Tax Planning

Tax Planning

• Well, the year 2015 has just started and for the benefit of our readers we will like to share with them Fifteen important tips for Tax and Investment Planning.
• These tips will surely help every tax payer to save some portion of his income-tax and also proper planning for his investment.
• Here are these fifteen tips:-

1. Cut down your tax payments

• The first theme for the year 2015 should be to cut down all your tax payment and this is possible through two vistas.
• First is taking advantage of all exemptions and deduction and second is ensuring Income-tax file for every member in the family.
• If you are able to take care of these two vistas only then surely your year 2015 would be a wonderful year bringing lot of money for you as a result of tax planning and also making money grow for you by proper planning of investment based on the changes made by the Government relating to investment strategy in whole of year 2015.

2. Planning for elder family members

• The next step in tax planning is to plan for a separate independent income-tax file of your Dada, Dadi, father and mother. This can be done through gift by you.
• Likewise, you can think of taking out Mediclaim Policy for your aged parents and this can help you to cut down your income-tax because you can enjoy additional deduction under section 80D amounting to Rs. 20000.

3. Tax Planning for the couple

In the year 2015 think of innovative ideas for tax planning for the couple and here are some of the important points which should be taken into consideration by you :-

1. A separate income-tax file of the spouse.
2. Taking care of non-clubbing provisions.
3. Maximizing tax deduction under section 80C for you and your spouse separately.
4. How a residential house for you and your spouse jointly owned by you would get you best deduction and maximum deduction of Rs. 2 lakhs per annum for each of you.
5. Make payment of Mediclaim Policy Premium for you and enjoy tax deduction up to Rs. 15000.

4. Tax Planning for your Children

Three types of Children Tax Planning to be done :-

1. For Married children
   • Plan for creating a separate income-tax file for your daughter in law if not already done. Avoiding transactions which cause clubbing of income.
   • Create a new HUF file for your married children so that a new tax entity can be created.
2. For major unmarried children
   • Take education loan If the Income-tax file is not yet created of major unmarried children who are students, think of creating a separate Income-tax File through gift. No clubbing of income will arise.
3. For minor children
   • Plan right now some funds for your minor children so that growth is high, tax is nil for long term perspective.
   • The income of the minor child is clubbed with the income of the parents and only a deduction up to Rs. 1500 per annum is available. Hence, if you make a gift to your minor child, make the investment in such a manner that the income does not become taxable in the hands of the parents. Think of buying Mutual Fund and Direct investment in the name of the minor child in the stock Market so that at least after one year the income received becomes tax free. Also think of creating a Special Hundred Percent Welfare Trust for the minor child so that the income-tax file of your minor child can be started without attracting the clubbing provisions.

5. Tax Planning for your Spouse and new year gift from husband to wife

• If we think of making a gift or a big gift to the spouse, the income thereof will be clubbed with the income of the husband.
• Hence, what is recommended is that as far as possible try to avoid making of the gift to the spouse but in the new year some gift and some memorable gift is definitely required to be given to your spouse specially when you want to stay peaceful in the family and I would like to suggest you to make a gift in the form of a Big No No.
• What is this No No ? This No No from tax planning is B B Not.
• Well the meaning of B B Not is Bank Balance Not. That is touch me not. Says the bank balance of your spouse.
• Don’t withdraw from the bank balance of your wife either for day to day household expenses or for travel or for children education expenses or for shopping.
• All these expenses in 90 per cent of the cases should only be met from tax planning angle by the poor husband.
• This is because if you don’t withdraw the money from the bank balance of your wife, then her balance accumulates and she is able to invest the money because all household expenses etc. etc. are taken care of by you.
• At least Mr. Husband if you cannot think of making a big gift for the year 2015 to your wife, at least think of this idea to provide B B Not formula i.e. touch me not formula of the bank balance of your wife.

6. Your Investment in Life Insurance Policies.

• Make it a point that it is time now that one Sunday morning take out time to spend 2/3 hours on finding out whether you are adequately insured or not.
• Unfortunately when I meet tax payers, I find that in most cases their insurance coverage is limited to the investment which they are required to make in terms of section 80C of the Income-tax Act, 1961.
• May I suggest at this time now that looking in particular the fast life you live, you must devote sometime to access the actual need of insurance in your family and go beyond the tax deduction of 80C for making insurance premium payment for the family members.
• If you have taken a big loan either for car or for house or for big education loan for your children, then it is also time now to think and adopt the theme of getting a Term Policy equivalent at least to the total amount of the loan on your head.
• Hence, think and think and take out new investment for insurance policy during the year 2015.

7. Are you planning to become a Non-Resident Indian.

• Your uncle has gone abroad. Your brother has gone abroad and so now it is your desire that you also want to go abroad for studies or for doing business.
• Well from tax angle the decision should be taken in the year 2015 that if you are interested to become a Non-Resident Indian, in that situation leave the country in the year 2015 not in January 2015 itself but think and plan to go abroad from the point of income-tax astrology between 1st April 2015 up to 30th September 2015.
• Well this is a tax astrological answer befitting this theme and that is that if you leave India during the above period, you would become a Non-Resident Indian and by chance if you leave India in October 2015 on-wards, then it is not possible to become a Non-Resident Indian during the coming financial year.
• Hence, from tax planning point of view leave India and leave your friends and family members between 1st of April 2015 till 30th September 2015 and move anywhere in the world.
• Earn money. Bring money back and happy news no income-tax planning at all and this is because of the fact that non-Resident Indian is not required to pay income-tax for his foreign income. He will pay income-tax only on Indian income.

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