TAX PLANNING MAKE YOU RICHER!!!!!

Tax planning plays a vital role in your portfolio

A small Portfolio plan has been described herein, which may make you feel the importance of tax planning in your portfolio

Suppose your monthly income is Rs 30,000 and your monthly expenses is Rs 20,000

It means you save Rs 10,000 monthly.

Suppose you just keep this money in your saving account which offers you only 3.5% to 4% interest annually.

By this you will earn interest of Rs 1943 at the end of the year and at the end of year you will have to pay tax on your salary which is Rs 3,60,000 is Rs 18740 (including tax on interest from saving account)

But if you plan your portfolio you will not only earn higher interest moreover you will save your Tax liability too.

Interest earned at the end of year(in Rs)                 

Monthly income                  Rs 30000      

Monthly expenses                Rs 20000

Monthly savings                        Rs 10000

Now,     

Insurance premium (monthly)         Rs 1000        nil

Saving a/c (monthly)                  Rs 2000        388

Tax saving bonds (through sip)       Rs 5000        2249

Public provident fund (monthly)      Rs 2000        899                   

Total                                          Rs 10000       3536

Moreover you have deposited of Rs 1,08,000 in the form of public provident fund, insurance premium and tax saving bonds which is eligible for deduction under section 80c of income tax act, 1961

Therefore, your tax liability will be in this case is of Rs 7688 (including tax on interest on saving account and return on tax saving bonds)

The key highlight of this portfolio is that you have earned an additional interest of Rs 1588 and moreover you have save tax of Rs 8812 and additionally you will get an insurance coverage too and you have some amount in your saving account which is meant for meeting urgent needs.

In this portfolio we have assumed that the monthly interest on saving is 3.5% and interest on tax saving bonds and on PPF account is 8%

The interest rate may vary depending on the investment company’s or different banks or as per government policy.

The tax slab is used for the purpose of assessment year 2012-2013 and the individual portfolio used here is assessee other senior citizen and female assessee.

For more or for tax planning or for portfolio

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