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Ramalingam

Ramalingam Kalirajan  |7946 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 11, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - Jun 04, 2024Hindi
Money

Hi, my package is around12lpa. I hv invested in PPF for 3k SIP and 5k SIP in mutual funds, HRA with 20k monthly rent. Still I hv my tax deducted monthly around 5-8k. Can u help me in wat ways can I invest and wer do I need to invest that would help me in zero tax cut

Ans: Understanding Your Financial Situation
Income and Tax Structure
Your annual package is Rs 12 lakh, translating to Rs 1 lakh per month. You currently invest Rs 3,000 in PPF and Rs 5,000 in mutual funds via SIPs. You also pay Rs 20,000 per month as rent. Despite these investments and deductions, your monthly tax deduction ranges from Rs 5,000 to Rs 8,000. Let's delve deeper into optimizing your investments and tax planning.

Monthly Breakdown
Monthly Income: Rs 1,00,000
Rent: Rs 20,000
PPF SIP: Rs 3,000
Mutual Fund SIP: Rs 5,000
Tax Deduction: Rs 5,000 to Rs 8,000
Maximizing Tax Savings
Section 80C Investments
You can claim deductions up to Rs 1.5 lakh under Section 80C. Currently, you are investing Rs 3,000 per month in PPF, totaling Rs 36,000 annually. You can optimize this section further.

Public Provident Fund (PPF)
PPF offers a safe investment with attractive interest rates and tax benefits. Continue with your current PPF SIP and consider increasing it if possible.

Current Annual Investment: Rs 3,000 * 12 = Rs 36,000
Potential Increase: Aim for Rs 1.5 lakh annually to maximize the Section 80C limit.
Equity-Linked Savings Scheme (ELSS)
ELSS mutual funds are tax-saving instruments with a lock-in period of three years. They offer the dual benefit of tax savings and potential market-linked returns.

Annual Investment: Consider allocating a portion of your Rs 5,000 SIP towards ELSS funds.
Lock-in Period: 3 years
Potential Returns: Higher than traditional instruments but with market risk.
Section 80D: Health Insurance
Premiums paid for health insurance policies qualify for tax deductions under Section 80D. This can include policies for yourself, your spouse, children, and dependent parents.

Health Insurance Premiums
Self, Spouse, and Children: Deduction up to Rs 25,000.
Parents (Below 60): Additional deduction up to Rs 25,000.
Parents (Above 60): Additional deduction up to Rs 50,000.
Benefits
Tax Savings: Up to Rs 75,000 if parents are senior citizens.
Health Coverage: Ensures financial support during medical emergencies.
Section 80E: Education Loan Interest
Interest paid on education loans for higher studies can be claimed as a deduction under Section 80E. This deduction is available for a maximum of 8 years or until the interest is fully repaid, whichever is earlier.

Education Loan Interest
Eligibility: Loans taken for higher education of self, spouse, or children.
No Upper Limit: The entire interest amount is deductible.
Section 80G: Donations
Donations made to specified charitable institutions and relief funds are eligible for deductions under Section 80G. The deduction can be either 50% or 100% of the donation amount, depending on the type of institution.

Charitable Donations
Eligible Donations: Donations to specified funds, NGOs, and charitable institutions.
Deduction: 50% or 100% of the donation amount.
Documentation: Ensure proper receipts and documentation for claiming the deduction.
Section 24(b): Home Loan Interest
Interest paid on a home loan for a self-occupied property is deductible up to Rs 2 lakh under Section 24(b). This deduction is over and above the Section 80C limit.

Home Loan Interest
Self-Occupied Property: Deduction up to Rs 2 lakh.
Rented Property: Entire interest amount deductible without any upper limit.
Principal Repayment: Eligible under Section 80C within the Rs 1.5 lakh limit.
Investment Planning
Diversifying Investments
Diversification helps in spreading risk and optimizing returns. Your current investments are a good start, but further diversification can enhance your portfolio.

Mutual Funds
Mutual funds offer a range of investment options across different asset classes. Diversify your mutual fund investments across equity, debt, and hybrid funds.

Equity Funds: For long-term growth and higher returns.
Debt Funds: For stability and regular income.
Hybrid Funds: For a balanced approach combining equity and debt.
Employee Provident Fund (EPF)
EPF is a retirement benefits scheme available to salaried employees. Contributions to EPF qualify for tax deductions under Section 80C.

Employee Contribution: 12% of basic salary.
Employer Contribution: 12% of basic salary.
Tax Benefits: Employee's contribution qualifies under Section 80C.
National Pension System (NPS)
NPS is a government-backed pension scheme offering tax benefits under Section 80C and an additional Rs 50,000 under Section 80CCD(1B).

Section 80C: Contribution up to Rs 1.5 lakh.
Section 80CCD(1B): Additional Rs 50,000.
Tax Savings: Up to Rs 2 lakh in total.
Additional Tax Saving Strategies
House Rent Allowance (HRA)
HRA can be claimed if you live in rented accommodation. The deduction is the least of the following:

Actual HRA received: Rs 20,000 per month.
50% of Salary (Metro): 50% of Rs 1,00,000 = Rs 50,000 per month.
Rent Paid – 10% of Salary: Rs 20,000 - Rs 10,000 = Rs 10,000 per month.
Optimizing HRA Claim
Ensure you have rent receipts and rental agreement documentation. Claim the maximum allowable deduction based on actual rent paid.

Leave Travel Allowance (LTA)
LTA can be claimed for travel expenses incurred for trips within India. It can be claimed twice in a block of four years.

LTA Claim
Eligibility: Travel expenses for self, spouse, children, and dependent parents.
Exemptions: Actual travel expenses (travel fare only, not food or accommodation).
Documentation: Maintain proper travel tickets and receipts.
Tax-Free Allowances and Perquisites
Certain allowances and perquisites provided by employers are tax-free. These can include meal coupons, telephone reimbursements, and conveyance allowances.

Utilizing Tax-Free Allowances
Meal Coupons: Up to Rs 50 per meal is tax-free.
Telephone Reimbursements: Actual expenses incurred for official purposes.
Conveyance Allowance: Up to Rs 1,600 per month is tax-free.
Regular Review and Rebalancing
Importance of Portfolio Review
Regularly reviewing your portfolio ensures it remains aligned with your goals and market conditions. Rebalancing helps maintain the desired asset allocation.

Quarterly Review: Assess the performance and make necessary adjustments.
Annual Review: Reevaluate your financial plan based on changes in income, expenses, or goals.
Professional Guidance
Benefits of Consulting a Certified Financial Planner (CFP)
A CFP provides personalized advice, helping you achieve your financial goals efficiently.

Tailored Strategies: CFPs design investment strategies based on your specific needs and risk tolerance.
Regular Monitoring: They monitor your portfolio and suggest timely adjustments to optimize returns.
Comprehensive Planning: CFPs assist in tax planning, retirement planning, and estate planning, ensuring holistic financial health.
Actively Managed Funds vs Direct Funds
Disadvantages of Index Funds
While index funds offer low costs, they may not provide the best returns. Actively managed funds, despite higher fees, aim to outperform the market.

Expert Management: Fund managers actively select stocks to generate higher returns.
Flexibility: Actively managed funds can adapt to market changes, potentially reducing losses.
Disadvantages of Direct Funds
Direct mutual funds require investor expertise and regular monitoring. Without professional guidance, there’s a risk of poor investment decisions.

Complexity: Direct funds demand more time and knowledge to manage effectively.
Risk of Underperformance: Investors may not achieve optimal returns without proper guidance.
Final Insights
By optimizing your tax-saving investments and making strategic contributions, you can significantly reduce your taxable income. Utilize Section 80C, 80D, 80E, and other sections effectively. Diversify your investments across different asset classes and seek professional guidance for personalized advice. Regularly review and rebalance your portfolio to stay aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
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  |7946 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 22, 2024

Asked by Anonymous - May 22, 2024Hindi
Money
Hi Sir, I am currently earning 1 lakh per month Regarding the investment purpose i am having a house loan emi per month, also doing fixed deposit after every 3-4 months and also investing in ppf and nps I cannot invest in term life insurance due my medical issues and cannot also invest in medical insurance for parent they are also facing medical issues so what can be done in this case monthly around 16k tax is getting deducted
Ans: Your current financial situation reflects a well-structured approach towards savings and investments despite the constraints posed by medical issues. You have a steady income of ?1 lakh per month, and you are diligently paying off a home loan EMI, investing in fixed deposits (FD), Public Provident Fund (PPF), and the National Pension System (NPS). This detailed guide aims to help you navigate your financial strategy effectively while considering your limitations and future goals.

Understanding Your Current Financial Position
Income and Expenses
Your monthly income is ?1 lakh, with an approximate deduction of ?16,000 for taxes. This leaves you with ?84,000 per month.

Home Loan EMI
Your home loan EMI is a significant fixed expense. Ensure this is a manageable proportion of your income to avoid financial strain.

Investments
You are making regular investments in FDs, PPF, and NPS. This is a prudent approach for tax savings and long-term financial security.

Medical Insurance Constraints
You cannot invest in term life insurance or medical insurance for your parents due to medical issues. This presents a unique challenge that requires a tailored financial strategy.

Optimizing Investments
Public Provident Fund (PPF)
PPF is a secure, long-term investment that offers tax benefits. Continue maximizing your PPF contributions up to the permissible limit.

Benefits
Tax-free interest
Long-term growth
Safe investment option
National Pension System (NPS)
NPS is excellent for retirement planning. It offers tax benefits and the potential for higher returns due to market-linked investments.

Benefits
Additional tax deduction under Section 80CCD(1B)
Flexibility in choosing the investment mix
Pension income post-retirement
Fixed Deposits (FD)
FDs offer guaranteed returns, making them a safe investment. However, their returns are generally lower compared to other investment options.

Considerations
Ensure you ladder your FDs to manage liquidity.
Compare interest rates across banks for better returns.
Exploring Additional Investment Options
Mutual Funds
Actively managed mutual funds can provide higher returns compared to FDs. They offer diversification and professional management.

Equity Mutual Funds
Suitable for long-term investments.
Higher potential returns but with market-linked risks.
Debt Mutual Funds
Lower risk compared to equity funds.
Suitable for short to medium-term investments.
Systematic Investment Plans (SIP)
Investing through SIPs in mutual funds helps in averaging out the market volatility and compounding returns over time.

Benefits
Disciplined investment approach
Flexibility in investment amount and tenure
Potential for higher returns compared to lump-sum investments
Tax-saving Investments
Consider other tax-saving instruments under Section 80C and 80D to reduce your taxable income further.

Examples
Equity Linked Savings Schemes (ELSS)
National Savings Certificate (NSC)
Senior Citizens Savings Scheme (SCSS) (if applicable for your parents)
Managing Medical Expenses
Emergency Fund
Maintain an emergency fund equivalent to 6-12 months of living expenses. This fund will provide a financial cushion for unexpected medical expenses.

Strategies
Keep this fund in a high-interest savings account or a liquid mutual fund for easy access.
Regularly review and adjust the fund amount based on your expenses.
Government and Employer Schemes
Explore any government or employer-provided health schemes that might offer some coverage for medical expenses.

Benefits
Reduced medical costs
Additional financial support for treatments
Financial Planning for Your Parents
Health Savings
Since insurance isn't an option, allocate a portion of your savings specifically for your parents' medical expenses.

Strategies
Create a dedicated medical fund.
Invest in low-risk, high-liquidity options like savings accounts or liquid funds.
Estate Planning
Ensure that you have an estate plan in place. This includes having a will to manage and distribute your assets efficiently.

Benefits
Clear instructions for asset distribution
Minimizes legal complications
Budgeting and Expense Management
Monthly Budget
Create a detailed monthly budget to track your income, expenses, and savings.

Steps
List all sources of income.
Categorize and list all expenses.
Allocate funds for essential expenses first (EMI, utilities, groceries).
Set aside a portion for savings and investments.
Review and adjust the budget regularly.
Expense Tracking
Use expense tracking apps or maintain a manual record to monitor your spending habits.

Benefits
Identifies unnecessary expenses
Helps in sticking to the budget
Reducing Tax Liability
Explore ways to reduce your taxable income through various deductions and exemptions.

Strategies
Maximize contributions to tax-saving instruments.
Claim deductions for home loan interest under Section 24(b).
Long-term Financial Goals
Retirement Planning
Continue contributing to your NPS and PPF for a secure retirement. Evaluate the corpus required for your retirement and plan accordingly.

Strategies
Review and adjust your retirement corpus based on inflation and lifestyle changes.
Diversify retirement investments for better risk management.
Child’s Education and Future
Start planning for your child’s education early to ensure you have sufficient funds when needed.

Education Fund
Consider starting an education fund through SIPs in equity mutual funds.
Use PPF and other long-term instruments for this purpose.
Investment Diversification
Diversify your investments across different asset classes to balance risk and return.

Examples
Equity and debt mutual funds
PPF and NPS
FDs and other fixed-income instruments
Conclusion
Your financial journey requires a balanced approach given the constraints on insurance and the need to manage medical expenses. By optimizing your current investments, exploring additional options, and maintaining a disciplined budgeting approach, you can secure a stable financial future for yourself and your family. Consulting a Certified Financial Planner can provide personalized guidance tailored to your unique situation.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |7946 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

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investing 10 lakhs in Mutual Funds: what fund option should I consider for 3 Years?
Ans: Investing for three years requires balancing returns and safety. Your choice should depend on risk tolerance, taxation, and liquidity needs.

Key Factors to Consider
A three-year horizon is short for equity investments.
Volatility in equities can impact returns if markets decline near redemption.
Debt funds provide stability but may have lower returns than equity funds.
Hybrid funds balance risk and returns better than pure equity or debt funds.
Taxation on mutual funds should be considered before making a choice.
Investment Options Based on Risk Profile
For Conservative Investors
Capital safety is a priority for conservative investors.
Debt mutual funds are suitable due to lower risk.
Short-duration and corporate bond funds offer better returns than fixed deposits.
Dynamic bond funds can work if comfortable with some interest rate risk.
Returns may be lower, but capital protection is higher.
For Moderate Investors
A mix of debt and equity is ideal.
Hybrid funds help balance stability and growth.
Aggressive hybrid funds invest around 65% in equity and 35% in debt.
Conservative hybrid funds invest more in debt and less in equity.
These funds can generate better returns than pure debt funds.
For Aggressive Investors
Equity funds can provide higher returns but come with risk.
Large-cap or flexi-cap funds are better than mid-cap or small-cap for three years.
Equity savings funds reduce risk by holding debt and arbitrage components.
Investors should be ready for short-term volatility in equity investments.
A systematic withdrawal plan (SWP) after three years can help manage risks.
Mutual Fund Taxation for 3-Year Investment
Equity fund LTCG above Rs. 1.25 lakh is taxed at 12.5%.
Equity STCG is taxed at 20%.
Debt funds are taxed as per the investor’s income tax slab.
Hybrid funds taxation depends on their equity component.
Investors in high tax brackets may prefer equity-oriented funds for tax efficiency.
Regular Funds vs Direct Funds
Regular funds provide Certified Financial Planner (CFP) support and expert guidance.
Direct funds may appear cheaper but lack personalized financial advice.
Market conditions change, and professional guidance helps navigate investments.
Investors often make emotional decisions, which a CFP helps avoid.
Long-term returns may be higher with proper advisory support.
Actively Managed Funds vs Index Funds
Actively managed funds aim to beat market returns.
Fund managers adjust portfolios based on market conditions.
Index funds simply follow market indices and lack flexibility.
Actively managed funds can protect during market downturns.
A three-year horizon does not favor passive investing due to short-term volatility.
When to Choose a Systematic Investment Plan (SIP)
A lump sum investment is ideal when markets are low.
SIP helps reduce risk in volatile markets.
If investing in equity or hybrid funds, staggered investment through SIP can help.
Debt funds are better suited for lump sum investments.
SWP can be used for gradual withdrawal after three years.
Liquidity and Exit Strategy
Some funds have exit loads if redeemed before a certain period.
Hybrid and debt funds often have lower exit loads than equity funds.
Ensure liquidity by choosing funds with flexible redemption options.
Plan redemptions at least 3-6 months before the end of the investment period.
Final Insights
Debt funds are safer for conservative investors.
Hybrid funds offer a balance of risk and reward.
Equity funds suit aggressive investors but require risk tolerance.
Mutual fund taxation should be considered before investing.
Regular funds with CFP guidance provide better long-term benefits.
Would you like help in selecting specific categories within these options?

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |7946 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

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Hi Team, I have been investing 5percent of my sip in Nasdaq but now unable to do sip. Could you please let me know whichother mf house are accepting sip for global investment
Ans: It seems you were investing in Nasdaq through a mutual fund SIP but are now unable to continue. You are looking for mutual fund houses that still accept SIPs for global investments.

There are multiple factors to consider before continuing with global investments.

Understanding Restrictions on Global SIPs
Many mutual funds had to pause fresh investments in international schemes.
This was due to regulatory restrictions on overseas investment limits.
Some fund houses have reopened investments, but availability changes frequently.
The acceptance of SIPs depends on whether they have room within the limits.
Mutual Fund Houses Offering Global Investments
Some Indian fund houses continue to accept SIPs for international funds.
They may invest in US markets, European markets, or emerging economies.
Some focus on technology stocks, while others cover broader sectors.
The availability of SIPs can change based on fund house policies.
You should check with the fund house or an expert before investing.
Should You Continue Global Investments?
The US market has given strong returns in the long term.
However, global investing comes with risks like currency fluctuations.
The rupee’s movement against the dollar impacts your returns.
The US market is expensive compared to Indian equities.
Diversification is good, but overexposure to a single market is risky.
Actively Managed Funds vs Index Funds
Many global funds track indices like Nasdaq or S&P 500.
Index funds may seem cost-effective, but they lack flexibility.
Actively managed global funds adjust portfolios based on market conditions.
Professional fund managers help manage risks in different economies.
Actively managed funds can outperform during market downturns.
Evaluating Your Investment Strategy
If you were investing 5% in Nasdaq, consider how it fits your overall plan.
Stopping SIPs should not disrupt your long-term goals.
If you cannot continue, ensure other investments balance your portfolio.
Look for options that align with your risk appetite and investment horizon.
Taxation of Global Mutual Funds
Global equity funds are taxed like debt funds.
There is no benefit of lower taxation like domestic equity funds.
Gains are taxed based on your income tax slab.
If you hold for more than three years, taxation remains the same.
Keep tax efficiency in mind while choosing investment options.
What Should You Do Next?
Check with mutual fund houses about SIP availability in global schemes.
If SIP is unavailable, you can still invest through lump sum when the window opens.
Consider balancing global and Indian investments for better diversification.
Review your financial plan to ensure your goals stay on track.
Finally
Investing in global markets can be beneficial, but not without risks.
Active management is preferable over index-based global funds.
Ensure you are aware of taxation before investing.
Focus on a diversified portfolio instead of chasing one market.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |7946 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

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I HAVE RECIEVED A SUM OF RS 10 LACS FROM FRIEND TO PURCHASE A HOUSE - HE HAS STATED I CAN RETURN MONEY AFTER MY DAUGHTER IS EARNING ENOUGH MONEY TO REPAY . I HAVE NOT BEEN FILING RETURNS SINCE I DONT HAVE TAXABLE INCOME . SHOULD I FILE I T RETURN FOR THIS AMOUNT - UNDER WHICH HEAD OF INCOME WILL I HAVE TO SHOW - SHOULD I MENTION IT AS GIFT OR LOAN
Ans: You have received Rs. 10 lakh from a friend for purchasing a house. The friend has stated that you can return it when your daughter starts earning. Since you have not been filing tax returns, let’s assess whether you should file a return and how to declare this amount.

Is Filing an ITR Necessary?
You don’t have taxable income, so filing is usually not required.
However, Rs. 10 lakh in your account can attract scrutiny.
To avoid future issues, filing an ITR is advisable.
It helps maintain transparency with the tax department.
How to Declare This Amount?
This is not a gift because a gift from a friend is taxable if above Rs. 50,000.
It is best to treat this as a loan.
Loans from friends do not attract tax but should be documented.
Declaring It Under the Right Income Head
A personal loan is not income, so it does not fall under "Income from Other Sources."
It is not taxable, but should be disclosed as "Loan Taken" in the balance sheet section of ITR.
If interest is paid on the loan, that interest will be taxable for the lender.
Steps to Ensure No Future Tax Issues
Keep a written agreement mentioning the loan terms.
The agreement should mention that repayment will be made after your daughter starts earning.
Ideally, the friend should transfer funds through a bank and not in cash.
If the tax department questions the transaction, you can show this agreement.
Final Insights
Filing an ITR is recommended for clarity.
Declare the amount as a loan, not a gift.
Maintain proper documentation to avoid future issues.
Ensure transactions happen through a bank for transparency.


Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |7946 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

Asked by Anonymous - Feb 02, 2025Hindi
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I am an employee. My company pays my rent amount to my house owners account. the amount is 9000. but my house rent is 4900 and I asked to return the remaining amount to return to me. My house owner is a senior citizen and has 5 houses. remaining houses pay rent in cash. He said I get taxed on the amount so I am deducting the tax amount. I feel he is cheating me in the name of tax. please help me in this issue.
Ans: Your house owner is deducting tax from the extra rent you asked him to return. It is important to assess whether this is a fair deduction or if he is keeping a part of your money unfairly.

Understanding Taxation on Rental Income
Your house owner is a senior citizen and has five rental properties.
He receives rent from other tenants in cash, which may not be reported as income.
The rent he receives from you is directly deposited into his bank account. This means it is officially recorded.
He may be liable to pay tax on this recorded income.
Why Is He Deducting Tax?
If he is filing income tax returns properly, he should pay tax on total rental income.
The tax he pays depends on his total income, including all rental earnings.
If he has no other income, rental income is taxed as per his slab.
If his total taxable income exceeds the exemption limit, tax is applicable.
Assessing If He Is Cheating You
Your employer is paying Rs 9,000 rent, but your actual rent is Rs 4,900.
The extra Rs 4,100 should be returned to you in full.
He is deducting a tax amount before refunding, which raises concerns.
The tax rate he claims to deduct should be verified.
If he is keeping a significant portion, he may be misusing tax as a reason.
Steps to Verify the Tax Deduction
Ask him to provide a written explanation of the tax deduction.
Request a receipt or breakdown of how much tax he is paying on rental income.
Check his income tax return (if he agrees) to see if he is genuinely paying tax.
If he is hesitant, he may be deducting more than required.
What Can You Do?
Ask your employer to pay only Rs 4,900 directly to him instead of Rs 9,000.
If the employer insists on paying Rs 9,000, ask for an official agreement with the owner.
Clarify in the agreement that extra rent paid will be refunded without deductions.
If he refuses, inform him that you will consult a tax expert.
You can also ask him to show proof of tax paid on the deducted amount.
Handling This in a Legal Way
There is no rule that allows a landlord to deduct tax from refunded rent.
Rental income tax is the landlord’s responsibility, not yours.
He should pay tax on his total income, not on your refund.
If he is deducting an unusually high amount, it is unfair.
Alternative Options
Consider renting a different house where the rent payment process is straightforward.
If your employer allows, request them to revise the rent agreement.
Check if your company can provide a direct reimbursement to you instead.
Final Insights
Your landlord is responsible for paying tax on his rental income.
He cannot deduct tax from the amount he is refunding to you.
If he insists on deducting tax, ask for proof and clarification.
If he refuses to return the full extra amount, he may be misusing tax as an excuse.
You can take steps to ensure you receive the rightful refund.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |7946 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

Asked by Anonymous - Feb 01, 2025Hindi
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I am 30 male. Working in Mumbai in BFSI sector. My in hand salary is 67k. Looking to start investement for retirement. Please suggest if NPS would be good option. If there is any fund which is similar to NPS can suggest as well. Looking to start with 10k as beginning. Also please suggest if the NPS in tier 1 can help in tax saving as well.
Ans: Your decision to start investing early for retirement is excellent. At 30, you have time to build a strong corpus.

Let’s assess if NPS is a good choice.

Understanding NPS for Retirement
NPS is a government-backed retirement scheme.
It invests in equity, corporate bonds, and government securities.
You can choose an active or auto allocation strategy.
Tier 1 NPS is locked until retirement.
60% of maturity value is tax-free. The rest must be used for an annuity.
Tax Benefits of NPS
Contributions under Section 80CCD(1) are part of Rs. 1.5 lakh limit.
Extra Rs. 50,000 deduction is available under Section 80CCD(1B).
Employer contribution is tax-free under Section 80CCD(2).
Annuity payouts after retirement are taxable.
Limitations of NPS
NPS has restrictions on withdrawals before retirement.
Equity exposure is capped at 75%, reducing long-term growth potential.
Returns depend on market conditions and fund manager performance.
40% mandatory annuity purchase reduces liquidity at retirement.
Alternative Investment Options
Mutual funds offer better flexibility and growth potential.
Actively managed equity funds outperform index-based options.
Midcap and flexi-cap funds provide long-term capital appreciation.
Hybrid funds balance risk and return for stability.
Portfolio Strategy for Retirement
A mix of equity and debt ensures a stable corpus.
Invest through SIPs to reduce market timing risks.
Increase allocation as income grows.
Keep a mix of large, mid, and small-cap funds.
Avoid over-reliance on any single investment product.
Final Insights
NPS is good for disciplined retirement savings.
Tax benefits are attractive, but liquidity is limited.
Mutual funds offer better long-term growth and flexibility.
A combination of both can work well for retirement planning.
Increase investment gradually as salary increases.


Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |7946 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

Asked by Anonymous - Feb 07, 2025Hindi
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I am planning to invest monthly 10,000 in nifty ETF, 10,000Motilal Oswal NASDAQ 100 ETF, 8000 in Axis Midcap fund, 6,000 in Tata small cap Fund, 3,000 in SBI innovation Fund, 3000 in Tata consumer fund, 3,000 in Tata nifty 200 alpha 30 fund and 2,000 in Motilal oswal nifty 500 momentum 50 fund. I am planning to invest for next 25 years for my daughter's education and marriage. My risk appetite is high. Is above strategy or funds are good for maximum return? I am planning to deploy more whenever market corrects and hold investment for 25 years, will it work for maximize portfolio return over long run?
Ans: Your long-term investment plan is well-structured. It is good to see a disciplined approach.

Investing for 25 years can generate significant wealth. But fund selection and strategy must be optimized.

Let’s analyse your portfolio.

Investment Horizon and Risk Appetite
You plan to invest for 25 years. This is ideal for wealth creation.
Your risk appetite is high. This allows you to invest aggressively.
Long-term investing reduces market volatility impact.
Staying invested through market cycles is key.
Issues with ETF Investments
You plan to invest in Nifty and Nasdaq ETFs.
ETFs follow an index and lack active management.
No fund manager works to generate extra returns.
Active funds can outperform during different market cycles.
ETFs do not adjust to changing market conditions.
Expense ratio is low, but returns are also market-linked.
Actively managed funds have delivered better long-term returns in India.
Fund Selection Analysis
Your portfolio has midcap, small-cap, innovation, consumer, and factor-based funds.
Midcap and small-cap funds provide high growth. But they are volatile.
Innovation and sectoral funds focus on specific themes. These funds carry high risk.
Factor-based funds follow a strategy like momentum or alpha. Performance varies in different market conditions.
Portfolio lacks a strong large-cap or flexi-cap fund. These provide stability.
Diversification and Balance
Portfolio is highly tilted towards high-risk funds.
Lack of a flexi-cap fund may impact risk-adjusted returns.
Large-cap funds give stability in market downturns.
A mix of large, mid, and small-cap funds creates a balanced portfolio.
Too many thematic and factor-based funds increase unpredictability.
Market Timing Strategy
Deploying more in corrections can increase returns.
But market corrections are unpredictable.
Staggered investments through SIPs and STPs work better.
Avoid lump sum investments unless valuations are very attractive.
Portfolio Optimisation Recommendations
Reduce exposure to index ETFs. Shift to actively managed large-cap or flexi-cap funds.
Keep midcap and small-cap allocation but balance with a flexi-cap fund.
Reduce allocation to thematic and factor-based funds. These should be only 10-15% of your portfolio.
Ensure a strong large-cap or flexi-cap presence for stability.
Maintain liquidity for market corrections, but do not try to time the market aggressively.
Final Insights
Your investment horizon and discipline are strengths.
Portfolio needs better balance between growth and stability.
Actively managed funds can generate better long-term returns than index ETFs.
Midcap and small-cap exposure should be paired with large-cap stability.
Market timing should be done cautiously to avoid overexposure in corrections.


Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |7946 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

Asked by Anonymous - Jan 29, 2025Hindi
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Money
I am 26 years old female i just got job with salary 60K monthly i dont have savings i need financial security how can I invest once job start
Ans: You are starting your financial journey at the right time. Your early investments will create long-term security. A structured approach will help you achieve financial freedom.

Below is a complete guide for your financial planning.

Step 1: Build an Emergency Fund
Keep at least 6 months' expenses as a safety net.
Save Rs 1.5 lakhs in a high-interest savings account or liquid fund.
This fund protects you in case of unexpected expenses.
Step 2: Get the Right Insurance
Buy a Rs 1 crore term insurance plan.
Get a Rs 10 lakh health insurance policy.
Choose a separate accidental cover for added protection.
Step 3: Plan Your Expenses and Budget
Track your spending for better financial control.
Save at least 40% of your salary every month.
Keep fixed expenses like rent and EMI within 30% of your income.
Step 4: Start Investing for Wealth Growth
Begin a SIP in actively managed mutual funds.
Avoid index funds as they lack flexibility in market changes.
Invest in a mix of large-cap, mid-cap, and flexi-cap funds.
Step 5: Plan for Tax Savings
Use Section 80C to reduce taxable income.
Invest in PPF or ELSS mutual funds for tax benefits.
Consider NPS for additional deductions under Section 80CCD(1B).
Step 6: Avoid Common Financial Mistakes
Do not buy ULIPs or endowment plans.
Avoid unnecessary credit card debt.
Do not invest all money in fixed deposits.
Step 7: Set Long-Term Financial Goals
Plan for a home purchase after 5-7 years.
Start investing early for retirement.
Increase your SIPs as your salary grows.
Finally
Focus on financial discipline from day one.
Keep a mix of equity and debt investments.
Review your portfolio every 6 months.
If you follow these steps, you will achieve financial security.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |7946 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

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Money
I am 42 yrs working in a PSU Bank. Service left is 18 yrs. Corpus is 60 lacs in NPS tier 1 and 2. Wife is housewife. 2 children 11 and 5. Have medical issues. Loan is 1.20 crore with 2 houses worth 4 crore. How much corpus i require if i plan for a premature retirement at 50 yrs. Thank you
Ans: Your goal of retiring at 50 is achievable. But it needs careful planning.

Your current situation has many factors to consider.

Let’s go step by step.

Existing Financial Position
NPS Tier 1 and 2 Corpus: Rs. 60 lakh
Loan Outstanding: Rs. 1.2 crore
House Value: Rs. 4 crore
Wife’s Income: None
Children’s Age: 11 and 5
Service Left: 18 years (Retirement at 60)
Medical Issues: Important to plan for healthcare expenses
Key Challenges in Early Retirement
You will retire at 50 but need income for 40+ years.
Loan repayment is a big commitment.
Children’s education expenses will rise.
Medical costs may increase in the future.
Your pension from NPS will start at 60.
Corpus Required for Early Retirement
Your annual expenses after retirement must be estimated.
Inflation will increase your costs every year.
Children’s education and other future needs must be considered.
A corpus should generate monthly income while keeping pace with inflation.
A rough estimate suggests you may need Rs. 5-6 crore.

Loan Management Before Retirement
Try to repay or reduce the Rs. 1.2 crore loan before retiring.
High loan liability will put pressure on your corpus.
Using rental income (if any) can help in repayment.
Partial loan prepayment every year will reduce interest burden.
Investment Strategy
NPS will give pension after 60, but you need income from 50-60.
Keep a mix of equity and debt investments for steady income.
Have 5-7 years’ expenses in low-risk instruments.
The rest should be in well-managed mutual funds for growth.
Medical Planning
You must have sufficient health insurance.
Set aside Rs. 25-30 lakh for medical emergencies.
If possible, buy super top-up insurance for additional coverage.
Children’s Education and Future Planning
Major expenses for education will come after your retirement.
Plan a separate corpus for higher education.
Avoid using retirement corpus for children’s expenses.
Final Insights
Retiring at 50 is possible but requires a bigger corpus.
Your priority should be loan repayment.
Medical costs and children’s education must be planned separately.
A structured withdrawal and investment strategy is essential.
A target corpus of Rs. 5-6 crore would give more financial security.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

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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