An old adage goes, ‘nothing is certain in life except for death and taxes’. This holds quite true considering the current tax system in the country. One cannot evade tax and hence planning it out correctly becomes essential. ‘Tax planning’ forms an indispensable part of a financial regime and tops the priority list of most of the investors. It is not a device to reduce tax burden but it helps to reap the benefits by investing in appropriate channels and avail the tax benefits at the same time. One way out is to save your well-merited money in the options offered by the government.
Savings reduces extravagant expenses and if taken into account how it benefits the country, it certainly helps to reduce inflation.

Tax savings are permitted for investments made in government securities and bonds of priority sectors, which ultimately help the nation. Savings and investments are interconnected. Before making investments the person has to consider various factors. Firstly, ‘liquidity’. Before investing one should calculate when the need would arise to withdraw the moolah. Though it may not be possible to know the exact day and year of the financial but a rough assessment will help you in the long run. For instance, money needed for your child’s marriage or further studies. Secondly, security of the investment and lastly investment should be done according to the returns and tax on income.

The options available are Insurance policies, Small saving schemes, Public provident fund, National saving certificate and Equity linked saving schemes. Investment in these instruments will enable you to save on tax. Depending on the need you need to make a wise investment.

Until the new Exempt Exempt Tax system notification was announced the tax saving investments looked simple. It has now come up with a host of new changes. The aforesaid instruments are about to move into the new EET system from the next financial year. So the obvious choice left is to invest in the existing options available before the new system takes these options in its wrap. Insurance is one of the important parts of the tax saving portfolio of investors and the best way is to purchase policies wherein you get the tax benefits as well as insurance protection. Not only it is a tax saving instrument but it also protects your family from future financial crisis. But it is important to bear in mind that the policy should be chosen according to one's own requirement and not just use it as a tool to avail tax benefits.

The following are the provisions of the new tax regime:
Individuals claiming income tax benefits under 80C will have to pay tax on withdrawals. The premature withdrawals will also be subject to tax at rates applicable to investor. However for the first time investors will have the option to switch between the savings instruments and no tax will be levied for this. Gratuity payments and super annuation funds will be exempt from this system. EET house will keep track of savings schemes for which tax offerings are availed.
Remember these changes will come into play from the next financial year or may be soon after the annual budget is announced. So do not waste any more time in making your investments. Rush now and pick up insurance policies before the budget is announced.

All you need to do is make the best pick and await the new EET system.


Bima Bachat: LIC’s recent launch, it is a single
1. What is Income Tax?
Income tax includes all taxes that individuals and businesses have to pay on their various sources of income, such as salaries, investments etc. The Indian Revenue Service, commonly known as the IRS, is responsible for collecting these financial duties within the given taxation year. The amount to be paid is determined according to the gross income.

2. Is it important to file Income Tax Return?
Yes, the filing of Income Tax return is a legal obligation of every person whose total income during the previous year exceeds the maximum amount that is not chargeable to income tax under the provisions of IT. Act, 1961. The return should be furnished in the prescribed form on or before the due date. At present, there is an emphasis on voluntary compliance on the part of the taxpayers. It is advisable for the taxpayers to furnish correct particulars in the Income Tax return.

You can handle the return yourself by obtaining income tax forms to the IRS by the appropriate deadline or you can hire a professional accountant to do your taxes.

3. What Is PAN?
The Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by an Assessing Officer of the Income Tax Department.

4 Is it compulsory to have PAN card ?
It is essential to obtain a PAN card. Having a PAN will help one in dealing with the Income Tax Department as well as with other Government agencies. Gradually, a PAN card is going to become as important as the ration card. It is also compulsory to quote PAN in all documents pertaining to financial transactions notified from time-to-time by the Central Board of Direct Taxes. Some transactions like sale and purchase of immovable property or motor vehicle or payments in cash, of amounts exceeding Rs. 25,000/-to hotels and restaurants or in connection with travel to any foreign country demand a PAN card. It is also mandatory to mention PAN for obtaining a telephone or cellular telephone connection. Likewise, PAN has to be mentioned for making a time deposit exceeding Rs. 50,000/- with a Bank or Post Office or depositing cash of Rs. 50,000/- or more in a Bank.

5. Who must have a PAN?
The following persons must have a PAN:
All existing assesses or taxpayers or persons who are required to furnish a return of income, even on behalf of others, any person, who intends to enter into economic or financial transactions where quoting PAN is mandatory, the Assessing Officer may allot PAN to any person either on his own or on a specific request from such person.

6. What is TAN?
TAN is Tax Deduction and Collection Account Number. It is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax. It is compulsory to quote TAN in TDS/TCS return (including any e-TDS/TCS return), any TDS/TCS payment challan and TDS/TCS certificates.

7. Who must apply for TAN?
All those persons who are required to deduct tax at source or collect tax at source on behalf of Income Tax Department are required to apply for and obtain TAN.
paid under the policy is paid back to the policyholder along with Loyalty Additions, if any. The policyholders receives 15% of the total sum assured every three years as survival benefits. The policy is available for a term of 9, 12 and 15 years. On the death of the policyholder during the term of the policy, an amount which is equal to sum assured is paid. Loan facility is also available under this plan but is operational only after the policy acquires paid-up value. Presently the rate of interest is 9% p.a. payable half-yearly.

Jeevan Plus: The booming stock market and the Sensex rising to its all-time high level of 9000 has reaped profits beyond the expectation of the policyholder. Jeevan Plus is a unit linked whole life plan, which offers investment-cum-insurance throughout the lifetime of the policyholder. It also provides risk coverage for lifetime. The policyholder can choose the level of cover within the limits, which will depend on the mode and level of premium he agrees to pay. Under investment, the policyholder has the option to choose any one from the four funds, which are Bond, Secured, Balanced and Growth funds.

Komal Jeevan and Jeevan Kishore: The best way of securing your child’s future is to buy insurance polices. Komal Jeevan and Jeevan Kishore are the two children’s policies available. Komal Jeevan is a money back plan. It allows payment of premium ceasing on policy anniversary immediately after the child attains 18 years of age. The plan, besides offering risk cover, also offers payment of sum assured in installments at age 18, 20, 22, 24 as also guaranteed and loyalty additions, if any, at the age of 26. Even term rider benefit is available to the extent of 20% of Sum assured.
Under Jeevan Kishore policy, the child becomes the owner of the policy automatically at the age of 18 years. The plan offers high bonus from day one itself and the risk on the policy commences after 2 years of policy or on completion of 7 years of age, whichever is later.

Future Plus: It is a unit linked deferred pension plan. The policyholder can choose the plan with or without risk cover. The insured can choose the level of cover within the limits, which will depend on whether the policy is a single premium or regular premium contract and the level of premium the policyholder agrees to pay. The allocated premiums will be applied to buy units for the fund type chosen.

For more details on LIC policies,
log on to our website www.domainname.com


      Continued from the last issue

What is a balance transfer of loan?
A balance transfer of loan as the term states is transferring the balance of your housing loan to another housing finance company. You may opt for a balance transfer if you are offered a housing loan at a far more attractive interest rate compared to the present one.
But do remember to factor in the pre-payment penalty you need to fork out and the interest rate being offered to you. In other words, check out the nitty-gritty before you take the jump.

What all should I consider before going in for a balance transfer?
Perhaps a housing finance company is offering you a loan at a lower interest rate and you feel its time you considered a shift or a balance transfer. But before you take the plunge check out the following:

  • Is the interest rate offered by the company on a fixed or floating basis?
  • Is it on a monthly or annual reducing balance?
  • Within how much time will the balance transfer take place? • Most of the companies charge an exit penalty. Factor in how much you may have to shell out to your present housing finance company as penalty.
  • Find out the tenure for which the rate of interest is being offered to you. In many a case the rate of interest is only for a period of 3 years or so after which there may be a hike in the interest rate defeating the very purpose of a balance transfer.
  • Check out the difference you would be gaining on your monthly EMI after you opt for a balance transfer to another finance company.

What all should I consider while buying a flat in a building that’s under construction?
If you are buying a flat from a builder in a building that’s under construction check out the following:
Reputation of the builder: See to it that the builder holds a good reputation.
Approved plan: Ask for the approved plan of the building along with the number of floors.
Approval of the floor: Ensure that the floor on which the flat that you plan to buy is approved by the authorities.
Ownership of land: Ensure that the land on which the builder is constructing the building has a clear title.
Reality check: Find out if the details given in the brochure about specifications match those in the sale agreement.
No Objection Certificate (NOC): Check out if the builder has obtained the Urban Land ceiling NOC (if applicable).
Note that the builder also has to obtain NOC from water and electricity authorities, lift authorities.
 
 
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