15 items to take note for proper tax & investment planning

Written on Friday, February 19, 2016
By Subhash Lakhotia- CNBC Awaaz

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We are about to enter the last month of current financial year, it is time to make the most of tax saving investments. Here are the 15 important items for the year 2016 required to take care of tax and investment planning.


1. Union Budget: The first thing on your mind should be the new Budget proposals.  As you are aware Budget will be presented in the Parliament on 29th of February 2016, hence for better tax planning and to avail better deductions and exemptions as a result of budget amendments, it is the right time.


2. Refund from Income-tax Department: The Income-tax Department has issued a Press Note to inform the taxpayers that the pending income-tax refund for taxpayers, especially the refund which is up to Rs. 50,000 will be promptly disposed off with respect to the Assessment Years 2013-14 and 2014-15.  Hence, in order to get prompt Income-tax refund, all the taxpayers who have the claim, may send a letter followed by a reminder after fifteen days to the assessing Income-tax officer.


3. New Guidelines for Quoting Permanent Account Number: The Government has amended the provisions of the Income-tax rules relating to compulsory quoting Permanent Account Number.  The new guidelines are applicable from 1st January 2016.  Hence, the taxpayers should understand the provisions concerning applicability of the PAN, which has been extended to many new items.  The limits on some items have increased and new limits have been prescribed for certain new items.


4. Avoid Cumulative Time Deposit or Fixed Deposits: Well, it is your personal choice whether to take out a Cumulative Fixed Deposit or to go for Fixed Deposit in which interest is paid to the depositor in three months, that is quarterly or fin a Fixed Deposit, where interest is to be paid every year.  I would like to recommend the taxpayers that as far as possible, it is better not to go in for Cumulative Time Fixed Deposits because in it, although, the payment is received at the time of maturity but every year the income is required to be shown in the Income-tax Return. 


5. Get Ready for Smart City Investments:  In respect of the new Smart Cities expected to come up in the year 2016, it is time now for you to plan your funds and resources in advance so that you can get ready for making your investment in the new Smart Cities and reap the benefits of early entry in the Smart City Market.


6. Stock Market or Equity Mutual Fund Investments:  If till now you have not taken the route of increasing your wealth through the Stock Market or the Equity Mutual Funds, it is time now for you to enter the stock market in the year 2016.  It is expected that the appreciation in the Stock Market as well as in the Equity Mutual Funds will achieve new heights of prosperity. 


7. Inspiration from Films: For your tax and investment planning see the movies and try to get an idea of investment planning from a film. For example, recently, when I saw the film Bajirao Mastani I got the idea of what Bajirao was thinking.  He had seen the torture that was done to his wife and so he was speaking to himself and worrying about it and gave away two villages in the name of his wife just after marriage thinking that even while I am alive, the torture afflicted on my wife, I can see and when I am no more in this world at that time who will take care of my wife and so he immediately gave away the said two villages in the name of the wife.  In the year 2016, plan for your wife so as to have some investments in her name. 


8. Investment for your Young Girl Child: You can also plan the calendar for making investments especially for your young girl child.  If your girl child is less than 10 years, it is time now for you to plan about making investment in Sukanya Samridhi Scheme in the name of the girl child and thereafter, receive tax-free interest income.


9. Files and Files for other Family Members:  In the year 2016 write down the names of all family members especially the adult family members and see that every adult member in particular has a separate income-tax file and separate income of his or hers. If there are no income-tax files now for these family members start making in the year 2016. 


10. Income-tax File Even for Your Minor Child, let it Happen in Reality: If you have got a minor child it is time now for you to calmly think carefully of starting separate income tax file for your minor child. What I want to suggest you all is to start a separate income-tax file for your minor child through the concept of 100 per cent Specific Family Trust and then to see that income of your minor child is not added with the income of father or mother. 


11. Careful Real Estate Transactions: In the year 2016, you should be little more careful for carrying out Real Estate Transactions, whether small or big. One should know about the rules and amendments of Income-tax Law that were carried out in recent times, the tax payers may not be aware of them.


12. Time to Start Your HUF Now: If you have not started your separate, independent Income-tax File for your Hindu Undivided Family, then it is the right time now to think of starting in the year 2016 a separate Income-tax File for your HUF. You, your wife and your children would constitute a separate Hindu Undivided Family and a new Income tax entity through Income-tax file can be started in their name.


13. High Jump for Section 80C Deduction: Let the year 2016 be planned in such a manner that you are able to achieve the highest amount of deduction under section 80C namely Rs. 1, 50,000.  Also plan right now to start saving Rs. 50,000 by making additional investment in the NPS Scheme, so as to avail a special deduction over and above Rs. 1,50,000. 


14. Term Insurance and other Insurance Policies: For those people in particular who have taken the housing loan, it is worthwhile to go in for the big Term Insurance Plan.  So, from a tax perspective, increase your focus on getting an insurance policy for different members of the family, so that the family is safe and secured and you are able to face any untimely crisis.


15. Take Care of Your Marriage Expenses: Under the Law, the Income-tax survey can take place even after marriage function.  Hence, whenever there is a marriage function, plan about the expenses in such a manner that all the expenses are duly accounted for.  You may spend for the marriage of your daughter as much as you like, no problem, but the only issue is that the fund should be made available to prove the source of all the expenditure incurred during the occasion of marriage. Also, do plan lots of gifts from relatives and friends, because the unlimited amount of the gift is exempted from tax.


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