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Samkit

Samkit Maniar  |118 Answers  |Ask -

Tax Expert - Answered on May 26, 2024

CA Samkit Maniar has eight years of experience in income tax, mergers and acquisitions and estate planning.
He has graduated from Mumbai’s N M College of Commerce and Economics and has completed his CA from The Institute of Chartered Accountants of India."... more
Asked by Anonymous - May 20, 2024Hindi
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Every month I am paying 30% tax on my salary .I have invested in PPF,NPS,EPF L,MEDICLAIM,LIC and also HRA. I have utilised the maximum benefits available in all sections.Still the amount of tax I have to pay is humongous. Can u please let me know if there is any other financial products that I should invest to save more tax

Ans: Unfortunately salaried people do not have many options, but if you have a housing loan or an education loan then you can get additional benefits. Donation is always an option u/s 80G.

Please consult with your CA once.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Dear Mr. Parikh, Are there any tax saving options available, considering I am on new tax regime. Also, I don't have any home/auto/etc. loan, and stay in my own apartment. Regards, Praveen
Ans: Dear Praveen,

Thank you for your question. I understand that you're looking for tax-saving options under the new tax regime. While the new tax regime does limit some of the deductions available under the old regime, there are still a few options you can consider.

Standard Deduction: A fixed amount of Rs. 50,000 is allowed as a deduction from the total income of salaried individuals. Please note that if you claim this standard deduction, you cannot claim any other deduction for the same amount under any other section of the Income Tax Act.
Employer's Contribution to NPS: If your employer contributes to your National Pension Scheme (NPS) account, this contribution can be claimed as a deduction.
Transport Allowances for Persons with Disabilities: If you have a disability, you may be eligible for deductions related to transport allowances.
Gratuity: If you receive a gratuity from your employer, it may be exempt from tax under Section 10(10).
Leave Encashment: If you receive any amount in lieu of leave not taken, it may be exempt from tax under Section 10(10AA).
Please remember that tax planning should be a part of your overall financial planning. It's important to choose the options that best suit your financial goals and circumstances. If you need more detailed advice, I would recommend consulting with a tax advisor who can provide guidance based on your specific situation.

I hope this helps!

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Ramalingam

Ramalingam Kalirajan  |4060 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Asked by Anonymous - Nov 03, 2023Hindi
Money
I have retired recently. Have received a decent proceeds. Have already invested in Pradhan Mantri Vayo Vrund Yojana of LIC. 2*15 lakhs already. Have a 50.00 lakhs liquidity . kindly suggest some tax savings schemes for me. I already receive a pension - with an annual tax liability of Rs. 3.00 lakhs
Ans: Congratulations on your recent retirement and your prudent investment choices so far. You've already made a smart move by investing in the Pradhan Mantri Vaya Vandana Yojana (PMVVY). Now, with Rs. 50 lakhs in liquidity and an annual tax liability of Rs. 3 lakhs, let's explore some tax-saving schemes that can also help you achieve financial stability.

Exploring Tax-Saving Investment Options
Senior Citizens’ Saving Scheme (SCSS)

The Senior Citizens’ Saving Scheme is a government-backed savings instrument for individuals above 60 years. It offers regular income and tax benefits.

Strengths

Regular Income: Quarterly interest payments provide steady income.

Tax Benefits: Investments qualify for deductions under Section 80C.

Challenges

Lock-in Period: Five-year lock-in period, extendable by three years.

Investment Cap: Maximum investment limit is Rs. 15 lakhs.

National Savings Certificate (NSC)

NSC is another government-backed fixed-income investment scheme. It is safe and offers tax benefits under Section 80C.

Strengths

Safety: Backed by the Government of India.

Tax Savings: Qualifies for Section 80C deductions.

Challenges

Interest Taxable: Interest earned is taxable.

Fixed Tenure: Five-year lock-in period.

Public Provident Fund (PPF)

PPF is a long-term investment scheme with attractive interest rates and tax benefits. It is suitable for building a retirement corpus.

Strengths

Tax Benefits: Contributions qualify for Section 80C deductions, and interest earned is tax-free.

Safety: Government-backed scheme.

Challenges

Lock-in Period: 15-year lock-in period, but partial withdrawals are allowed after the seventh year.

Investment Cap: Maximum annual investment limit is Rs. 1.5 lakhs.

Tax-Free Bonds

Tax-free bonds issued by government entities offer tax-free interest income. They are suitable for conservative investors seeking regular income.

Strengths

Tax-Free Income: Interest earned is exempt from tax.

Safety: Issued by government-backed entities.

Challenges

Lower Returns: Generally offer lower interest rates compared to other fixed-income investments.

Liquidity: Can be traded in the secondary market but with low liquidity.

ELSS (Equity-Linked Savings Scheme)

ELSS are mutual funds with a lock-in period of three years, providing tax benefits under Section 80C. They invest primarily in equities.

Strengths

Tax Benefits: Investments qualify for Section 80C deductions.

Potential for High Returns: Equity exposure can provide higher returns over the long term.

Challenges

Market Risk: Subject to market fluctuations.

Lock-in Period: Three-year lock-in period.

Optimizing Your Investment Strategy
Diversification

Diversify your investments across different asset classes to manage risk. A mix of fixed-income and equity investments can provide stability and growth.

Balanced Approach

Given your current investments and tax liability, a balanced approach between safe, income-generating investments and growth-oriented investments is ideal.

Regular Monitoring

Keep an eye on your investments and tax liability. Adjust your portfolio as needed based on performance and changes in tax laws.

Utilize Section 80C Fully

Make sure you fully utilize the Rs. 1.5 lakh limit under Section 80C. This includes investments in SCSS, PPF, NSC, and ELSS.

Maximize Tax-Free Income

Consider tax-free bonds to maximize tax-free income. They provide steady, risk-free returns.

Implementing the Strategy
Step 1: Invest in SCSS

Invest Rs. 15 lakhs in the Senior Citizens’ Saving Scheme for regular income and tax benefits under Section 80C.

Step 2: Allocate Funds to PPF

Invest Rs. 1.5 lakhs annually in a Public Provident Fund for long-term growth and tax-free interest. This also qualifies for Section 80C deductions.

Step 3: Purchase Tax-Free Bonds

Invest in tax-free bonds for steady, tax-exempt interest income. This will enhance your regular income without adding to your tax burden.

Step 4: Explore ELSS

Consider investing in Equity-Linked Savings Schemes for potential higher returns and additional Section 80C benefits. Start with a small allocation due to market risks.

Step 5: Consider NSC

Allocate some funds to National Savings Certificates for additional tax savings and safe, fixed returns.

Ensuring Financial Security
Emergency Fund

Maintain an emergency fund equivalent to 6-12 months of your expenses. This will provide a financial cushion in case of unexpected expenses.

Health Insurance

Ensure you have adequate health insurance coverage. Medical expenses can deplete your savings quickly.

Estate Planning

Plan your estate and ensure your financial documents are in order. This includes writing a will and nominating beneficiaries for your investments.

Additional Tips for Financial Well-Being
Stay Informed

Keep yourself updated on changes in tax laws and new investment opportunities. Staying informed will help you make better financial decisions.

Seek Professional Guidance

Consult a Certified Financial Planner for personalized advice tailored to your financial situation and goals. Professional guidance can help optimize your investment strategy.

Regular Review

Review your investment portfolio and financial plan regularly. Adjustments may be needed based on market conditions and personal circumstances.

Empathy and Encouragement
Retirement is a significant life transition, and managing your finances effectively is crucial for peace of mind. Your proactive approach to investing and tax planning is commendable. Remember, the key to successful financial planning is diversification, regular monitoring, and staying informed.

You're already on the right track with your investments in the PMVVY. By strategically allocating your remaining funds into tax-saving schemes, you can reduce your tax liability and ensure a steady income stream.

Conclusion
Your retirement planning is off to a great start. With careful consideration of tax-saving schemes like SCSS, PPF, tax-free bonds, and ELSS, you can optimize your investment portfolio. Diversification, regular monitoring, and professional guidance will ensure financial stability and peace of mind.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Patrick

Patrick Dsouza  |488 Answers  |Ask -

CAT, XAT, CMAT, CET Expert - Answered on Jun 26, 2024

Asked by Anonymous - Jun 22, 2024Hindi
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I graduated with a B.Com (General) with 73.52%, and I obtained 54.71% in 10th grade and 51.17% in 12th grade. I belong to the General category and am eligible for an EWS certificate. My academic profile is summarized as 5|5|7. Since graduation, I have been a fresher with no practical work experience or internships, and I do not have any notable co-curricular or extra-curricular achievements. I took the CAT 2022 exam shortly after graduation for experience. Following that, I started preparing for CAT 2023, XAT 2024, and MHT CET 2024 but was unsuccessful due to a lack of consistency, discipline, and dedication. This year, I am preparing for CAT, NMAT, SNAP, XAT, MHT CET, and CMAT with the goal of getting into a top B-school in India. My preparation is going well this time. Although I realize I may not get into the top IIMs (BLACKIS), I am targeting and working hard for the new and baby IIMs, XLRI, FMS, SPJIMR, NMIMS, SIBM, and other reputable non-IIMs. Many people have advised me to pursue an MBA from local colleges or to try for government or banking jobs. While I respect their suggestions, I am determined to pursue an MBA from a top college in India. I cannot change my past academic record, but I am focused on improving my overall profile. I seek your valuable guidance on how to justify my gap years, improve my profile, and get advice for GDPI, securing a SIP, and placement. Currently, I am only able to get job of BPS in MNCs with only 11k p.m. for night shift. It may affect my schedule my preparation and work culture will be hectic and will only get 1.5 to 2hrs on weekdays for preparation. If I able to get a sales/Marketing related to my career interest then i can max 14k with more hectic work and more travel which may results inconsistency in preparation in weekdays. Even if I start working now, I can only add about 2 months of work experience before CAT and other MBA entrance test registrations, and less than 10 months of work experience before GDPI next year. I am committed to achieving a 99+ percentile this time. Alongside my preparation, I have acquired two beginner-level certifications in digital marketing and plan to add up to five more certifications in pre-MBA relevant skills. I am highly grateful for your feedback and suggestions.
Ans: It may be a little difficult to get into top colleges based on your academics - though it is possible if you do well in the written test and interview. It will help if you look at more colleges for admission. IF you are ready to wait then can take up a job and try to get experience along with preparation for CAT. By next year you would have 1 year experience which would give you some additional marks that could help you get a call.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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