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I earn 29LPA in Delhi and want tax advice. New vs old regime, and investments?

Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 27, 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
Viren Question by Viren on Jun 05, 2024Hindi
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My salary is around 29LPA. I am an unmarried male living in new delhi with my mother. I am really bad at tax planning hence asking here. How should I plan my taxes i.e. should I opt for new regime or old regime? I have recently lost about 50K against my variable. I just have one car loan which I will be closing in few months but apart from that I don't do any investments but can invest as adviced.

Ans: Effective tax planning can save you a significant amount of money. Let's evaluate whether the new or old tax regime is better for you and suggest suitable investment options.

Understanding Tax Regimes

Old Tax Regime: Offers various deductions and exemptions like 80C, 80D, HRA, etc.

New Tax Regime: Has lower tax rates but no exemptions or deductions.

Evaluate Your Situation

Since you are not currently investing, your deductions are likely limited. Let's compare both regimes.

Old Tax Regime

80C Deduction: You can invest up to Rs 1.5 lakhs in various instruments like PPF, EPF, ELSS, etc.

80D Deduction: Health insurance premiums up to Rs 25,000 for yourself and your mother.

HRA and Home Loan Interest: You don't have these, so they won't apply.

New Tax Regime

Simplified Structure: Lower tax rates but no exemptions or deductions.
Comparative Analysis

Old Regime: Beneficial if you can claim significant deductions.

New Regime: Suitable if you prefer a simpler structure without investing for deductions.

Tax Slabs Comparison

Here’s a simplified comparison of tax slabs:

Old Regime:

Up to Rs 2.5 lakh: Nil
Rs 2.5 to 5 lakh: 5%
Rs 5 to 10 lakh: 20%
Above Rs 10 lakh: 30%
New Regime:

Up to Rs 2.5 lakh: Nil
Rs 2.5 to 5 lakh: 5%
Rs 5 to 7.5 lakh: 10%
Rs 7.5 to 10 lakh: 15%
Rs 10 to 12.5 lakh: 20%
Rs 12.5 to 15 lakh: 25%
Above Rs 15 lakh: 30%
Optimal Investment Strategy

Considering your current situation and future goals, here are some recommendations:

Section 80C Investments

PPF: Safe and offers good returns. Lock-in period of 15 years.

ELSS: Equity-linked saving schemes with a lock-in period of 3 years.

EPF: If you contribute to the Employee Provident Fund.

Health Insurance (Section 80D)

Health Insurance: Cover yourself and your mother. Get tax benefits up to Rs 25,000.
Additional Investments

NPS (Section 80CCD(1B)): National Pension System offers an additional Rs 50,000 deduction.

Term Insurance: Essential for financial security. Get tax benefits under 80C.

Comparing Deductions

If you can invest Rs 1.5 lakh in 80C, Rs 25,000 in 80D, and Rs 50,000 in NPS, your total deductions would be Rs 2.25 lakh. This would make the old regime more beneficial.

Benefits of Actively Managed Funds

Expert Management: Fund managers make informed decisions.

Potential for Higher Returns: Aim to outperform the market.

Disadvantages of Index Funds

Lack of Flexibility: Index funds simply track a market index.

Lower Return Potential: Aim to match market performance, not exceed it.

Final Insights

For effective tax planning, consider the old regime if you can utilize the deductions. Invest in PPF, ELSS, and health insurance. Also, consider NPS for additional benefits. Consult a Certified Financial Planner for tailored advice and better financial planning.

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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Tejas

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Tax Expert - Answered on Apr 25, 2023

Asked by Anonymous - Mar 31, 2023Hindi
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Hi Expert, My CTC is 12 Lakhs. I have home loan interest of INR 1,60,000 and principle of approx INR 80,000, ELSS 36,000, Life Insurance 12,000, Tuition Fee 60,000, Medical Insurance 26,000, PPF 50,000 to1,00,000. these are my planned annual investments. I need you help to choose new tax regime or old tax regime. can you help, please.
Ans: Based on the information you have provided, you can calculate your tax liability under both the old tax regime and the new tax regime to see which one is more beneficial for you.

Under the old tax regime, you can claim deductions under Section 80C for your home loan principal repayment, ELSS, life insurance premium, tuition fees, and PPF, which amounts to a total deduction of up to INR 1.5 lakh. In addition, you can claim a deduction of up to INR 25,000 for medical insurance premium under Section 80D. Your total deductions would be INR 1.75 lakh, which reduces your taxable income to INR 10.25 lakh.

Your tax liability under the old tax regime would be as follows:

Up to INR 2.5 lakh: Nil
INR 2.5 lakh to INR 5 lakh: 5% of (taxable income - INR 2.5 lakh)
INR 5 lakh to INR 7.5 lakh: INR 12,500 + 10% of (taxable income - INR 5 lakh)
INR 7.5 lakh to INR 10 lakh: INR 37,500 + 15% of (taxable income - INR 7.5 lakh)
INR 10 lakh to INR 12.5 lakh: INR 75,000 + 20% of (taxable income - INR 10 lakh)
Above INR 12.5 lakh: INR 1,25,000 + 30% of (taxable income - INR 12.5 lakh)
Under the new tax regime, you cannot claim the deductions under Section 80C, Section 80D, and other sections. However, you can claim a standard deduction of INR 50,000. Your taxable income would be INR 11.1 lakh.

Your tax liability under the new tax regime would be as follows:

Up to INR 2.5 lakh: Nil
INR 2.5 lakh to INR 5 lakh: 5% of (taxable income - INR 2.5 lakh)
INR 5 lakh to INR 7.5 lakh: INR 12,500 + 10% of (taxable income - INR 5 lakh)
INR 7.5 lakh to INR 10 lakh: INR 37,500 + 15% of (taxable income - INR 7.5 lakh)
INR 10 lakh to INR 12.5 lakh: INR 75,000 + 20% of (taxable income - INR 10 lakh)
Above INR 12.5 lakh: INR 1,25,000 + 30% of (taxable income - INR 12.5 lakh)
Based on the above calculations, it seems like the old tax regime may be more beneficial for you as your taxable income would be lower due to the deductions under Section 80C and Section 80D. However, you should consult a tax expert or a financial advisor to make an informed decision based on your individual circumstances.

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Sir i am currently in class 11 th and i just want to prepare for jee mains and advanced 2026 exam so give me some roadmap to achieve and also guide me for computer science
Ans: Shreya, I trust that you have already enrolled in a coaching center, whether it be online or in person, and have finished your eleventh syllabus. (1) If you have not yet created your own short-notes for the 11th syllabus that has been completed, prepare it and continue to revise them every three days until 2026, even after you have commenced studying the 12th syllabus in December 2024. (2) Review the questions that you have incorrectly answered or skipped in mock tests conducted by your Coaching Center and/or practiced independently. (3) In order to increase your rank/percentile by targeting computer science at a reputable college/institute, prioritize mathematics (although all three subjects are equally important). (4) You should be thorough with NCERT books, particularly those pertaining to chemistry, in conjunction with the materials provided by your coaching institute. (5) Have 1-2 reference books for each subject. Not exceeding two. (6) Review the questions that were incorrectly answered or skipped in your mock and practice exams and retake the test. It is advisable to maintain a distinct note-book for these types of questions, which should include answers and elucidating notes, in order to review them repeatedly for all three subjects. (7) Download the SYLLABUS of JEE Main 2025 (available on Google by searching for "JEE Main Information Bulletin") and print it out, as there will be no significant changes to the syllabus in 2026. Maintain it on your study table and continue to update the 11th syllabus chapters and concepts that you have covered to date by marking them with a checkmark. This will boost your confidence if you continue to update the same till November 2025. (8) A slight difference in Syllabus might be visible when you acquire the 2026 JEE Main / JEE Advanced Syllabus. The same can be resolved within 15 days to one month in 2025-26. (9) Increase your productivity by studying for 45 minutes to 1 hour, taking a 10-minute break, and then continuing for 45 minutes. (10) Take a 2-3 minute break every 45 minutes while practicing questions, whether offline or online. This break should consist of closing your eyes and taking long breaths to enhance your concentration and mental capacity. (11) Additionally, it is recommended that you acquire the 20-40 PREVIOUS years question paper book of JEE (Main & Advanced) from Amazon. Arihant's, Disha's, or MTG's publications are recommended. Once you have finished reading a chapter, practice and complete it to determine the extent to which you have comprehended the concepts and to identify areas that require improvement. (12) By October 2025, ensure that you have reviewed significantly more than 90% of the previous years questions. Your confidence will be further bolstered by this. (13) After the mock test is completed at your coaching center, clarify all incorrectly answered or ignored questions and continue to revise and practice them, as these types of questions will significantly disrupt your performance in the actual JEE. (14) If you are a regular school student, inquire with your class teacher about the minimum attendance requirement as outlined in the Board's regulations (State, CBSE, ICSE, etc.). Utilize the remaining 15% by taking time off and preparing for your JEE, if only 85% attendance is required. (15) THE MOST IMPORTANT Value Added Suggestion: Rather than solely relying on JEE, please participate in 5-7 entrance exams/counseling process with a JEE score for getting admission into any one of the private engineering colleges to have a variety of options to select the most suitable one. All the BEST for Your Prosperous Future.

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T S Khurana

T S Khurana   |197 Answers  |Ask -

Tax Expert - Answered on Nov 23, 2024

Asked by Anonymous - May 11, 2024Hindi
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Can you please suggest on capital gains as per Indian taxation laws arising in the below two queries : 1) property purchased with joint ownership, me and my wife’s name in 2015 at a cost of 64,80,000, housing improvements done for the cost of 1000000 and brokerages of 200000 paid and sold the same property at 10000000 in Dec 2023? 2) 87% of the proceeds got from the deal i.e 8700000, have been reinvested to pay 25% amount in purchasing another joint ownership property in Dec 2023, 3) I have invested in another under construction property in Nov 2023 by taking housing loan, which is on me and my wife’s name worth 1.4 cr, here the primary applicant is me only while wife is just made a Co applicant in the builder buyer agreement and also on the housing loan . So what are the LTCG tax liabilities arising from the above 3 scenarios for FY 2023-2024 and FY 2024-2025. I intend to sale off the property acquired in (2) by Dec 2024 and use that proceeds to close the housing loan for the property acquired in (3), will this sale of property be inviting any tax liabilities if the complete proceeds received from the sale of the property in (2) would be utilised to close the housing loan taken in Nov 2023 for the property in (3) ? Since in FY 23-24, I would be claiming the LTCG from the sale proceeds of 1) invested in the purchase of property in 2), and I intend to sale off this property in Dec 2024, will the LTCG claim be forfeited on the property sale in (1), should I hold this property at least for further 1 year so that sale of this property in 2) will not invite STCG?
Ans: (A). Let's first talk about F/Y 2023-24 :
You jointly sold a Property during the year for Rs.76.80 lakhs (64.80+10.00+2.00), & sold the same for Rs.100.00 lakhs.
You have jointly also purchased Property No.3 (I suppose it is Residential only), for Rs.140.00 lakhs.
You should avail exemption u/s-54 & file your ITR accordingly. Please disclose all details about sale & purchase in your ITR.
02. Now coming to the F/Y 2024-25 :
You intend to Sell Property No.2, which was acquired in 2023-24. Any Gain on Sale of it would be Short Term capital Gains & taxed accordingly.
Alternatively, you may hold this sale of property no.2 (for 2 years from its purchase) & avoid STCG
You are free to utilize the sale proceeds in a way you like, including paying off your housing Loan.
Please note to avail exemption u/s 54 only from investment in property no.3 & not 2.
Most welcome for any further clarifications. Thanks.

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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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