tax ppt without icici back
TRANSCRIPT
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TAXIMISER(2009-10)
Maximise your Tax Savings...Maximise your Tax Savings...
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Objective
By the end of this session we will cover:
Relevant Sections (FY 2009-10)
Tax slabs and rates of tax
Some avenues of tax savings
Role of insurance in tax planning
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80CCE (Total Rs.1 lac)
80C
Instruments
80CCC
Instruments(Pension)
80CCD
Instruments(Central Govt.Employee only)
10(10D)Exemption onMaturity
10(10A)CommutationBenefit(1/3rd ofCorpus)
80DHealth cover
Sections of our relevance
(Life Insurance
Premium)
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Section 80C
Under Sec.8
0C, total Rs. 1 Lac deductions can be claimedunder the following items:
1. Life Insurance premium
2. ELSS
3. NSC4. Tuition Fee paid on Childrens education up to two children.
5. Housing Loan Principal
6. Public Provident Fund
7. Recognised provident Fund
8. Bank FDs (tenure of 5 years or more)
9. Approved Superannuation Fund
10. Specified Infrastructure bonds
11. Senior citizen saving scheme
12. Post office time deposits etc.
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What is Tax Deduction?
An investment which reduces the taxable incomeon which tax is calculated
For e.g.
Gross Total Income: 10 Lacs
Deduction: 1 Lac
Taxable Computable Income: 10 Lacs 1 Lac = 9 Lacs
Deduction helps in reducing the computable tax base, in turn reducing the net taxDeduction helps in reducing the computable tax base, in turn reducing the net tax
liabilityliability
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Usage of Tax Deductions
A break granted by the governmentIn order to encourage investmentTo fulfill certain long term objectives (e.g. infrastructuredevelopment,
Socially desirable objectives (e.g. life cover for the
individual, pension savings etc.)
Sections of IT Act deal with tax deductions:Section 80C
Section 80CCCSection 80D
Section 80E
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Section 80D
Premium paid for health insurance policies is tax deductibleIn case of individual assessee, it means
Himself/herselfSpouse
Dependant childrenParents
In case of HUF assessee any member of HUF
2 conditions applicable for Sec 80D:
If age < 65 - Maximum limit is Rs. 15,000
If age >=65, then deduction upto Rs. 20,000
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Section 80D
Additional Deduction for parents:Parents age < 65 - Upto Rs. 15,000Parents age >=65, Upto Rs. 20,000
Total Deductions: Self + Parent
Parents age < 65 - Upto Rs. 30,000 (15,000+ 15,000)Parents age >= 65 - Upto Rs. 35,000 (15,000+20,000) can
be availed
Premium should be paid in any mode other than cash
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So, under section 80CCE & 80D, I along with my HUF Income canactually save:
Section 80(C) Individual Rs. 100,000
Section 80(C) Karta, HUF Rs. 100,000
Section 80(D) Self, Rs. 15,000Section 80(D) Parents (=65 yrs) Rs. 20,000--------------------
Rs. 230,000
or
Rs. 235,000
Summary
Either of the caseEither of the case
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Hindu Undivided Family
Hindu Undivided Family HUF
Can be created by Hindu Father/Mother forPurpose of creating a common pool of assets
For the benefit of whole family
U/S 80C of Income Tax Act, 1961Rs. 1 Lac deduction available from total HUF Income
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Premiums paid for Life insuranceDeduction u/s 80C subject to limit of Rs. 1lac under allavenues of Sec 80CCE
20% limit : (In a financial year) if Premium paid > 20% ofthe actual sum assured then
Deduction will be only for premiums up to 20% of thesum assuredFor e.g.
Sum Assured: Rs. 4 LacsPremium: Rs. 90,000
Even if premium increases more than 20% due to Topup; deduction will be only to the defined limit
The policy should remain in force for minimum 2years, failing which the deduction allowed shall beadded to income in year of lapsation
Life Insurance & Tax
Deduction of Rs. 80,000 only u/s 80C
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As per Section 10(10D) of the IT ActPremium cannot exceed 20% of sum assured throughout the term of thepolicy
Receipts from life insurance policies are exempt subject to conditions u/s10(10D)
Maturity will be taxable even if Top up increases the SA & premium ratio of1:5
Tax exempt under this section is allowed inAll withdrawals
Surrender
Maturity proceeds
Death benefit
Life Insurance & Tax
Life Insurance premium provides dual tax benefits in form of deduction &Life Insurance premium provides dual tax benefits in form of deduction &
exemptionsexemptions
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* Central Govt. amendment: GSR 908(E), dated Dec 06, 2000* Central Govt. amendment: GSR 908(E), dated Dec 06, 2000
Contribution to PPF (over and above your mandatory PF)
should not exceed Rs. 70,000
If wife & kids are dependent thenAll combined PPF contribution not to exceed Rs. 70,000
Else there will be no interest paid & principal is refunded*
For annuity plans, sum assured limit for tax benefit doesnot apply
Pension & Tax
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Pension & Tax
Once an annuity plan matures:Full withdrawal (taxable)Commutation u/s 10(10A) - 1/3 exempt from taxRemaining 2/3rd as taxable pensionFull Pension (taxable in the financial year in which pension is
received)
Lets understand with an exampleMaturity Corpus: 3 crores1/3rd commuted: 1 crore (Tax free)
2/3rd corpus: 2 crores (Annuity receivable is Taxable)
Any annuity received forms a part of the gross annualincome for that financial year
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Taximise your Housing Loan
Capital borrowed for Acquisition of self occupied houseproperty
Deductible upto Rs. 1 lac
Under Sec. 80C from gross annual income
Under Sec. 24(b) of the IT Act the interest paid in case of
a house loan taken for acquisition & construction is
deductible subject to:
Rs. 30,000 p.a. if loan taken before 1st April, 1999Rs. 150,000 if loan taken after 1st April, 1999
In case of Let & Deemed Let out property No Limit
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Income Definition
1. Salary
2. HouseProperty
. usinessProfession
. apitalains
5. OtherSources
Income
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Tax Computation Flow
Note : Sec 10(1), 10(10D) etc. are containedin Chapter III of the IT Act
Note : Sec 80C, 80CCC, 80CCD, etc. arecontained in Chapter VI of the IT Act
Less :Exempted Income(Chapter III of the IT Act)
Gross Total Income
Less : Deductions(Chapter VI of the IT Act)
Total Income
Compute Tax
Add : Education CessOn Tax
Final Tax Liability
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Tax Rates for 2009-10
Education cess @ 3% on the tax payableEducation cess @ 3% on the tax payable
Sr. Citizen: Tax Payers of the age 65 & aboveSr. Citizen: Tax Payers of the age 65 & above
Total Income (Rs.)Total Income (Rs.)
Rate of TaxRate of Tax
Senior CitizenSenior Citizen Women below 65 yearsWomen below 65 years OthersOthers
Upto Rs. 160,000/- Nil Nil Nil
Rs. 160,001/- to 190,000/- Nil Nil 10%
Rs. 190,001/- to 240,000/- Nil 10% 10%
Rs. 240,001 to Rs 300,000 10% 10% 10%
Rs. 300,001 to Rs 500,000 20% 20% 20%
Rs. 500,001/- and above 30% 30% 30%
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Annual net salary of Mr. Raj is Rs. 5,75,000.What will be his tax?
As shown above, the tax payable comes to Rs.
76,500=(14,000+40,000+22,500)
Not only this your customer has to pay education cess @ 3% on the tax
amount so calculated.
Therefore it comes to 76,500 x .03 = Rs. 2,295
Hence total tax payable is 76,500 + 2295 = Rs.78,795
Slab Income in the slab Rate Tax
0 - 1,60,000 160,000 0% 01,60,001-3,00,000 140,000 10% 14,000
3,00,000-5,00,000 200,000 20% 40,000
Above 5,00,000(5,75,000-5,00,000) 75,000 30% 22,500
Total Tax 76,500
Tax Planning-Case 1
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Mr. Raj: My employer deducts Rs. 14,400 everyyear towards PF. He also contributes an equalamount
Now if I invest Rs. 25,000 in Insurance, how muchtax will I be able to save?
I have no other form of tax planning
Tax Planning
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Taxable Income
Assuming, that he has a life cover of atleast Rs.1,25,000,(i.e. 5 times) (refer slide #20) his entire insurance premiumis tax deductible
His contribution to pension is also tax deductible
Hence total taxable income is now Rs. 5,35,600 (Rs.5,75,000-Rs. 25,000-Rs.14,400)
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Tax saved is money EARNED
Tax comes to Rs. 64,680
Education cess @ 3% of Rs. 64,680 = Rs. 1940
Therefore total tax payable (64,680+1940) = Rs. 66,620
Now he pays Rs. 12,175 lesser tax than earlier (78,795-66,620)
Hence we may say he has EARNED Rs.12,175 throughsmart TAX PLANNING
Slab Income in slab Rate Tax
0 - 1,60,000 160,000 0% 0
1,60,001-3,00,000 140,000 10% 14,000
3,00,000-5,00,000 200,000 20% 40,000
Above 5,00,000(5,35,600-5,00,000) 35,600 30% 10,680
Total Tax 64,680
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Tax Planning-Case 2
Mr. Vijay: My taxable income is Rs. 12,00,000. I have madeinvestments of Rs. 1,00,000 eligible for tax deduction underSec. 80C. I have also paid a professional tax of Rs. 1,200
I pay Rs. 15,000 towards a health plan
How much tax will I have to pay? Is there any otherInvestment option which will provide tax benefit?
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Actual Taxable income
Salary 12,00,000
Less: Professional tax paid 1,200
-----------------------
Taxable Salary income 11,98,800
Less: Deduction u/s 80C 1,00,000
Less: Deduction u/s 80D 15,000
---------------------
Taxable income 10,83,800
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First Rs. 1,60,000 will not suffer tax 0Next Rs. 1,40,000 will attract 10% 14,000Next Rs. 2,00,000 will attract 20% 40,000Remaining Rs. 5,83,800(10.83 Lac-5.0 Lac) 1,75,140@30% ------------
Total 2,29,140Education Cess @ 3% of Rs. 2,29,140 6,874 --------------Total Tax 2,36,014
Tax Payable
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Conclusion
In short life insurance is an excellent tax saving toolbecause:If premium falls within 1lac limit of Sec. 80C and is upto20% of sum assured, it is exempt during earning
It is not taxed during accumulation
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Disclaimer
Tax benefits are as per the Income Tax Act, 1961, andare subject to any amendments made thereto fromtime to time
Tax benefits are subject to conditions of Sec 80C,
80CCC, 80D, 80E, 10(10D), 10(10A), & 24(b) of theIncome Tax Act, 1961 & are subject to change fromtime to time
Tax rates are as per the Finance Act No.2) of 2009 &
applicable for the financial year 2009-10
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