I will be writing about the Tax Planning for the year 2009. How ever the budget is not yet announced, we have to wait till the election is getting over. But, learning some tips for the tax savings is important before submit your tax declarations. If you have not saved anything before forget it and think that from 2009 onwards utilize your all the tax exemptions and get the maximum tax benefits. Your hard earned money cannot be just given for the tax.
From my experience there are many people unknowingly paying the huge amount of tax and they could have saved that money by the wise tax declaration and investments. In this series of article I will be writing about the tax planning and tips where yon can invest for the tax savings.There are numerous options like Fixed Deposit (FD), Insurance, Donations,etc. to spend your tax money.
Apart from writing the tax savings tips, I would like to help people if they are interested in contacting me directly for the tax savings tips. I would be more interested in helping them without any fees. Also you can write your questions in the comments section. I will answer your questions.
Home Loans for Tax Savings
Taking the home loans is the good tax savings oppurtunity. Earlier I have written few articles about the home loans and tax benefits on the home loans. If you read the above article, it will help you to understand the basics of home loans and in what way you can save the money.
Income Tax act 1961, provides two section where you can use home loans for the Tax Savings purpose. These two sections are section 80c and section 24b. One for savings on home loans principal repaid and the another one for interest paid on the loan amount. For more details about the section and benefits please read the article here.
But in the recession time, it is not good idea to invest on the houses. This will be applicable to the people who has enough savings and want to invest money on the real estate. For others, it is not the correct time to invest on buying the new houses. For those who want to save money by not investing on the houses, in the next section I will write about the insurance and Fixed Deposite(FD) schemes.
Fixed Deposit for Tax Savings
Another good source for the tax savings is the Fixed Deposit scheme. from 2006, the government has extended the tax benefits as five-year fixed deposit schemes. In the existing the provision, you are eligible to claim the tax benefits up to Rs.100000. But, with the tax saver fixed deposit you cannot apply for the loan against fixed deposit. The interest rates on fixed deposit is decreasing rapidly, it may touch the 7% per anum mark with in next few months. It was golden time when the fixed deposit rate is above 10%. I have written a detailed article on how to start the fixed deposit for tax savings.
Summary
Update : Tax Planning for 2009 – Part 2
In this article I have written about the two sources where you can invest for the tax savings. In my next article I will be writing some more investment options like insurance,mutual funds,etc. with details. Hope the 2009 union budget will bring cheers in every one’s face. Till that time I will continue this series of tax savings article. Thank you for reading the article!!. Please post your feedback in the comments section.
March 27, 2009 at 3:30 am
Hi Krishna,
Thanks for all the articles, I’ve been a passive reader and I enjoy reading your posts, quite useful and it keeps reminding me about saving my money as I’m very lazy and bad at it.
Last year – 2008-2009 – I’ve lost a huge sum of money in taxes because I didn’t plan it ahead properly. So this year – 2009-2010 – I’m thinking of saving every penny I possibly could.
My first question to you: how much minimum amount will I have to pay in tax if I’m a male earning 6 lakhs per annum? In other words, if I use all the tax benefits that I’m eligible to, how much amount of money is taxable in my income? And how much tax will I have to pay for that taxable income?
I stay at a rented apartment and living in a non-metropolitan city. I have not taken any home loans. So any tax savings one can do in home loans is not applicable to me. My basic salary is 2 LPA.
Thanks again and I’ll be waiting for your next article.
March 29, 2009 at 9:26 pm
HI Sri,
Thank you for reading all my articles. I would be happy to help you in saving the tax money from this year
First thing, there is no such limit like paying the taxes.Income tax act provides many provisions to eliminate the taxable amount from the total income. If some of the provisions fit into your category, then you have to use it properly from reducing the tax burden.
Some times it depend on your company also. Some caompanies provide you the option like claim the tax benefit for petrol bills and telephone bills. You have to utilize all those options.
If you stay in the rented house, you can claim HRA from the tax deduction.
Find the minimum of the following three options:
1. Actual house rent allowance received from your employer
2. Actual house rent paid by you minus 10% of your basic salary
3. 50% of your basic salary if you live in a metro or 40% of your basic salary if you live in a non-metro
Use the above calculation for the HRA. This is separate from the section 80c where you can invest for the Rs.100000.
If you have any more doubts please send me a reply. I would like to help you. If you are interested I can discuss with you in the free time through phone also.
Thanks.
krishna
March 29, 2009 at 10:26 pm
Krishna, thanks a lot!
I’m planning to invest in fixed deposit scheme this year for claiming under 80c, and of course, claim HRA also.
March 29, 2009 at 10:50 pm
HI Sri,
That is great idea for investing in the Fixed Deposit scheme. Few points to consider while investing in the Fixed Deposit.
1)The term must be 5 years. You cannot with draw any loan or close the scheme before the specified year.
2) The deposit amount should be maximum Rs.100000
3)Apart from investing in the fixed deposit, the interest for the amount deposited is taxed. So, this is one drawback on this scheme. Unlike Post Office Savings are tax free, this is taxable income and you have to pay the tax for it.
4)Under section 80c, the maximum amount can deposited is Rs. 100000. As we know, the amount includes all other tax saving components like PF, PPF, Home Loans.
You can read the details here:
http://www.thinkplaninvest.com/2009/01/tax-savings-on-term-depsoit-under-section-80c/
Please invest it soon, banks will reduce the interest rates in coming months. It may come up to 7% p.a.
Thanks,
Krishna
April 3, 2009 at 2:05 am
Hi Krishna,
Thanks for your article.Really it will be useful for everyone those who want to reduce the tax burden like me.
And i have one query, if we go for FD tax saving scheme, how much percentage will be deducted on returns?
Once again thanks a lot for a nice article.
Thanks and Regards
Kalam
April 3, 2009 at 3:26 am
HI Kalam,
Thank you for the feedback. You can deposit Rs.100000 under FD scheme. The percentage will be depend on the taxable income on you. Monday I am posting Part – 2 of this article, that will provide you more in depth knowledge on tax planning and various options under section 80c. I would like to help you, if you have any personal guidance on tax planning. You can reply to this comment with your details or send me a mail to krishna.sa at gmail.com. I will reply you with details.
For more details, look for the part 2 of this article
Thanks,
Krishna
May 8, 2009 at 4:48 am
Hi Krishnan,
Nice article. I am planning for investment for tax saving purpose for 2009-10. I am interested in short term investment. As your article suggests Equity Linked Savings Schemes(ELSS) is one of them.(3 yrs with high returns with some risk) Please give some more details regarding ELSS and beat options from your point of view.
Thanks
RD
May 8, 2009 at 7:55 am
HI RD,
ELSS is investing in the mutual funds. In the mutual funds itself there is many category. I would advice you to choose the SIP(Systematic Investment Plans). In this plan every month you will be paying as the premium(minimum Rs.500). That will be invested in the equity market. When the market is high you will get the very good returns for the investment. If you have any other queries please reply to this comment or send me a mail with your mobile number. I will talk to you.
You can read part 2 of this article:
http://www.thinkplaninvest.com/2009/04/tax-planning-for-2009-part-2/
Thanks,
Krishna
August 7, 2009 at 3:56 am
Hi Krishna,
I am planning to invest in FD arround 2lakhs in ICICI bank for 990 days, can I avoid the tax on intrest on FD if I open the FD on my wife’s name she is a housewife.
Thanks,
Nitin
August 7, 2009 at 10:47 pm
HI Nitin,
Yes..surely you can avoid the tax, but submit the Form 15G.
Thanks,
Krishna
January 13, 2010 at 1:57 am
I want to invest in fixed deposits for an amount of Rs. 4,00,000/-. What is the best option for me. And will the interest received on this FD taxable and how this can be avoided.
Thanks
Babita
January 15, 2010 at 5:17 am
Hello Babita,
As of now, the bank FD rates are very low. I don’t suggest you to invest in the bank FDs. You can go for the company FDs like mahindra, they offer good interest rates.
http://www.thinkplaninvest.com/2009/04/how-to-avoid-tds-on-fixed-deposit/
Thanks,
Krishna
January 13, 2010 at 6:13 pm
I am working in a private co. and recently after working for 20 yrs I am going abroad for JOB. where to invest my PF/GRATUITY/SUPERANNUATION AMOUNT WHICH WILL BE APROX 15 LAKS,before going abroad. I do not need these money in coming three years.
regards
JISHNU
January 15, 2010 at 5:19 am
Hello JISHNU,
You can invest part of the money in mahindra finance and remaining you can invets in the mutual funds also.
Thanks,
Krishna
January 15, 2010 at 6:57 am
Dear Krishnas: Thank you for your promt reply. Pl. plan for me an investment of 15 lakhs . I want a safest investment plan as i will invest my PF/GRATUITY ETC MONEY , while going abroad.
You can mail me in my e mail address also : jyotiprosanna@yahoo.co.uk
What are the other safest invest option other than Mahindra finance. What about hdfc fixed deposit.
Which are the safest mutual fund.
regards
JISHNU
January 20, 2010 at 12:18 am
Dear Krishnas
Please inform, is Postal Life Insurance covered under Section 80C? i.e. investment in PLI is eligible for deduction under 80C?
thanks
Babita
July 22, 2010 at 8:55 pm
hi, We have booked a flat in joint names (possession is in Jan 2013)and loan emi will start only after that. Please suggest some good monthly investment plan for a period of 2-3 years which can be used for squaring off the loan as well as tax free returns.
August 8, 2010 at 2:17 am
hi krishna,
i read all your article, really helpful to all.thanks a lot for your effort!
am really new to savings. i dont have any idea bout taxing and all that stuffs !!
can you pls suggest me , how to start a savings in earlier period of human life ,,
at present i have only 5lk !!! how and wher to invest this amount
and i have plan to build a house in one of my land ..how can i get home loans .. which is preferable.. i need your help and suggestions please !!!!!
August 9, 2010 at 9:25 pm
sir.
i am an electrical engineer my salary is about 3 lakh per annum……….
an this year i spent 30000 rs/- in NSC investment for tax saving . but rest 70000 rs wants to invest ULIP or MIP ,elss ….plz suggest me how and where i spend rest monye with best returns….
thanking u.
December 13, 2011 at 1:37 am
Hello sir, I have 60 lakh rupee and i want to invest anywhere , where i got 30000-45000 rupee return per month.