How to save income tax in 2020?

 

The tax saving season is in full swing as the financial year closes on 31st March 2020 and you want to explore all possible avenues to save as much tax as possible. While the new Interim Budget 2020 has made some very good changes, these changes would be applicable from the next financial year (1st April, 2020 onwards). You would, therefore, have to file your taxes on 31st March, 2020 as per the existing tax norms.

Many of you approach seasoned tax practitioners to help you prepare your taxes while some of you like to file your taxes yourself. Whatever be your choice of tax filing, one thing which every one of you looks for is the way to save the maximum possible tax outgo. So, for all of you taxpayers, here are some of the ways of saving your tax outgo this 2020 when filing your returns for the financial year 2018-19–

• Utilize Section 80C to the fullest

Section 80C is a blessing for taxpayers as the section helps you reduce your taxable income by INR 1.5 lakhs. The section lists some expenses and investments which are tax-free in nature. If you have incurred such expenses and/or make investments in the tax-free avenues, you can claim a deduction of up to INR 1.5 lakhs under this section. Some common instances of tax-free options under the section are as follows –

• EPF and PPF investments
• Life insurance premiums paid
• Tuition fee paid for up to two children
• Home loan principal repayment
• Mutual fund ELSS schemes, etc.

So, make sure to use Section 80C to the fullest to claim a deduction of INR 1.5 lakhs on your taxable income.

• Buy health insurance and utilise Section 80D

Premiums paid for health insurance policies are also allowed as a tax deduction under Section 80D. The limit of deduction is up to INR 25, 000 if premiums are paid for you, your spouse and dependent children. This limit increases to INR 50, 000 if you are a senior citizen. Moreover, if you pay premiums for the health plan for your dependent senior citizen parents, you can claim an additional deduction of up to INR 50, 000. So, buy a health insurance plan for yourself and your senior citizen parents and save tax on up to INR 1 lakh of your taxable income under Section 80D.

• Use loans to claim tax deductions

Home loans and education loans also give you tax saving advantages. Besides the principal repayment of your home loan, the interest component is also allowed as a tax-free expense under Section 24. The limit is INR 2 lakhs. Moreover, if the property is rented out, the entire interest paid on the home loan on such property is allowed to be tax-free. You also get an additional limit of INR 50, 000 on the home loan interest paid if you are a first-time homeowner under Section 80EE.

Besides home loan, education loans also give you a tax benefit. The interest paid on such loans is allowed as a tax-free expense under Section 80E.

So, if you have these loans, they can help you with tax saving.

• Save tax on your savings account interest

The interest that you earn on your savings bank account and post office savings account is allowed as a tax-free income up to a limit of INR 10, 000 under Section 80TTA of the Income Tax Act. This limit increases to INR 50, 000 if you are a senior citizen.

• Donate

Donations not only give you mental satisfaction of doing charity, but they also help you save your taxes as well. Money donated to recognised charitable institutions is allowed as a deduction under Section 80G. 50% or 100% of the donated amount is allowed as a deduction depending on the charity selected. For instance, charities which allow 50% of the donation as tax-free deduction include the following –

• Prime Minister’s Drought Relief Fund
• Indira Gandhi Memorial Trust
• Jawaharlal Nehru Memorial Fund, etc.

Similarly, charities allowing 100% of the donation as a deduction are as follows –

• Prime Minister’s National Relief Fund
• An approved university/educational institution which is of National eminence
• National Defence Fund established by the Central Government, etc.

So, donations also give you tax advantage which helps you in saving tax.

You can, therefore, use these above-mentioned ways to reduce your tax liability. Be aware of the relevant tax deduction sections when you file your taxes this 2020 and save the maximum possible tax outgo. Moreover, with the new changes introduced by the Union Budget 2020 , the financial year 2020 -20 promises great tax savings for the middle-class earners. So, from the new financial year starting from 1st April, 2020 , here are the ways which would lower your tax liability –

• Claim tax rebate if your net taxable income is up to INR 5 lakhs

The highlight of the Union Budget 2020 is the introduction of tax rebate for individuals having a net taxable income up to INR 5 lakhs. As per the proposed rules, no tax would be payable in such cases giving middle-class taxpayers complete tax relief. So, if you have an income of up to INR 7.5 lakhs, you can claim a full tax rebate by lowering your taxable income using the following tax-saving measures –

• By utilising the full potential of Section 80C and reducing your taxable income by INR 1.5 lakhs
• By investing in NPS scheme to avail a further deduction of INR 50,000
• By claiming a standard deduction of INR 50,000 if you are salaried

Thus, these measures help you lower your taxable income by INR 2.5 lakhs bringing it down to INR 5 lakhs or below. When your net taxable income falls within INR 5 lakhs, you get a full tax rebate and have to pay no tax.

• Get the benefit of enhanced standard deduction limits

The Interim Budget 2020 also enhanced the standard deduction available to salaried individuals to INR 50,000 from the existing INR 40,000. So, you can get an additional tax saving on INR 10,000 of your salary income and reduce your tax outgo.

So, in the new financial year April 1st, 2020 , pay heed to the changes introduced by the Interim Budget, 2020 and save the maximum possible tax outgo. In fact, if you can bring your taxable income within the INR 5 lakh limit, you can even escape the tax burden altogether. Good news, isn’t it?

Share:

Read More

Your Rs 200 per day savings can become 4.21 crore! Here is how

Crorepati : Yes, it is true! Investing Rs 6,000 per month or Rs 200 per day in equity mutual fund SIP can give Rs 4.21 crore maturity amount.

The goal of investors goal is mainly to become rich at a faster rate. However, they also want to invest in such a way that it doesn't have much impact on their monthly expenditure either. To address such investment options, mutual funds SIP, especially equity funds are fast attracting the eyeballs of the Indian investors. In this SIP option, investments can be made in a monthly mode for the long-term as is possible with Public Provident Fund (PPF) or any other debt fund. Choosing SIP in equity mutual funds provides investors with the same investment pattern as a PPF, but the returns are much higher if the investment is for the long-term.

Speaking on the benefits of SIP investment, Firoz Aziz, Deputy CEO at Anand Rathi Wealth Management said to the Zee Business program Money Guru, "Mutual Fund investors can choose the SIP route for investment as it gives them some breathing space in their monthly budget. Apart from that, those who are in the nascent phase of their career may not have a huge lump-sum amount for investment but in the long-term, they might look for a huge maturity amount, in terms of gains. For them, mutual fund SIP is a good option. In this option, if investors invest for the long-term, means near 30 years, they can easily expect around 15 per cent returns on investment."

Assuming the mutual fund SIP return to the tune of 15 per cent for a 30-year mutual fund SIP, this SIP (crorepati) calculator suggests that investors will get Rs 4.21 crore as maturity amount if the monthly SIP is Rs 6,000. Means, the equity mutual fund SIP has that much of power where Rs 200/day (6000/30 = 200) can become Rs 4.21 crore after 30 years if investment discipline is maintained and investment in the SIP continues for thirty years.

From Discover on Google https://www.zeebiz.com/personal-finance/news-crorepati-calculator-your-rs-200-per-day-savings-can-become-421-crore-here-is-how-119472

Share:

Read More

Reqular Income Solution - SBI Equity Hybrid Fund

REGULAR INCOME SOLUTION

SYSTEMATIC WITHDRAWAL IN - SBI EQUITY HYBRID FUND

 Investment Date - *01/01/2017* 

Investment Amount - *10,00,000 Rs* 

Systematic Withdrawal Amount - *10,000 Rs* 

Withdrawal Frequency - *Monthly* 

Withdrawal Period - *01/02/2017 to 31/01/2020* 

Total Withdrawal Amount - *3,60,000 Rs* 

Current Value of Investments after Withdrawal as on 01/01/2020 - *10,28,047 Rs* 

 *Total Valuation - 13,88,047 Rs (Total Withdrawal Amount + Value of Investments after Withdrawal)*

 *Source - Advisorkhoj.com*

 *Fund Performance* (As on 06th Feb,2020)

 *1 Year - 18.74%* 

 *3 Year - 12.21%* 

 *5 Year - 9.98 %* 

 *7 Year - 14.83*

Share:

Read More

Highlights of Union Budget for 2020-21

*Highlights of Union Budget for 2020-21*

*FY21 ESTIMATES*

* Fiscal deficit seen at 3.5% of GDP

* Net market borrowing pegged at 5.36 trln rupees

* Gross market borrowing at 7.8 trln rupees

* Pegs nominal GDP growth at 10%

* Receipts seen at 22.46 trln rupees

* Total spending seen at 30.42 trln rupees

* ETNow: Pegs divestment target at 2.1 trln rupees

*FY20 REVISED*

* Net market borrowing pegged at 4.99 trln rupees

* Fiscal deficit seen at 3.8% of GDP

* Receipts 19.32 trln rupees

* Spending revised to 26.99 trln rupees

*FISC HEALTH*

* Expected tax buoyancy will take time

* Good part of govt borrowing to be used for capex

* Fully provided for all flagship schemes of govt

* To activate FRBM Act escape clause on structural reforms

* Fundamentals of economy strong

* Centre's debt down to 48.7% of GDP Mar 2019 vs 52.2% Mar 2014

*GROWTH, INFLATION*

* India now 5th largest economy in the world

* FY14-19 average GDP growth 7.4%

* Financial structure must keep evolving to become $5-trln economy

* Stable, predictable business environment a key objective

* Reliable, robust, clean financial sector critical for economy

*DIRECT TAX*

* Looking at inverted duty structure under GST

* Introducing Aadhaar-based verification for indirect taxes

* Instant allotment of PAN on basis of Aadhaar

* To amend Income Tax Act to help merged PSU banks to absorb losses

* To waive interest on tax disputes if amount paid by Mar 31

* Propose scheme to settle old direct tax cases

* To amend laws to allow faceless tax appeals

* Propose to abolish dividend distribution tax

* Dividend to be taxed only in hands of recipient

* Revenue forgone on dividend distribution tax 250 bln rupees

* To review, rationalise tax exemptions over next few years

* New power cos to attract 15% corporate tax

* Cooperatives can be taxed at 22% without exemptions

* Concessional 4% withholding tax on bonds listed in GIFT City

* Proposes some tax sops on ESOPs of staff at startups

* Deferring tax payment on sale of ESOP for 5 yrs in start-ups

* Concessional 5% withholding tax extended to municipal bonds

* Can avail new tax rates if not availing some exemptions

* Tax holiday for affordable housing extended by 1 year

* Turnover threshold for audit of MSMEs hiked to 50 mln rupees

* Tax on income above 1.5 mln rupees at 30%

* Person with income of 1.5 mln rupees to get 78,000-rupee relief

* No tax on income below 500,000 rupees

* Cut tax on income of 1.25-1.50 mln rupees to 25%

* Cut tax on income of 1.00-1.25 mln rupees to 20%

* Cut tax on income of 750,000-1 mln rupees to 15%

* Cut tax on income of 500,000-750,000 rupees to 10%

* New direct tax scheme optional for taxpayers

* Large benefits for taxpayers under new direct tax regime

* Propose to significantly reduce income tax in new regime

* To bring simplified personal income tax regime

* Tax proposals to bring ease of compliance, reduce litigation

* Tax proposals focused on simulating growth

* Want to enshrine taxpayers' charter into statute

* Tax harassment can't be tolerated

* 100% tax exemption on sovereign wealth funds' infra investment

* Removed 70 of 100 income tax exemptions in new regime

* Revenue foregone on income tax cut at 400 bln rupees/year

*INDIRECT TAX*

* Propose nominal health cess on import of medical devices

* Customs duty on footwear, furniture raised

* To review remaining customs duty exemptions

* Some customs duty exemptions being withdrawn

* To review rules of origin for imports under free trade deal

* Amending laws to ensure no undue gains for imports under FTA

* To transfer FY17, FY18 cess balance to GST compensation fund

* GST compensation to states to be limited to cess collection

* GST helped add 6 mln tax payers in 4 years

* Average household saves 4% of monthly spend due to GST

* Effective tax for all commodities came down due to GST

* GST did face certain challenges

* Turnaround time for trucks cut by 20% due to GST

* Inspector Raj has vanished due to GST

* GST has resulted in efficiency gains

* GST has been gradually maturing

* GST has facilitated formalisation of economy

* GST extended 1-trln-rupee benefit annually to consumers

*REFORMS*

* Accepted substantial recommendations of 15th finance panel

* To improve quality of life through national infra pipeline

* Already provided 220 bln rupees for national infrastructure pipeline

* To encourage states to follow model laws made by Centre

*FINANCIAL SECTOR, MARKETS*

* Propose to divest LIC via IPO

* GIFT City to set up international bullion exchange

* To enhance credit guarantee scheme for NBFCs

* To allow NRIs to buy certain govt securities

* To float new debt ETF comprising primarily of gilts

* Some gilts to be completely available to overseas investors

* FPI limit in corporate bonds to be raised to 15% from 9%

* To amend Factoring Regulation Act to cover NBFCs

* Asked RBI to mull extending MSME recast window by 1 more year

* Encourage PSU banks to approach capital mkt for fund raising

* Have robust system to check health of scheduled commercial banks

* To amend Banking Regulation Act to strengthen co-op banks

* "Depositors money absolutely safe"

* Deposit insurance cover hiked to 500,000 rupee/depositor

* To sell govt stake in IDBI Bank to private investors

* FY14-19 saw twin focus on structural reforms, inclusive growth

* Banks saw clean-up, recapitalisation during FY14-19

* Aim for seamless delivery of svcs via digital governance

* Recognise need to support energised spirit of entrepreneurs

* Note there is global discussion on monetary policy efficacy

* To carry out governance reforms in PSU banks

* To mull strengthening National Contracts Act

* Propose new national policy on national statistics

* To ensure civil offence has no criminal penalty in Cos Act

*INFRASTRUCTURE, INDUSTRY*

* Allocate 273 bln rupees in FY21 to develop commerce, industry

* To allot 14.8 bln rupees on national technical textile mission

* Plan project preparation facility for infra pipeline

* India needs to boost domestic manufacturing

* To launch new export credit scheme NIRVIK

* NIRVIK to have higher insurance cover, lower premiums

* NIRVIK scheme for small exporters

* Moot new manufacturing scheme for medical devices

* Need to boost manufacturing of electronic items in India

* Scheme for mobile phone manufacture, semiconductor packaging

* Scheme also for electronic equipment manufacturing

* Plan five new smart cities via PPP mode

* Propose to set up an investment clearance cell

* Investment clearance cell to work through a portal

* To create single window for e-logistics market

* To soon release national logistics policy

* To digitally refund duties to exporters

* All ministries to issue quality standard orders

* Propose 1.7 trln rupees for transport infra FY21

* To seek external funds for Bengaluru suburban rail network

* To develop 100 more airports by 2024 to support UDAAN scheme

* To mull listing at least 1 key port on bourses

* Plan more Tejas-type trains to connect tourist locations

* Moot large solar capacity alongside tracks on railway land

* To actively pursue Mumbai-Ahmedabad high-speed train

* Aim to achieve 27,000 km electrification for railway tracks

* Need commercialisation of highways for NHAI to raise funds

* To monetise over 12 lots of highway bundles before 2024

* Delhi-Mumbai expressway to be completed by 2023

* To start Chennai-Bengaluru Expressway

* Allocate 220 bln rupees for power, renewable sector in FY21

* To expand national gas grid to reach 27,000 km

* To announce more reforms for transparent price discovery in gas

* To develop Bengaluru city rail network for 186 bln rupees

* To take more steps to reform power distribution cos

* Intend to promote pre-paid smart electricity metering

* 100,000 gram panchayats to be linked with Bharat Net this year

* Propose 60 bln rupees for Bharat Net programme in FY21

* Policy to enable pvt sector to set up data centre parks

* Moots 80 bln rupees for quantum technology plan for 5 years

* Two national-level science schemes to map India genetic landscape

* Propose 25 bln rupees to promote tourism in FY21

* To provide 31.5 bln rupees for culture ministry in FY21

* Propose to set up tribal museum in Ranchi

* Propose 44 bln rupees for clean air in FY21

* Advised to shut thermal power units if emission above limit

* Propose to set up national recruitment agency

* Propose national recruitment agency for non-gazetted posts

* To decriminalise some norm violations under Companies Act

* To set up international bullion exchange in GIFT City

*FARM SECTOR*

* Agri services need copious investments

* Farm markets need to be liberalised

* To unveil 16 action plans to focus on farm sector

* Committed to doubling farmers' income by 2022

* To help 1.5 mln farmers to solarise grid connected pump sets

* Solar power from farms to be sent to grids

* Expanding KUSUM plan to 2 mln farmers for solar powered pumps

* Provided energy sovereignty through KUSUM scheme

* Moot comprehensive steps for 100 water stressed districts

* Rural road plan, fincl inclusion helped raise farm income

* To launch Krishi Udaan scheme for domestic, global routes

* Krishi Udaan to help value realisation in tribal areas

* Krishi Udaan to help value realisation in northeast

* Railways to form kisan rail for perishable cold supply chain

* Kisan rail for perishables' cold supply chain through PPP

* Viability gap funding for warehousing at block, taluk levels

* NABARD to map, geo-tag farm warehouses, cold storage

* To further strengthen NABARD refinance

* Must change regime incentivising excessive chemical fertiliser use

* To have framework for development, mgmt of marine resources

* To raise fish output to 20 mln tn by FY23

* Target 500 fish farmer producer organisations

* To double milk processing capacity to 108 mln tn by 2025

* MGNREGA to be used to develop fodder farms

* To expand NABARD refinance scheme to NBFCs, co-operatives

* Negotiable warehousing receipts to be integrated with e-NAM

* Give support to states for cluster-based horticulture farm

* Agri credit target for FY21 set at 15 trln rupees

* To strengthen online national farm products market

* Zero-budget farming is govt's focus area

* To support states adopting 'one fruit for one district' plan

* Integrated farming systems in rain-fed areas to be expanded

* To set up warehouse regulatory, development authority

* Allocation for farm, irrigation, rural development 2.83 trln rupee

* Farmer Producer Organisation to now include fish farmers

 *SOCIAL SECTOR, EDUCATION*

* Allocate 690 bln rupees for health sector

* To allocate 30 bln rupees for skill development in FY21

* Allocate 993 bln rupees for education sector in FY21

* Jal Jeevan Mission allocation 115 bln rupees in FY21

* Swachh Bharat Mission allocation 123 bln rupees in FY21

* Govt scaled up programmes that aided poor, underprivileged

* Hope to address hopes, aspirations of youth, women, SC/STs

* Govt committed to serve people with humility

* 271 mln people out of poverty

* Strive to bring ease of living for every citizen

* A caring society, humane and compassionate, a Budget theme

* Economic development for all a theme for the Budget

* Antyodaya an article of faith

* Aspirational India a theme for the Budget

* To use proceeds from tax on medical devices for health infra

* Viability gap funding via PPP for setting up hospitals

* Allocate 1.23 trln rupees for rural development

* Indradhanush plan expanded to cover 12 new diseases

* To eradicate tuberculosis by 2025

* New education policy to be announced soon

* Holding talks with states on new education policy

* Want India to be preferred destination for higher education

* Moots 1-year internship for engineers by urban local bodies

* To take steps to enable FX borrow, FDI for education sector

* India to have largest working population in world by 2030

* Propose bridge courses for nurses, teachers for jobs abroad

* Viability gap funding for medical college-local hospital link

* Plan to attach medical college to district hospital via PPP

* To set up national police varsity, forensic varsity

* To have graduate-level online education plan for poor

* Allocate 95 bln rupees for senior citizens, handicapped FY21

* To provide 537 bln rupees for programmes for STs in FY21

* To allocate 850 bln rupees for schemes for SCs, OBCs in FY21

* To provide 286 bln rupees for women-specific plans in FY21

* Propose 356 bln rupees for nutrition-related plans in FY21

* Identified tech for eliminating manual cleaning of sewers

*MISCELLANEOUS*

* National security top priority

* "Wealth creators will be respected in this country"

* To host G20 presidency in 2022

* To allot 1 bln rupees for hosting G20 Summit in 2022

* To provide 307.6 bln rupees for J&K, Ladakh in FY21

* Five archaeological sites to be developed as iconic sites

* Aim to set up Indian Institute of Heritage and Conservation

* FY21 Budget woven around three themes

* Wish to open up vistas for vibrant economy

* To boost income, enhance purchasing power

* People have reposed faith in our economic policy

* PM Modi received massive mandate for economic stability

* Sitharaman tables Finance Commission's report for FY21

* Sitharaman skips rest of the speech after feeling uneasy

Share:

Read More

Save taxes with the help of ELSS

 Not many people are happy when the tax season is nearby, but people investing in Equity Linked Savings Scheme (ELSS) have a reason to celebrate the tax season. Want to know why? Watch the full video to know why

For investment inquiry contact us at -

   9974372131

  investandharvest@gmail.com

Share:

Read More

What is a Mutual Fund?

Want to invest in Mutual Funds, but now doing it because you know nothing about it? Worry not, its not rocket Science!

Watch the video to understand the concept of Mutual Funds.



For investment inquiry contact us at -
Mobile - 9974372131
Email- investandharvest@gmail.com

Share:

Read More