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15 Dec - 03:00 hrs

Harsh Roongta | CEO, Apna Paisa


How to save income tax through tax planning?

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moderator: Dear Moneycontrol user, welcome to the chat session with Harsh Roongta, CEO, Apna Paisa who will answer your queries on how to save income tax through tax planning. So fire away your questions!
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rayabagis: Hello Sir, Which is better, FMP or FD in view of Tax on Interest?
Harsh Roongta: Firstly in a FMP (which have mostly growth options and do not normally have dividend payout option) there is no TDS. Secondly assuming your holding period is more than 1 year you will get the benefit of lower tax rate(10.30%)or a tax rate of 20.60% after using indexation. This will give you better post tax return if you are paying tax at the highest tax rate. Off course FDs gives you a fixed interest rate and are relatively safer than a FMP.
dilippshah10: Sir, my yearly regular premium to my Pension Plan is Rs. 15000 and year end i am getting certificate to that effect regarding elligible for deduction u/sec 80ccc. But if i make any extra payment of Premium (Top-Up) it is not covered in Certificate. So pl. tell me for such additional payment of premium (investment),whether i am entitled to get deduction u/sec 80c or not.
Harsh Roongta: The total deduction for all items covered in section 80C -such as PPF,EPF,Insurance premium, Children`s Tuiton fee, etc alongwith the premium payable for a pension plan in 80CCC is Rs. 1 lakh (as provided in section 80CCE). So if you invest Rs. 1 lakh in a pension plan it will be eligible for full deduction though you will then not get any of the other deductions.
rayabagis: Hello Sir, Is it advisable to invest in Infra Bonds for Rs. 20,000 to save tax?
Harsh Roongta: off course it makes sense especially if you are paying tax at the highest tax rate. With attractive coupons at 9% it makes sense to invest in these bonds to the extent of Rs. 20,000/- if you are paying tax. see my detailed article on this in economic times on this link.
84adityak: Sir, Good afternoon. I intend to do STP from my liquid fund to equity oriented growth fund. Do each STP amounts to sale under IT Act, 1961. Please elaborate. Thank you.
Harsh Roongta: Yes. You will need to calculate capital gains, if any,on each redemption. Consequently the cost of acquisition in the equity fund will be the NAV at which you acquire the equity fund. STP is an excellent way to avoid making a lump sum exposure in equity instruments and spreading your investment to reduce the timing risk.
imtiyaz1980: What are the different ways I can save tax. Could you please list them?
Harsh Roongta: This is indeed a tough one as a lot of deductions may not be applicable to everyone. assuming you are salaried you can look at the following : Deductions available : 1) For interest payable on a loan taken to acquire a residential house property. If self occupied the deduction is limited to Rs. 1,50,000/- but if the property is rented out the rent is taxable but full interest is deductible without any limit. 2) Items mentioned in 80C and 80CCC (such as EPF,PPF,Insurance Premium, ELSS,NSC, Honme loan principal payment, tuiton fee, etc and pension premium and NPS) subject to a maximum of Rs. 1,00,000/- 3) Health Insurance premium for self, spouse,children and parents subject to a varying limit depending on age but a maximum of Rs. 40,000/- under all circumstances 4)Interest payable on education loan taken for self,spouse or children from financial institution exemptions 1) HRA can be exempt to certain limits if you are actually paying rent to stay in ahouse not owned by you 2)Interest on PPF 3) dividends from mutual funds/companies
kkgroup: My friend has get an agriculture land in May 2006 after death of his father (Purchased in 1979). My friend has sold the land in November 2011 & earned Capital Gains. The benefit of indexation will come from 2006 or 1979 & what is the status of fair value. He also wants to invest Rs. 50.00 Lacs in NHAI Bonds in March 2011 & another Rs. 50.00 Lacs in April 2011. Will he receive full exemption of Rs. 100.00 Lacs as he invests within 6 months of sale? Kindly reply it will be a great help. Thanks
Harsh Roongta: Agricultural land is not a "capital asset" unless it is located within specific areas. So have this check out first with your tax consultant. assuming it is within urban areas and hence taxable the fair market value will need to be taken as on 31st March 1981. The market value so arrived will have to be indexed and the such indexed cost deducted from sale consideration will give you the figure of long term capital gains. The long term capital gains need to be invested in capital bonds within a period of six month in order to claim tax benefit. However you can not invest more than 50 lacs in one financial year. However in your case the period of six months spill to two financial years your friends can invest 50 lacs before 31st March 2012 and another 50 lacs in next financial year and thus be able to claim the benefit of making investment upto 100 lakhs of capital gains. see this article for details
majmu1988: What is the best tax saving option for me with minimum lock in period. I plan to pursue my post graduation studies after two years so will need to utislise this amount for the purpose.
Harsh Roongta: if you need access to your money a good option would be NSC where you can a loan against the value of the NSC immediately. For any other "investments" (as distinct from expenses) the minimum lock in is at least 3 years
l.sundar: For a pvt sector limited co employee what is the tax free limit for Gratuity and leave encshament on retirement? Also let me know f on retirement I can avail of the benefit of Rs 15000 as med deduction from salary(pension int)
Harsh Roongta: Gratuity -section 10(10)- half months of salary for each completed year of service maximum - Rs. 10,00,000/- Leave encashment - 10 months salary maximum Rs. 10 lakhs medical deduction under section 80D for health insurance premium is available against any income. However deduction possible as salary only where it is received as reimbursement of medical expenses from employer
Tax Calculator
This calculator helps you to calculate the tax you owe on your taxable income after considering all eligible tax deductions under section 80C.
Tax Slabs
Income tax slab (in Rs.)
0 to 2,00,000
No Tax
2,00,001 to 5,00,000
5,00,001 to 10,00,000
Above 10,00,000
Education Cess 2%
Secondary and Higher Education Cess 1%
Tax Deductions

Section 80GG

Deduction available is the least of (i) Rent paid less 10% of total income (ii) Rs.2000 per month (iii) 25% of total income.

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