tax ppt without icici back

8/7/2019 tax ppt without icici back

1/29

TAXIMISER(2009-10)

Maximise your Tax Savings...Maximise your Tax Savings...


2/29

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


3/29

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)


4/29

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.


5/29

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


6/29

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


7/29

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


8/29

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


9/29

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


10/29

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


11/29

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


12/29

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


13/29

* 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


14/29

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


15/29

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


16/29

Income Definition

1. Salary

2. HouseProperty

. usinessProfession

. apitalains

5. OtherSources

Income


17/29

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


18/29

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%


19/29

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


20/29

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


21/29

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)


22/29

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


23/29

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?


24/29

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


25/29

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


26/29

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


27/29

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


28/29


29/29

tax ppt without icici back

Documents