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Let us all welcome the year 2013 with varied ideas to bring home tax planning for you and your family and also take you through Investment Strategies for investing your money.
By Subhash Lakhotia, Tax Guru : CNBC Awaaz, Tax & Investment Consultant
Let us all welcome the year 2013 with varied ideas to bring home tax planning for you and your family and also take you through Investment Strategies for investing your money. The following thirteen important Investment Tips for the year 2013 will surely help you to achieve your desired results :-
1. Income-tax file for one and all:
In whose name to make the investment yes, this should be the first point in the back of your mind before planning investment strategies for 2013, it is time now for every tax payer of the country to make a resolution to have a separate independent Income-tax File for every member in the family. The objective of this is to achieve tax planning and cut down on your income-tax payments. Firstly think of your wife and if she does not have till now a separate independent Income-tax File, then start of having such independent Income-tax File for your wife. The concept of gift and loans in the name of your wife will help you to achieve this. However, do remember that your wife can receive gift from any relative other than her husband, her father in law and her mother in law. However, wife is free to take loan with reasonable interest from anyone including the husband. Similarly adopt the concept of gifting your major children and start having separate independent Income-tax File for your major children.
2. Investments for Hindu Undivided Family tax file in your kitty
Investments made by your Hindu Undivided Family can bring rich dividends for you in the year 2013. If you are a Hindu, then it is time now to find out whether you have a separate independent Income-tax File of your Hindu Undivided Family. If still now you have not been instrumental in opening a separate Income-tax File for your Hindu Undivided Family, then right now is the time when you should start such separate Income-tax File in your family so that it helps you in the process of tax planning. The HUF file apart from enjoying the basic income-tax exemption of Rs. 2,00,000 will also continue to enjoy tax deduction in terms of section 80C as well as deduction for interest on housing loans. Also do remember that your HUF file can come into existence whether you have a son or just a daughter and even if you do not have any children, still your HUF file can come into existence right now.
3. Plan for Investments for your minor children
If you are having a minor child or a grand child, plan right now the different strategies for the safety and security of your minor child in particular. If you want to have lots of income and wealth in the name of the minor child and would still like no clubbing of the income of the minor child, then it is time now to think of creating a separate independent hundred per cent “Specific Beneficiary Trust” in the name of the minor child based on the principles enunciated by the various courts of India including the Supreme Court of India so that the income of the minor child with special terms and conditions mentioned in the Trust Deed is not clubbed with the income of the parents. It is also possible for you to think of starting a PPF account in the name of the minor child for his or her safety and also do not forget to take out Life Insurance Policies specially in the name of your minor child which will help the process of investment strategy in the years to come for the safety, security of your loving children.
4. Deposits in savings bank account:
In the year 2013 also consider keeping money in the Savings Bank Account specially because the interest rates in the Savings Bank Account have gone up and moreover the biggest advantage is that from the Financial Year 2012-13 the interest income from Deposits in Savings Bank Account in Bank, a Co-operative Society and a Post Office will be exempted up to Rs. 10,000 as per section 80 TTA of the Income tax Act, 1961. This benefit is available to Individuals and Hindu Undivided Families. The “Time Deposits” interest income would not enjoy the deduction.
5. Zero Coupon Bond:
Think of investing in Zero Coupon Bond in the year 2013 and it should be taken as a preferred tool of instrument of investment specially by persons not interested in regular income. Generally the maturity time of Zero Coupon Bond is ten years. Also look into the tax planning aspect at the time of maturity. Because of the benefit of Cost Inflation Index tax will be virtually nil on your income from Zero Coupon Bond at the time of maturity. It is also good to gift Zero Coupon Bonds to your minor children aged eight years and above.
6. Tax free bonds:
If you are coming in the highest income bracket, namely if you are having income exceeding Rs. 10 lakhs in a year, then surely it is worthwhile for you to make your investment in tax free bonds specially if you calculate the impact of income-tax savings on the same. The investment in the year 2013 in tax free bonds would be better than Bank Fixed Deposits.
7. Postal Instruments:
Do invest in Postal Office Instruments like National Savings Certificate VIII issue, National Savings Certificates IX issue, Post Office Time Deposit Receipts, as well as in Senior Citizen Savings Scheme specially keeping in view the aspects connected with tax deduction under section 80C and also the rise in the interest rates. The above items from Post Office will be eligible for 80C deduction. There has also been some increase recently in the interest of these investments.
8. Continue investment in Public Provident Fund:
In the year 2013 also please continue to keep your investment in Public Provident Fund Account specially because of the fact that the interest income from Public Provident Fund will now be 8.8 per cent. Moreover, such income will continue to be exempted from income-tax. Also do open Public Provident Fund Account specially for your minor children and your spouse. However, the total investment in Public Provident Fund Account for you and your minor children taken together in a financial year should not exceed Rs.1 lakh.
9. Real Estate Investments for the family:
In case you do not yet own your own residential house property then it is time now to start investing in new residential house property so that you can have your dream house. The investment in residential property would also bring home for you special tax deduction under section 24 for interest payment on loan for residential property. The maximum deduction would be Rs.1,50,000 for interest payment. Besides, the repayment housing loan also would enjoy tax deduction under section 80C. It would be better to buy a house in the name of two or more family members so that each one can enjoy tax deduction. From tax angle it would not be worth just to buy a piece of land because no tax benefit is available only on land purchase.
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