Tax Planning - 2009/2010

Tax Planning Procedure,

I think this is the right time to dicuss some details regarding Tax-planning.
First we know about the different Tax-Slab available in India hereby,

up to 1.6 lakhs - No Tax
1.6 lakhs to below 3.0 lakhs - 10%
3.0 lakhs to below 5.0 lakhs - 20%
Above 5.0 lakhs - 30%

First thing in this calculation is calculating Taxable-Amount.

Taxable Amount = Gross Salary - Investment(Tax Rebate)

Gross salary is the Take-Home Salary, not your offer-letter salary.

So, we need to concentrate over the Investment part.

1. First thing is the 80c/80cc's maximum limit is 1.0 lakhs
2. Next we can deduct out HRA amount starightly.
3. There is a limit of Rs.10000 for preminum paid to Medical Insurance.

Its our responsibility to utilize the 80C limit fully by investing in periodic basic,

Below example are made according to monthly-basis investment,

Provident Fund - 1600.00
Public Provident Fund - 2000.00
ELSS - 3000.00
ICICI Pru Tax Plan (G) - 1000.00
HDFC Tax Saver (G) - 1000.00
SBI Magnum Tax Gain Scheme (G) - 1000.00
Insurance - 1500.00
Money Back Insurance - 1500.00


For example if your Gross salary is 4.5lk

Investments
80c/80cc
Provident Fund - 19200.00
Public Provident Fund - 24000.00
ELSS(Mutual Fund) - 36000.00
Insurance - 18000.00
----------------------------------------
Total - 97200.00
----------------------------------------

HRA
Total(7000*12) - 84000.00

Medical Insurance
Total(800*12) - 9600.00

So, Taxable Amount = 450000 - (97200.00+84000.00+9600.00) = 259200.00

This amount will come under the Slab-2, so tax to be paid is 25920.0(annually)