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Balwant Jain

CA & CS , Bombay Oxygen

How to plan your tax savings now

 

Questions Answered

Q

guest: What is tax treatment of liquid funds

Balwant Jain: The liquid funds are treated as debts funds. The holding period requirement for liquid funds to qualify as long term is 36 months. So for redemption before 36 months the profits are treated as short term and taxed at the slab rate applicable to you. For redemption after 36 months, you get the benefit of indexation and after indexation you need to pay 20% on the indexed profits. Due to indexation the actual tax liability may be very low on liquid fund units redeemed after 36 months or even you may not have any tax liability for long term gains on liquid funds.
Q

guest: Is there any investment in mutual fund I can get tax benefits

Balwant Jain: Yes. There is. For making investments in Equity Linked savings Scheme (ELSS) funds you can claim tax benefits under Section 80 C upto Rs. 1.50 lakhs every year. You can read the following article for further details on ELSS. http://www.moneycontrol.com/news/business/mutual-funds-business/who-should-invest-in-elss-does-it-suit-your-requirement-2268637.html Profits made on investments held in equity oriented mutual fund for more than 12 months is fully tax exempt under Section 10(38) of the Income Tax Act. Moreover
Q

guest: Hello sir, Is it good to invest in NPS to save tax over and above 80c?Will this be helpful in future while redemption?

Balwant Jain: Yes. It makes sense for you to invest in NPS and avail the tax benefits in respect of additional contribution. Though NPS is generally locked till 60 years of age, it makes sense to invest additional 50,000 as this willl help you create good retirement kitty while helping you save tax as well. at 30% rate you will be able to save 15,000 as tax. I did not understand second part of the query. for further details read the following articles. http://www.moneycontrol.com/news/business/personal-finance-business/here-is-how-to-plan-your-taxnps-1430649.html http://www.moneycontrol.com/news/business/personal-finance-business/-1296327.html http://www.moneycontrol.com/news/business/personal-finance-business/nps-withdrawal-becomes-more-investor-friendly-now-1547529.html
Q

guest: sir please suggest best fund elss plan to save tax with best return.

Balwant Jain: You can invest in DSP black rock tax saver fund or L & T tax advantage fund or Tata India tax saving fund. Read the following article to know more about ELSS. http://www.moneycontrol.com/news/business/mutual-funds-business/who-should-invest-in-elss-does-it-suit-your-requirement-2268637.html
Q

guest: Age 24 yrs (F), FY2016-17 salary income 190000, short term capital gain (share mkt): 70000 what is taxable amount

Balwant Jain: As per section 111A of the Income Tax Act in case you are a resident of India for tax purposes, you can set off any shortfall in your basic exemption against taxable short term capital gains. So after setting off 60,000/- shortfall, your taxable short term capital gains will only be Rs. 10,000. Since your total taxable income shall not exceed Rs. 5.00 lakhs you will get rebate under Section 87 A upto Rs. 5000/- and as @ 15% on 10,000 tax is only 1500, you will not have to pay any tax.
Q

guest: Hi sir, Im a 32 yr banker drawing annual salary of Rs 5.50 lacs. Kindly advise me about how to save tax as I ended up paying more than 30 k tax in 2016-17.

Balwant Jain: Since I do not know whether you had taken the benefit under Section 80 C, 80 CCD(1) and 80 CCD(1A) i can not advise you properly. Please avail the tax bebefit under Section 80 C upto Rs. 1.50 lakhs in the instrument of your choice. Additionally you can contribute Rs. 50,000/- in NPS and claim additional tax benefit. So the total deduction availabel comes to Rs. 2 lakhs leaving your taxable income to Rs. 3.50 lakhs on which the tax liability comes to Rs. 5000 only @ 5% as proposed. In case your total income does not exceed Rs, 3.50 lakhs, you can avail the tax reabte u/s 87A upto Rs. 2500/- and thus reducing your tax liability to Rs. 2500 only. Read the articles on NPS on the following links. http://www.moneycontrol.com/news/business/personal-finance-business/here-is-how-to-plan-your-taxnps-1430649.html http://www.moneycontrol.com/news/business/personal-finance-business/-1296327.html http://www.moneycontrol.com/news/business/personal-finance-business/nps-withdrawal-becomes-more-investor-friendly-now-1547529.html
Q

guest: Is there any avenue of investments wherein return is taxfree apart Sec. 80 C,. 80D, 80T. liquidity is not problem. only concern is safety of investment I am already investing maximum permissible under PPF a/c

Balwant Jain: You can invest in equity oriented mutual funds in case you have longer tenure for investment where the profits made on redemption is tax free if held for more than 12 months. If you do not want to take risk of equity you can buy tax free bonds from the market and enjoy the tax free interest. You can write to me at jainbalwant@gmail.com for any further clarification.
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