Saving tax can help you reach your financial goals
Written on Tuesday, October 20, 2015
By Kumar Pushpraj
If your income is taxable, why not do something that will help you save tax and provide for future financial requirements at the same time. The funds that you would save as tax will help you with things like buying a better home, your child’s education or your own retirement. When it comes to tax planning, every year we look for some better and efficient tax saving schemes, so that we can save a little extra. But why settle for a little extra, when you can save up to Rs. 78,795 on an investment of Rs. 2,55,000.
Tax Free Incomes
The following incomes are completely exempt from income tax without any upper limit. You can choose to invest in related options and go for maximum savings.
1. Interest on PPF/GPF/EPF.
2. Interest on GOI/other approved tax free bonds.
3. Dividends on Shares and on Mutual Funds.
4. Any sum received under a life insurance policy (including the sum allocated by way of bonus on such policy) either on death of the insured or on maturity of life insurance plan. However, in case of life insurance policies issued after March 31, 2004, exemption on maturity payment u/s 10(10D) is available only if the premium paid in any year does not exceed 20% of the sum assured.
5. Interest on savings bank account in a post office.(Exempt up to Rs 3,500 in an individual account and Rs 7,000 in a joint account under section 10 (15) (i) )
6. Long term capital gain on sale of shares and equity mutual funds if the security transaction tax is paid/imposed on such transactions.
Dividend Income: Dividend income from companies /equity-oriented Mutual Funds is completely exempt in the hands of investors. Dividend is also tax-free in the hands of investors in case of debt-oriented Mutual Fund schemes.
Gift Tax: Gift tax was abolished with effect from October 1, 1998. The gifts are no longer taxable in the hands of donor or receiver. However, with effect from September 1, 2004, any gift received by an individual or HUF will be included in taxable income, provided the amount of gift exceeds Rs 50,000.
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