Tax planning Financialyear 2019-2020 Taxbenefit

                        

           Tax savings

Hello friends my name is Rajesh kumar, and once again am here with a new topic tax savings. In this

blog you will know about tax savings, and under which section how much tax you can save. Because 

from the next onward JFM (January, February & March) will start. So as an Indian people we 

schedule each and every thing in last. Like one night study, ticket booking in last moment etc etc. So 

we plan our tax also in last. There are lot's of section under which you can save your tax. But we will 

cover only major section in this blog. 

1.  80C -     The first and most important section for tax payer is 80 C. The maximum limit of 80C is Rs.1.5 Lac in a financial year. Because lots of tax instruments cover under 80 C. So let's discuss each & every topic one by one.

                   Tax Saving's FD -    I cover this topic on first number because FD is favourite for senior

 citizens. This group of people always prefer to FD. Because no if & but include in this. This is

 simple product in banks or any NBFC. They normally goes for higher amount of fd's. Like 5lac, 10

 lac like this. This is the safest product and no risk involve. 

Is all FD's are tax saving- Of course not. All fd's are not comes under 80C. Tax saving's fd is book

for 5yrs. There is locking period of 5yrs. Before 5 yrs we can't withdraw our money at any cost. But

there is once drawback is that interest which you will earn through this fd is taxable. In other words

we can say that you have to pay tax on interest. And the best part is that you can take loan also on

behalf of the fd on lower interest. Minimum booking amount is 10,000 & there is no limit for

maximum one.

          Principle part of Home loan-  This point is also very important because either lot's of people

already running their home loan or want to take home loan. I think home loan is very cheap loan in

India. Because first rate of interest is already very low, and second you can enjoy dual tax benefit on

home loan first is 80C & another one is 24 B. When we pay home loan emi to our bank. Then two

things are hidden. First is interest part and second is principle part. In the starting period banks charge

maximum interest from your emi's. And slowly slowly with time interest part getting reduce &

principle part getting high. Let's understand this topic with the help of an example.

For example you running a home loan from HDFC LTD Of Rs. 10lac for 20 yrs. So you have to pay

 emi's around 10k. So in initial stage Bank charge around 90 per interest part & 10 per principal part.

It means only one thousand you are paying as a principal amount. And 9000 is your interest part.  So

 this one thousand is cover under 80C. In a financial year you can enjoy only Rs.12000 of tax benefit

through principal part of home loan.

Life Insurance Policies 

Life Insurance policy is also comes under section 80 C. All life insurance policies either it's term

plan, endowment plan or Ulip's. All types of policies comes under 80C. But the best part of life

insurance policy is maturity amount is also tax free under section 1010D. On the maturity of tax

saving's fd's you have to pay tax but here the storey is different. Life insurance policy play a very

important part in our life and I think atleast we should have one term plan. This is also a very lengthy

 topic so I will cover this topic separately in my next blog.

PPF (Public Provident fund)  PPF is introduced by national savings institute of the ministry if

finance in 1968. The minimum amount to investment is Rs.500 and there is no limit for maximum

one. But for tax saving's purpose maximum amount is only Rs.1.5lac. Like life insurance policies

return is also tax free. You can invest you amount in lum sum or in instalment of 12 months. This is

flexible product. You can invest as per you own convenience. There is lock in period of 15 yrs in PPF.

 It means before 15 yrs you can't withdraw your money. Like FD this is also risk free product. There

is no if or but in this product. Simply you have to invest according to you budget and you will get fix

return on it.

EPF  (EMPLOYEE PROVIDENT FUND)   If you are a salaried person and your company

deducted pf every month from your salary then EPF is also key point for you. Simply you have check

 your salary slip and just check how much pf is getting deducting from your salary. suppose company

 deducting Rs.1000 on the name of pf every month from your salary. Then in a financial year you can

take Tax benefit of Rs. 12000. Generally the finance department or Hr department of your company

automatically cover this amount for your tax savings.

ELSS (EQUITY LINK SAVINGS SCHEMES)  ELSS also cover under section 80C. This is the 

type of mutual fund with the lockin period of 3yrs. It means before three years. You can't withdraw

 your money. You invested your money in equity or debt. In simple language we can say that your 

money is invested in share market. Unlike fd's or ppf your money is not safe or return is not 

guaranteed. But if you invested you money in DEBT scheme then somewhere you reducing your risk

 level. But your return will also low, around 9-10 per. But in equity if risk is there then return also be

 there. In long run you can expect the return of more then 15 per. 

             I suggest if you are a handsome/beautiful young boy/girl then you should go for equity

 otherwise debit is also not bad at all. 

2)   24B    Section 24B is dedicated to home loan interest part. Earlier we discuss this topic there 

is two component of you home loan emi's first is principal part and another one is interest part. So 

your interest part is comes under the section 24B. The maximum limit is Rs. 2lac in a financial year.

 The home loan interest part is single point which covers under section 24B. 

3)   80D      After 80C & 24B now it's time to discuss about 80D. This section is also very 

important because it's related to our health, and someone said health is wealth. So the maximum limit 

to avail 80D is Rs.25000 (including wife/husband, children) but this amount is not pertain to senior 

citizen. For senior citizen Rs.50000 is applicable. To avail 80D you have to purchase a health 

insurance policy from any General insurance company. Company should IRDA certified. IRDA 

means INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA. Basically 

IRDA is government body which makes the rules & regulation or we can say that guidelines for all 

insurance company either its life insurance company or general insurance company. 

         Health insurance is very important part of our daily life. Because with the increasing 

population, deceases are also increasing. And medical cost also touching the sky. So it's better if you

 buy a health insurance policy in early age so that in case of any unforeseen event with your life, your

 bank balance should not affected.

4)     80CCD (1B)  If your income is high and you falls under high tax slab, and your 80C, 

24B & 80D is already exhausted and still you thinking or worrying about high tax. So wait & watch 

once more section available by our Indian government which is 80CCD (1B). Here CCD is not 

belong to CAFE COFFEE DAY. The maximum till Rs.50000 you can save your tax under this 

section.

          To take participate in this particular section just you have to invested your amount in NPS 

which is nation pension scheme. Again like fd you can buy this product through any banks or directly 

login to https://npscra.nsdl.co.in/. This is the pension scheme. I will make the blog separately. 

          But here I will say this also a very good section for tax saving. And if you not comes under 

higher tax slab. Still you can invest under this scheme. 

5)     10 (13A)  Means HRA (House rent allowance). If you are staying on rent where you    

    doing job. 

Then you are eligible to for 10 (13A). Just you have to submit the rent slip in your office and you can

 enjoy tax benefit under this section.  HRA is decided based on the salary. However, there are some

other factors that also affedt HRA. Such as the city in which the employee resides. In case the

individual. Resides in a metro city, then he/she is entitled to an HRA equal to 50% of the salary. For

cities other than a metro, the entitlement is 40% of the salary.

6)         80G You can avail tax under section 80G if you believe in some donation or 

charity. If pay some specific amount in NGO on monthly basis. Then you are eligible for this section. 

7)         80E  If you having any education loan then you are eligible for section 80E. 

On the interst part you can avail the tax benefit under section 80E.

So this was the major section under we can save our money. If still you have any doubt or

 you want to ask any question then kindly go to contact us column and leave message. I will

 reply you. In last blog I discussed about salary account & saving account.

https://bankingin2min.blogspot.com/. This is link. This is also a very good topic please go through

this link also. So guys it's time to say good bye. Very soon I will back with once more banking topic

. Bye Bye.