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Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University Complete Information

Evaluation Of Tax Saving Instruments For Financial Planning Mcom Sem 1 Delhi University Complete Information

Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University :  Here we provides complete details about Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University Complete Information  and other Financial Planning MCOM Sem 1 Delhi University important notes in pdf format. Here we provide direct download links for Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University notes in pdf format. Download these Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University Complete notes in pdf format and read well.

Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University Complete Information

Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University :  One must realize that tax saving instruments do much more than only saving taxes. Smart planning with right tax saving instruments adds value to a portfolio. So take a wiser approach and avoid last minute rush for tax saving.

Download here Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University Complete Information in pdf format 

Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University Complete Information

Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University : Tax-saving is an important part of financial planning. An intelligent tax-planning strategy can serve the dual objective of helping individuals meet their financial goals and save tax in the process.

Here is a list of some of the best tax saving options, plans and schemes for 2016 that can help individuals maximize tax benefits:

Sr No.Tax Saving Option & PlanTax Benefit Under Section
1Life InsuranceSection 80C (Premium) Section 10(D) (Death / Maturity)
2Pension PlansSection 80CCC(sub-section under Section 80C)
3Health insurance or MediclaimSection 80D
4NPSSection 80CCD
5Tax-saving mutual fundsSection 80C Section 10(D) (Death/Maturity)

Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University : 

  • Life insurance
    Life insurance plays an important role inthe individual’s financial portfolio offeringsecurity to the individual’s family in case of an eventuality. This makes it the breadwinner’s primary responsibilityto take life insurance at the earliest for the family’s security.Life insurance, be it traditional (endowment) or market-linked (ULIP), offers tax benefits to policyholders on the premiums paid.There are various life insurance plans like:

    1. Term plans
    2. Endowment plans
    3. ULIPs or unit-linked plans
    4. Money back plans

    Regardless of its nature, life insurance plans offer tax benefits to policyholders.

    Premiumspaid towards life insurance are covered under Section 80C of the Income Tax Act up to a maximum of Rs 1.5 lakhs. Proceeds on death / maturity are tax-free under Section 10(D).If policyis surrendered/terminated withinfive years, deductions claimed are added to income and taxed accordingly

  • Pension plans
    Pension Plans is another form of life insurance. They serve a different end-objective from other insurance plans like term plans and endowment plans – which are called protection plans. While protection plans are geared to financially secure the individual’s family on his death, pension plans aim at providing for the individual and his family if he lives on.Contributions towards pensionare covered under Section 80CCC(sub-section under Section 80C) of the Income Tax Act. The aggregate limit of deduction under all the sub-sections of Section 80C cannot exceed Rs 1.5 lakhs.On maturity 1/3rd of the accumulated pension amount is tax free with the balance 2/3rd treated as income and taxed at the marginal tax rate. The amount is tax free upon death of beneficiary.
  • Health insurance or Mediclaim
    Health insurance or Mediclaim as it is more popularly known, covers expenses incurred from an accident/hospitalization. Mediclaim also covers pre and post-hospitalization expenses, subject to the sum assuredHealth insurance offers tax benefits under Section 80D. Insurance premium upto Rs 20,000 for senior citizens and Rs 15,000 for others is eligible for tax benefit. If the policyholder pays Rs 15,000 as premium on his own policy and Rs 20,000 for his parent, a senior citizen, he can claim tax benefit of Rs 35,000 (Rs 15,000+20,000). Maturity value is tax free for sum received under critical illness insurance policies policies
  • NPS
    The NPS or the New Pension Scheme is regulated by the Pension Funds Regulatory and Development Authority – PFRDA. Any citizen of India over the 18 – 60 years age bracket can participate in it. It is extremely cost effective since fund management charges are low. The fund managers manage the money in three separate accounts having distinct asset profiles viz. Equity (E), Corporate bonds (C) and G Government securities (G). Investors can choose to manage their portfolio actively (active choice) or passively (auto choice).Contributions made to the NPS are covered under Section 80CCD of the Income Tax Act. The aggregate limit of deduction under this section along with Sections 80C, 80CCC cannot exceed Rs 1.5 lakhs.Given the range of options, NPS is particularly useful for individuals, with varying risk appetites, looking to set aside money towards retirement.

Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University : 

  • Tax-saving mutual funds
    Investments in tax-saving mutual funds, also known as equity-linked savings scheme (ELSS), qualify for tax benefits. Tax-saving mutual funds invest in stockmarkets, among other assets, and are more suited for investors with medium to high risk appetite. Investments are locked in for three years.Investments towards tax-saving mutual funds are covered under Section 80C of the Income Tax Act up to a maximum of Rs 1.5 lakhs. Proceeds on death / maturity are tax-free under Section 10(D).
  • Health insurance or Mediclaim
    Health insurance or Mediclaim as it is more popularly known, covers expenses incurred from an accident/hospitalization. Mediclaim also covers pre and post-hospitalization expenses, subject to the sum assuredHealth insurance offers tax benefits under Section 80D. Insurance premium upto Rs 20,000 for senior citizens and Rs 15,000 for others is eligible for tax benefit. If the policyholder pays Rs 15,000 as premium on his own policy and Rs 20,000 for his parent, a senior citizen, he can claim tax benefit of Rs 35,000 (Rs 15,000+20,000). Maturity value is tax free for sum received under critical illness insurance policies policies
  • NPS
    The NPS or the New Pension Scheme is regulated by the Pension Funds Regulatory and Development Authority – PFRDA. Any citizen of India over the 18 – 60 years age bracket can participate in it. It is extremely cost effective since fund management charges are low. The fund managers manage the money in three separate accounts having distinct asset profiles viz. Equity (E), Corporate bonds (C) and G Government securities (G). Investors can choose to manage their portfolio actively (active choice) or passively (auto choice).Contributions made to the NPS are covered under Section 80CCD of the Income Tax Act. The aggregate limit of deduction under this section along with Sections 80C, 80CCC cannot exceed Rs 1.5 lakhs.Given the range of options, NPS is particularly useful for individuals, with varying risk appetites, looking to set aside money towards retirement.
  • Tax-saving mutual funds
    Investments in tax-saving mutual funds, also known as equity-linked savings scheme (ELSS), qualify for tax benefits. Tax-saving mutual funds invest in stockmarkets, among other assets, and are more suited for investors with medium to high risk appetite. Investments are locked in for three years.Investments towards tax-saving mutual funds are covered under Section 80C of the Income Tax Act up to a maximum of Rs 1.5 lakhs. Proceeds on death / maturity are tax-free under Section 10(D).

Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University Complete Information

Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University :   The end of the third quarter of the financial year should be the alarm to plan tax saving under Sections 80C to 80GGC. The Income Tax Act specifies deductions from gross total income under these sections. Section 80C is the most important section for an individual or an HUF (Hindu Undivided Family) which provides deduction up to Rs. 1 lakh through certain instruments. Apart from a few tax free expenses, these instruments largely comprise tax saving investments, which range from pure debt to pure equity options. Therefore, one needs to explore each option in the context of one’s personal financial situation.

Role of tax saving instruments

Most of the tax saving instruments are great financial products and effectively participate in various financial needs of one’s life. Please refer table 1.

Table 1: Tax Savings instruments in a portfolio

Financial needInstrumentSection
of
IT Act
TenureLiquidity
before
maturity#
Taxation at maturityFrequencyof investmentFeatures
 
 
Financial security
Premium of life insurance policy80CLongLoan against traditional policy, withdrawal from ULIPs after 5 yearsTax freeRegularPremium on own/ spouse/ and child’s life (subject to a maximum of 20% of sum assured and if policy is issued on or after 01st April’12, then 10% of the actual capital sum assured) is eligible.
Premium of mediclaim policy80D*AnnualN/AN/ARegularUp to Rs. 15,000 for self/ spouse/ children & Rs. 15,000 for parents. (Limit is Rs. 20,000 for senior citizens.)
Retirement corpusEPF80CLongWithdrawal allowed for specified goalsTax freeRegularContribution up to 12% of salary is eligible for tax deduction & interest up to 9.5% is tax free.
PPF80C15 years & extension in blocks of 5 yearsWithdrawal allowed from 7th year onwardsTax freeRegularThe aggregate limit is Rs. 1 lakh for the account of an individual and his minor children. Contribution to the accounts of spouse and major children is excluded from this limit.
Pension funds & annuity plans80CLongWithdrawal after specified yearsTaxable under 80CCC/ 80CCDRegular/ one timePlans in the name of spouse and children are also eligible.
80CCCPension received from an annuity plan is taxable in the hands of recipients.
80CCDThe maturity amount of pension scheme will be exempt from tax if used for purchasing an annuity plan.
SCSS80C5 years & extension of 3 yearsPartial withdrawal not allowedInterest taxableOne timeOnly senior citizens are eligible. Interest is paid quarterly @ 9.3% per annum.
 
Investment
ELSS (tax saving mutual fund scheme)80C3 yearsNoTax freeOne time/
SIP
Dividends are tax-free.
Equity exposure seeks to provide higher return.
NSC80C5 years/ 10 yearsNoInterest taxableOne timeInterest accrued on NSC is added to total income and then deduction is allowed under Section 80C as interest is deemed as reinvested up to the end of 5th year.
Tax saving deposits80C5 yearsNoInterest taxableOne timeBanks & post offices offer such deposits.
Rajiv Gandhi Equity Saving
Scheme
80CCG3 yearsTo take benefit of capital appreciate–on is allowed after 1 yearTax freeOne timeOnly individuals are eligible. Investment up to Rs. 50,000 in specified shares allows deduction of 50% of investment amount.
 
Eligible expenses/ payments
Tuition fees80CAnnualN/AN/AN/ATuition fees of 2 children are eligible
Repayment of principal of home loan80CLongN/AN/AN/AInterest up to Rs. 1.5 lakh is deductible from taxable income under Section 24 (b).
Preventive health checkups80DAnnualN/AN/AN/ALimit is of Rs. 5,000 within prescribed overall limit of 80D* as mentioned above.
Payment of house rent80 GGAnnualN/AN/AN/AMaximum Rs. 2,000 per month. Not applicable if the assessee gets HRA or owns a house and claims the concession for the self occupied property.

Evaluation Of Tax Saving Instruments For Financial Planning MCOM Sem 1 Delhi University Complete Information

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