it comes to your tax-saving instruments? Before you invest, #AskWhatELSS

You look for options in everything you do. Why not when it comes to your tax-saving instruments? Before you invest, #AskWhatELSS You look for options in everying you do. Why not when it comes to your tax-saving instruments? Before you invest, #AskWhatELSS February 2016 Few Questions That Boer Investors??Ÿ Tax saving avenues: Traditional