Tax Planning

Insurance As Tax Saving Instruments:

Insurances are one of the top tax saving schemes. Now these Insurance Schemes are of many types so that you can pick and choose as per your requirements and convenience.

• LIFE INSURANCE: Under Section 80C of the Income Tax Act (I-T Act) premiums for life insurance covering you, your spouse and children are eligible for deductions up to 1.5 Lakh.
• HEALTH INSURANCE: This is another vital area where you can easily invest. Health insurance is not only a tax saving mechanism but also helps you out in your time of a medical emergency. Section 80D, premiums for insuring the health of self, spouse and children are eligible for up to Rs 15,000 deduction in a financial year. Paying for parents' cover makes you eligible for an additional deduction of up to Rs 15,000. If at least of one the insured is above 60 (a senior citizen for tax provisions), the deduction limit in that case is Rs 20,000.

IN YOUR 30'S: Vital years for retirement planning

Tax Saving Schemes Boosts Your Wealth As Well:

• RGESS: Rajiv Gandhi Equity Savings Scheme is ideal for the small scale investor. RGESS deduction u/s 80 CCG is available on 50% of the amount invested. The investors who invest up to Rs 50,000/- is eligible for claiming benefit and it comes with a lock-in period of 3 years.
• ELSS: You can make claims under Section 80C benefits for investments in Equity linked savings scheme (ELSS). It again comes with a lock-in period 3 years. These investments do not attract capital gains tax.
• ULIPS: Unit-linked insurance plans, or Ulips, is another popular choice and can be used to get insurance as well as equity exposure. ULIPs investments are eligible for Rs 1.5 lakh deduction under Section 80C. The maturity proceeds are tax-free.

Retirement Planning - Another Tax Saving Instrument:

Don't even think for a single minute that your retirement planning has got nothing to do with your tax saving plans. In fact it is one of the vital planning's that can save your money from getting taxed. Some of the popular measures offered are:

• THE EMPLOYEES' PROVIDENT FUND (EPF): Here both the employer and the employee need to contribute. However it is applicable only if you fall within the Rs 1 lakh Section 80C limit.
• SAVINGS CERTIFICATES: Five-year and 10-year National Savings Certificates (NSCs) are offering 8.6 per cent and 8.9 per cent a year, respectively. But keep in mind that the interests are taxable.
• SENIOR CITIZENS' SAVINGS: Senior citizens (60 and above) will get 9.3 per cent return in 2012-13 under the Senior Citizens' Savings Scheme. The maturity period is five years.
• NATIONAL PENSION SYSTEM: You have to contribute at least Rs 6,000 a year in the NPS account, which is eligible for deduction under Section 80CCD (the total deduction under Section 80C, 80CCC and 80CCD is Rs 1 lakh).

INCOME TAX SLABS AND RATES FOR AY 2019-20

Income Tax Slabs / Income Tax Rates for AY 2019-20 (applicable on income earned during 01.04.2018 to 31.03.2019) for various categories of Indian Income Tax payers.:

• Individual resident < 60 years
• Senior Citizen
• Very Senior Citizen
• Any NRI / HUF / AOP / BOI / AJP
• Co-operative Society
• Firm
• Local Authority
• Dom. Co. - Turnover upto ₹ 250 Cr.
• Dom. Co. - Turnover above ₹ 250 Cr. Other Company

Individual Resident Aged Below 60 Years (I.E. Born On Or After 1st April 1959)

• 10% of the Income Tax, where taxable income is more than ₹ 50 lacs and upto ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 50 lacs by more than the amount of increase in taxable income.
• 15% of the Income Tax, where taxable income is more than ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 1 crore by more than the amount of increase in taxable income.

Health & Education Cess : 4% of the total of Income Tax and Surcharge.

SENIOR CITIZEN: (Individual resident who is of the age of 60 years or more but below the age of 80 years i.e. born on or after 1st April 1939 but before 1st April 1959)

• 10% of the Income Tax, where taxable income is more
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than ₹ 50 lacs and upto ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 50 lacs by more than the amount of increase in taxable income.
• 15% of the Income Tax, where taxable income is more than ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 1 crore by more than the amount of increase in taxable income.

Health & Education Cess : 4% of the total of Income Tax and Surcharge.

VERY SENIOR CITIZEN: (Individual resident who is of the age of 80 years or more i.e. born before 1st April 1939)

• 10% of the Income Tax, where taxable income is more than ₹ 50 lacs and upto ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 50 lacs by more than the amount of increase in taxable income.
• 15% of the Income Tax, where taxable income is more than ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 1 crore by more than the amount of increase in taxable income.

Health & Education Cess : 4% of the total of Income Tax and Surcharge.

Any NRI Or HUF Or AOP Or BOI Or AJP

• 10% of the Income Tax, where taxable income is more than ₹ 50 lacs and upto ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 50 lacs by more than the amount of increase in taxable income.
• 15% of the Income Tax, where taxable income is more than ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 1 crore by more than the amount of increase in taxable income.

Health & Education Cess : 4% of the total of Income Tax and Surcharge.

* Abbreviations used : NRI - Non Resident Individual; HUF - Hindu Undivided Family; AOP - Association of Persons; BOI - Body of Individuals; AJP - Artificial Judicial Person

Co-Operative Society

Surcharge: 12% of the Income Tax, where taxable income is more than ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 1 crore by more than the amount of increase in taxable income.

Health & Education Cess : 4% of the total of Income Tax and Surcharge.

Firm

• INCOME TAX : 30% of taxable income.
• SURCHARGE : 12% of the Income Tax, where taxable income is more than ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 1 crore by more than the amount of increase in taxable income.
• HEALTH & EDUCATION CESS : 4% of the total of Income Tax and Surcharge.

Local Authority

• INCOME TAX : 30% of taxable income.
• SURCHARGE : 12% of the Income Tax, where taxable income is more than ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 1 crore by more than the amount of increase in taxable income.
• HEALTH & EDUCATION CESS : 4% of the total of Income Tax and Surcharge.

Domestic Company - Turnover Upto ₹ 250 Crores

SURCHARGE : The amount of income tax as computed in accordance with above rates, and after being reduced by the amount of tax rebate shall be increased by a surcharge

At the rate of 7% of such income tax, provided that the taxable income exceeds ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 1 crore by more than the amount of increase in taxable income.

At the rate of 12% of such income tax, provided that the taxable income exceeds ₹ 10 crores. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 10 crores by more than the amount of increase in taxable income.

Health & Education Cess : 4% of the total of Income Tax and Surcharge.

Company Other Than A Domestic Company

SURCHARGE: The amount of income tax as computed in accordance with above rates, and after being reduced by the amount of tax rebate shall be increased by a surcharge as under

At the rate of 2% of such income tax, provided that the taxable income exceeds ₹ 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 1 crore by more than the amount of increase in taxable income.

At the rate of 5% of such income tax, provided that the taxable income exceeds ₹ 10 crores. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 10 crore by more than the amount of increase in taxable income.

Health & Education Cess : 4% of the total of Income Tax and Surcharge.

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