4yrs back I was the same.... No.1 worry will be about March salary. Confused on how to retain the salary and where & how to invest. Usually our Tax planning is done by colleagues, friends, agents etc., which is usually according to their point of view.........
Life has to be lived by us, problems have to be faced by us.... no one will feel the pain as you can when there is not enough money in hand in need...
Here is some information that I collected for myself, maybe it is a good start for your future investments.
Taxation is a beautiful invention by the rulers......
Income Tax (IT) is a tax imposed by the govt. on anyone who earns money. But for me tax is something govt. forces people to save & invest for their future. As we don’t know how to do that we just blame and worry. Some of my friends say that I am a positive thinker... when I am not making anything being negative, then its better to be positive... what do u say?
If you are really interested, you can learn how to pay minimum IT legally and have lots of investments. Aaaha!! sorry guys, this is only for the people who want to work legally..... No no to illegal advices.
lets move on to the fun subject... TAX
Taxes are collected in three ways:
- TDS - Tax deducted at source on your behalf from the payments received by you..... we receive salary after this cut... many don't even realize
- TCS - Tax collected at source on your behalf at the time of spending
- Voluntary payments like Advance Tax & Self Assessment Tax
God!! do we need to remember these..... not exactly, but need to know about them.
First two types of taxes are ok for us becoz someone will take care and they are not in our hands. Problem starts at 3rd point becoz it needs to be taken care by us ... hahaha
Everyone who earns income falls under TAX BRACKET. It is important to keep in mind that your 'taxable income' or income after allowable deductions defines your tax bracket.
The current income tax law has 4 tax brackets, which are as follows :
Limit (per yr) Tax Payable (%)
Upto Rs. 1,50,000 Nil
Rs. 1,50,001 - Rs. 3,00,000 10%
Rs. 3,00,001 - Rs. 5,00,000 20%
Rs. 5,00,001 - Rs. above 30%
- For women (resident Individual), below the age of 65yrs - basic exemption limit is Rs. 1,80,000 and above the age 65yrs - basic exemption limit is Rs. 1,95,000.
- Surcharge of 10% is applicable only when taxable income exceeds Rs. 10,00,000
- Education cess is applicable @ 3% on income tax
How much tax can you save?
The govt. made tax planning a lot simpler with section 80C(2). This section includes all 'tax deductible' individual saving instruments under one umbrella - invest upto Rs. 1,00,000 in a tax saving instrument or a combination of them and you can deduct the invested amount from gross taxable income.
why & where to invest, ways of investing e.t.c... we will see all these in my next post........
For any further info you may contact at : Incometowealth@gmail.com