Basic tax planning tools

Hi Friends

Can u please name some tax planning tools/methods wiht detail explanations (for an individual)?

 

regards

Replies (3)

Dear Rohan,

There are numrous tax planning tools. you please say for what purpose you need it?? 
atleast give hint... for e.g. in capital gains, house property, clubbing of income, gift, etc......

I am talking in general...like for an individual drawing a salary..how should he plan nad invest his money/salary to save taxes

If your income is less than Rs. 200,000/-, you need not worry about tax.

Your taxable income (income from salary) shall be reduced upto Rs. 100,000/- . How? You have a choice of investing in Public provident fund, purchase national saving certificate, pay for life insurance premium, invest in equity oriented mutual fund, invest in ULIP, invest in 5-year fixed deposit. 

Your taxable income can be further reduce by another Rs. 15,000/-. How? If you pay for mediclaim insurance premium.

Even the interest you earn from saving bank account is exempt (tax-free) upto Rs. 10,000/- pa.

There are many other deductions available for individuals so as to reduce the taxable income. When the taxable income is reduced, so will the tax liability on it.  That is how one saves tax. We all want higher income, but higher income means more tax liability. Higher income and higher deductions availed, lower tax liability and higher returns.

It is better to invest (which wil earn interest and come back to you in the near future) instead of pay tax (which is just like an expense having no real tangible benefits) 

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