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Mihir Tanna  |900 Answers  |Ask -

Tax Expert - Answered on Mar 13, 2023

Mihir Ashok Tanna, who works with a well-known chartered accountancy firm in Mumbai, has more than 15 years of experience in direct taxation.
He handles various kinds of matters related to direct tax such as PAN/ TAN application; compliance including ITR, TDS return filing; issuance/ filing of statutory forms like Form 15CB, Form 61A, etc; application u/s 10(46); application for condonation of delay; application for lower/ nil TDS certificate; transfer pricing and study report; advisory/ opinion on direct tax matters; handling various income-tax notices; compounding application on show cause for TDS default; verification of books for TDS/ TCS/ equalisation levy compliance; application for pending income-tax demand and refund; charitable trust taxation and compliance; income-tax scrutiny and CIT(A) for all types of taxpayers including individuals, firms, LLPs, corporates, trusts, non-resident individuals and companies.
He regularly represents clients before the income tax authorities including the commissioner of income tax (appeal).... more
Asked by Anonymous - Mar 06, 2023Hindi

Dear Mihir, My income is 13.66 lac per annum. My company has been deducting TDS to an extent of 2 lac . I fail to understand the reason. My house rent & electricity bill is getting paid by the company. House rent is shown as rent allowance in the pay slip & electricity bill is paid upon furnishing the bill every month. They say that these are perquisites and are taxable. I have not been told before about the same. Please guide me. This is what they are showing...Please help me in saving this tax...I am clue less about this. Please find your Tax Calculation Sheet below.  Income Tax Computations With Rent/Without Perquisites With out Rent/With Perquisites Gross Salary (includes Employer contribution to NPS **) 1415198 1320496 Exemptions U/s 10   House Rent Allowance 101999 0 Gross Salary after Section 10 Exemptions 1313199 1320496 Deduction U/s 16 Standard Deduction (Sec 16 ia) 50000 50000 Professional Tax (Sec 16 iii) 2400 2400 Gross Total Income 1260799 1268096 Deductions under chapter VI-A     Investments  ( Sec 80C) 150000 150000     Contribution to NPS (Sec 80CCD (1b) 10000 10000     Medical Insurance Premium (Sec 80D) 15000 15000     Total 175000 175000 Net taxable income 1085800 1093100 Tax on Total Income ( as per applicable slabs)     Income Liable to Tax at Normal Rate 138240 140429     Short Term Capital Gains (Charged @ 15%) 0 0     Long Term Capital Gains (Charged  @ 20%) 0 0     Long Term Capital Gains (Charged @ 10%) 0 0     Winnings from Lottery (Charged @ 30%) 0 0 Total Tax Due 138240 140429 Surcharge on Tax 0 0 Education Cess @4% 5530 5617 Total Tax Due 143770 146046 Less Tax Deducted Till Date- Employer 51000 51000          Other TDS deduction    0 0 Balance Tax to be deducted 92770 95046 Remaining months in the Year 2 2 Tax Per Month 46385 47523 Old Regime Old Regime

Ans: If rent and electricity is paid by the company, it is considered as perquisites. To save tax, you can invest additional 40k in NPS, you can pay additional mediclaim premium.
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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Ramalingam Kalirajan  |5295 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 13, 2024

Sir I am 36 now and working in PSB . My monthly Gross is around Rs 1.40 lakhs . Perk value is around Rs 4.00 lakhs annualy. Apart from monthly deduction like home loan ,nps,pf,a substantial part,approx about Rs 35k is being deducted as income tax . My 80c is already full. Car loan of 15 lakhs ,housing loan outstanding of Rs 36 lakhs repayble till 70 years is present. My first questions is how to reduce the income tax amount. My 80C investments is more than Rs 2.5 lakhs while loss from housing return is also being claimed by me Second is I have a flat that i have acquired through loan at Raipur. I have also got a G plus 1 storey building built by my father avquired 6amily settlements. The constructiion about 30 years old but property is at prime location at raipu.My wife want to settle at bhubaneswar where average price for 3 bhk is around rs 1.5 cr but will fetch good rental values. However I would like to demolish the house at Raipur and build a one with modern outlook which will cost around Rs 80 lakhs since land is in my possession. Which will be better option
Ans: Investing wisely is crucial to ensuring a secure financial future. I understand you have several financial commitments and are looking for ways to optimize your investments and reduce your income tax. Let's address your concerns comprehensively.

Reducing Income Tax
Firstly, you mentioned that you are already maximizing your 80C investments and claiming housing loan interest. Here are some additional strategies to reduce your taxable income:

Utilize Section 80D: Under Section 80D, you can claim deductions for medical insurance premiums for yourself, your family, and your parents. The deduction is Rs 25,000 for yourself and your family and an additional Rs 25,000 (Rs 50,000 if parents are senior citizens) for your parents' insurance.

Claim House Rent Allowance (HRA): If you are paying rent and do not live in your own house, you can claim HRA exemptions under Section 10(13A). The exemption amount depends on your salary, rent paid, and city of residence.

Invest in National Pension System (NPS): Contributions to NPS under Section 80CCD(1B) provide an additional deduction of Rs 50,000 over and above the 80C limit of Rs 1.5 lakhs. This can help you save tax and build a retirement corpus.

Interest on Education Loan (Section 80E): If you have taken an education loan for yourself, your spouse, children, or a student for whom you are a legal guardian, you can claim a deduction on the interest paid on such loans.

Donations (Section 80G): Donations to specified charitable institutions qualify for deductions under Section 80G. Ensure the charity is eligible for deductions.

Section 24(b) - Interest on Housing Loan: Beyond your primary residence, if you have a loan on a second house, you can claim deductions for the interest paid without a cap under certain conditions.

Investment Options
Now, let’s discuss where to invest your money for good returns without a lock-in period:

Systematic Investment Plans (SIPs) in Mutual Funds: SIPs are ideal for disciplined investing. They allow you to invest a fixed amount monthly in mutual funds. Opt for equity mutual funds for potentially higher returns over five years. Diversify your portfolio by including large-cap, mid-cap, and balanced funds.

Debt Mutual Funds: For conservative investments, consider debt mutual funds. These invest in fixed-income securities and offer relatively stable returns. They are less volatile than equity funds and provide liquidity.

Liquid Funds: These are a type of debt mutual fund that invests in short-term instruments. Liquid funds provide high liquidity and better returns compared to savings accounts. They are suitable for short-term investments and emergencies.

Ultra-Short Duration Funds: Similar to liquid funds, but with slightly longer investment horizons. They offer better returns and maintain liquidity.

Your Real Estate Decision
You have two main options regarding your properties in Raipur and Bhubaneswar:

Option 1: Demolish and Rebuild in Raipur: Building a new house on your existing land can modernize the property and potentially increase its value. However, consider the cost (Rs 80 lakhs) and whether it will yield a good return on investment, especially if you plan to sell or rent it out.

Option 2: Settle in Bhubaneswar: Bhubaneswar offers a good rental yield and is your wife's preferred location. Purchasing a 3 BHK for Rs 1.5 crores can be a good investment, especially if the property appreciates and offers a steady rental income.

Analysis and Recommendation: Assess the potential returns, convenience, and personal preferences. Bhubaneswar seems more lucrative if it offers good rental income and aligns with your lifestyle. However, rebuilding in Raipur could be worthwhile if the property's location is prime and the new construction significantly increases its value.

Managing Loans
You currently have a car loan of Rs 15 lakhs and a housing loan of Rs 36 lakhs. Here are some strategies to manage and reduce your loan burden:

Prepay High-Interest Loans: Focus on repaying high-interest loans like the car loan first. Use any surplus funds to reduce this debt faster.

Balance Transfer for Home Loan: Consider transferring your home loan to another bank offering lower interest rates. This can reduce your EMI burden and total interest outgo.

Part-Payment of Home Loan: Use bonuses or other windfalls to make part-payments on your home loan. Reducing the principal amount can significantly lower your interest burden over time.

Creating an Emergency Fund
Ensure you have an emergency fund that covers at least 6 months of your expenses. This fund should be easily accessible and kept in a high-liquidity account like a savings account or liquid fund. It provides financial security in case of unforeseen circumstances like medical emergencies or job loss.

Financial Planning for the Future
Retirement Planning: With your home loan payable till the age of 70, it's essential to have a solid retirement plan. Continue contributing to NPS for a pension corpus. Also, consider other retirement-focused mutual funds or pension plans that offer steady returns.

Children’s Education: If you have children, start planning for their education expenses early. Invest in child education plans or equity mutual funds with a horizon aligned with your child’s age.

Regular Monitoring and Rebalancing: Regularly review your investment portfolio to ensure it aligns with your goals and risk tolerance. Rebalance your portfolio as needed to maintain the desired asset allocation.

Enhancing Financial Literacy
Improving your financial knowledge can empower you to make better decisions. Consider reading books on personal finance, attending workshops, or following credible financial blogs and news sources. Understanding basic financial concepts will help you navigate investments and tax planning more effectively.

Final Insights
Balancing your income, expenses, and investments is key to achieving financial stability. By strategically investing Rs 36,000 monthly, utilizing tax-saving options, managing your loans efficiently, and planning for the future, you can secure a robust financial foundation. Regularly monitor and adjust your plans to stay on track with your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,


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Latest Questions
Nayagam P

Nayagam P P  |2471 Answers  |Ask -

Career Counsellor - Answered on Jul 25, 2024

Presently Im a class 12 commerce student and i want to join BCA for my degree next year but i dont know what are the careers after BCA.
Ans: Adella, first of all, shortlist top 5-10 colleges to get admission for your BCA.

Know the Eligibility Criteria / Admission Process / Entrance Exams (such as CUET & other Private Colleges' its own Entrance Exams) you will have to appear in.

There are multiple career options after BCA, but depends upon which specialization you will choose, which specilizations are available in the college you will join & which all skills you will upgrade. Some of the examples of specializations available for BCA are:

1) Software Development
2) Cyber Security
3) Data Analytics
4) Web Development
5) Mobile Application Development
6) Networking & System Administration
7) Cloud Computing
8) Digital Marketing
9) Multimedia & Animation
10) AI & ML
11) Full Stack Development & More.

After you get admission into BCA in any college:

1) Try to maintain a good academic performance.
2) Involve in co/extra-curricular activities.
3) Keep upgrading your skills, as recommended by your college faculties.
4) Start researching about the Recruiters/Companies visited your college for Campus Recruitment.
5) Have a Professional LinkedIn Profile.
6) Put Job Alerts related to your domain in LinkedIn.
7) Get notifications of job vacancies and go through the JD (Job Description) of each.
8) Know the Job Market Trends & keep analyzing how it changes till your 3rd year.
9) Connect with Professionals of your domain, get their advice/views/opinions for your Career Growth
10) At the end of your 3rd year, start applying for jobs through LinkedIn, matching your Profile and also prepare for your Campus Interview.

All the BEST for Your Bright Future.

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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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