My Salary income is 6LPA also I have STCG of 3LPA but now I have incurred loss of 1LPA. What tax planning should I do to save taxes as my total income is 8LPA. Should I go with old or new tax regime also what deduction should I opt for how much

Ans: As per the details mentioned above section 80C is completely covered.

In order to avail further benefit, you can avail medical insurance premium under section 80D. You can claim deduction upto 25,000 on premium paid towards medical insurance for self, spouse and children and parents below 60 years of age and Rs. 50,000 if parents are above 60 years of age.

You can also avail an additional deduction of 50k by investing in NPS.

Ans: Person getting salary of Rs.15 lakh, claiming deduction of 80C of 1.5 lakh, NPS 50k, standard deduction of 50k is advised to opt for new tax regime, as tax liability is expected to be lower with new slab rate proposed for FY 23-24 under new tax regime

Ans: You have raised the point whether your past losses in F&O and Intraday trading can be used to save tax now? There are some points to note here:-

1. F&O is classified as a non-speculative business while Intraday Trading is classified as speculative business.
2. Both speculative and non-speculative business incomes are added to your overall income including salary, other business income, interest on deposits, income from rentals, etc and taxed according to the applicable tax for you.
3. Losses arising from speculative transactions are called speculative losses. These losses can be carried forward for a period of up to four consecutive financial years. Also, they can be set-off only against speculative business income made during that period.
4. On the other hand, losses arising from non-speculative transactions (non-speculative losses) can be carried forward for a period of up to eight consecutive financial years. You can set-off non-speculative losses against any other business income except salary in the same year.
5. Usually, trading in futures & options must be reported as a business unless you have only a few trades (say if only 2-3 trades) in the financial year. Remember this also applies to individuals. You don’t have to be formally incorporated as a company or some legal entity to earn business income. Individuals can have business income too.

From your statement it seems that you have not reported your past losses. If you have not done so, then you would not be able to set them off in the manner given above. However, if you have any such losses in the last financial year whose Income Tax Return (ITR) is yet to be filed, you can use the set-off rules as given above.

For more clarity, do discuss it in more details with your tax filing person.

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