Five Common Insurance Myths

Insurance is only meant for the wage earner of the family: Every family member needs insurance. The need for insurance may differ from person to person but it is important to gauge and analyse this need. It is not just the chief wage-earner’s prerogative to insure himself.

Insurance is mainly for tax saving: Saving tax is just an added advantage of insurance. Governments offer Best Tax Saving Plan benefits on insurance plans so that more and more people feel encouraged to insure themselves. The main objective of insurance is to provide financial protection to you and your family and to build an assured corpus for your future needs.

Benefits of insurance can be reaped only after death: Insurance provides financial protection to you and your family. One of the main objectives of taking insurance is to provide financial support to your family in case you are not around, as in case of term insurance. But that is not the only objective. Insurance helps you to build a corpus for yourself and your dear ones. It provides you with comfortable retired life and even takes care of your needs at various life stages.

Group insurance provided by my employer is adequate: Your group insurance might be adequate but what if you change the job? Once you change the job your group insurance will cease and you will be left with no cover till your new employer gets you covered. So it is always advisable to take insurance other than the insurance offered by your employer. Also the insurance provided by your employer may not be adequate to provide complete financial protection to your family.

Young people do not need life insurance: We live with a common notion that people die when they are old. But knowing about life’s uncertainties, it is best to take insurance early in life. Having the risk of death covered is definitely better than leaving dependents financially unstable in case of an untimely death. Besides, it is useful to take benefit of the lower premium rates offered to the young. The older you grow; buying insurance becomes tougher due to higher premium rates or refusal because of ill-health.

Source: http://blog.hdfclife.com/did-you-know/insurance-myths

Why Save Tax at the 11th hour?

Every year, the month of March springs a wakeup call on many of us. Suddenly, we are rushing at breakneck speed, riffling through financial papers, researching investment instruments, frantically calling the accountant—the deadline to file income tax returns is once again too close for comfort.

There are many reasons why we put off filing our tax returns each year—work, family pressure, and even sheer laziness. We are all wired to procrastinate; blame it on human nature. The point is this: Should we at all be procrastinating about something as crucial as our tax planning?

Last-minute tax savings: Why it is a problem

1.       Higher financial burden – Last-minute tax savers often have to scrimp during the last few months of the financial year because a bulk of their income is now directed into Best Tax Saving Plan  instruments. The problem is compounded by the fact that the largest chunk of income tax is deducted during the final quarter of the financial year—i.e. from January to March.

2.       Greater opportunity for error – Rushing is never a good idea, especially when your financial well-being is at stake. In the hurry to make good on the potential to save tax, you could make poor financial decisions and invest in unsuitable products. For example, a 25-year-old confirmed bachelor with no dependents has little need for life insurance, but he might buy a policy at the last minute in an attempt to save tax.

3.       Dangers of mis-selling – When attempting tax savings at the 11th hour, many people consult agents and blindly take their advice. You should never take an agent’s sales pitch at face value because (a) there is the obvious danger of mis-selling by an unscrupulous agent and (b) even an honest agent may not be sufficiently aware of your financial condition. It is necessary to do your own research, which is not possible at the last minute.

4.       Processing takes time – Note that buying a tax saving investment is not like buying groceries; there are procedures and it takes time. Furthermore, there may be unexpected delays for various reasons. Postpone your tax planning until too late and you run the danger of missing your tax filing deadline.

Tax planning: Why you should start early

1.       Make good investments – You should ideally give yourself time to research tax-saving products so that you are certain of getting a good deal. Starting early also ensures that you benefit from the potentially higher rate of returns than your savings bank account would offer you.

2.       Spread out the burden – If you start planning early, you can spread out the cost of making smart investments. Smart planning ensures that you do not have to adopt austerity measures as January comes around in a bid to do save as much tax as possible.

3.       Look at the bigger picture – The longer you procrastinate, the greater the possibility that you will be looking at tax savings through blinkers: Your main goal will then be to save taxes in that particular year rather than on which tax-saving investment instruments benefit you over the long term. This really is the most important factor in favour of starting early, as it enables you to plan for your financial future in a better and more holistic way.

Source: http://blog.hdfclife.com/early-tax-savings-benefits-532440

Top 10 Small Business Tax Savings You May Be Missing

As the tax deadline approaches it’s time to start thinking about how to minimize that tax bill, or even better—maximize that refund.
Take a look at this list of Top 10 Tax Savings You Have Missed to squeeze a little more out of your return.

Savings #1 – Initial start-up costs

If 2014 was your first year of operation, and if you made your first sale during that period, you can deduct some or all of your business’s start-up costs. As long as your total start-up costs were less than $50,000, you can deduct $5,000 in general costs (things like buying equipment or renting space), as well as another $5,000 in organizational costs (legal fees, professional consultations, etc.).
Savings #2 – Insurance Premiums

Insurance can help give business owners valuable peace of mind since, let’s face it, accidents happen. Luckily you can claim most insurance premiums on your taxes to help make coverage a little bit more affordable. Not all premiums are deductible but most common ones are, such as liability, malpractice or fire insurance.

Savings #3 – Home office

Plenty of freelancers and small business owners believe taking the home office deduction puts you at higher risk of an audit, but that’s not necessarily true. Even if this were the case, the financial impact of taking this deduction correctly would be worth the risk (assuming you have documentation to back up all your claims).

If you do decide to claim your home office as a deduction, be sure to follow IRS guidelines in regards to calculating the space that qualifies. Then, be sure to account for any overall utility costs that contribute to running your space.

Savings #4 – Credit card processing fees

While many consider them an unretrievable cost of doing business, credit card processing fees are still a business expense. Meaning they’re deductible on your small business taxes! Your processor should provide you with a record of the fees you incurred throughout 2014 (if not, call and ask for these records to be provided). So, deduct those numbers from your taxes and make up for any lost revenue.

Savings #5 – Continuing education

Continuing education should be a major priority for all small business owners and self-employed workers (and the IRS wants to help you make it so). If you’ve attended any seminars, training courses or conferences throughout the year, the bulk of your costs will likely be deductible (but keep in mind that deductions for dining costs associated with conference trips are limited to 50% of the total bill).

Savings #6 – Business gifts

Business owners encounter a number of different occasions where giving gifts to clients is perfectly appropriate. Ever sent a fruit basket to celebrate closing a big deal? Or printed up jackets to give away to top customers? Add these items to your deductions list, gifts made to customers and employees up to $25 in value are 100% deductible on your taxes (nice).

Savings #7 – Health savings accounts

If you have a high-deductible health plan or offer this type of insurance to your employees, it’s worth your time to determine whether or not you’re eligible to tie a health savings account (HSA) to your plan. If you are, setting up this type of account will let you put money away for future medical expenses, in addition to letting your contributions grow (tax-free!!) over time.

Savings #8 – Child labor

We’re not recommending sweatshop labor or inappropriate work practices, but if you have a dependant child who handles work tasks for your business, you can employ them without paying the all of the same payroll taxes you’d pay for an older worker—and potentially claim part of their salary as an expense on your tax return.

This break is only available, however, if your business is structured as a sole proprietorship or as a partnership between you and your spouse. If you’re set up as a corporation, you will not be able to claim this deduction.

Savings #9 – Pet supplies

It’s not crazy talk. If you operate a farm and keep a guard dog on premises for the protection of livestock/crops, you may be able to deduct the costs of its care, including dog food, bedding and veterinary care, as a legitimate expense. Note though that deducting pet supplies requires a verifiable business purpose. ‘ol Fido warming your feet while you work on the computer won’t cut it with the IRS.

Savings #10 – Your FreshBooks subscription

FreshBooks isn’t just a great tool for getting a hold of your business’s finances—it’s also a valuable tax deduction. Most tax advisors agree that software-as-a-service (SaaS) products should be included in the “Other expenses” category of your tax saving plans reports, as they don’t involve a purchase that loses value over time.

Source: http://www.freshbooks.com/blog/top-10-small-business-tax-savings-you-may-be-missing/

Ten Tax savings options for Salaried Employees.

Hurray !! I got my first job. I can’t still forget my joy when I saw the offer letter in my hand and the first salary amount being credited in my bank account. At that time what ever was credited in my bank account was great – I did not care about how much tax got deducted out of my gross salary its relationship with my net cash salary. However, very shortly I realised that some thing is going horribly wrong. I was paying a good part of my salary to the tax man which could be easily prevented should I tax some easy and quick steps.

An employee is offered many options to structure his salary to ensure maximum tax benefit. As a part of his salary an employee can receive various allowances (either completely exempt or partly exempt) to reduce his eventual tax liability.

1. An example of such an allowance is leave allowance. An employee can use such an allowance to cover his domestic travel and can be used for air, rail, and road transport.

2. Gratuity paid to an employee also has taxation benefits. To determine the taxability of gratuity, it is important to understand whether an employee is covered by payment of gratuity act. If an employee is covered by this act, lower of the following will be exempted from tax: –

15 days salary based on salary drawn for each year of service.

Rs. 10,00,000/-

Actual gratuity received.

If an employee is not covered under the gratuity act then, the lower of the following will be exempted from tax:-

½ month’s salary for each completed year of service.

Rs. 10,00,000/-

Actual gratuity received.

3. New pension scheme (NPS) is applicable to salaried employees to reduce their overall salary. In this scheme an employer contributes an amount to the NPS which is the same amount that is contributed by the employee. Both of these contributions are eligible for deduction u/s 80 CCD (2) of the act. Thus such contributions reduce the overall tax saving plans liability of the employee.

4. House rent allowance (HRA) is paid by an employer to an employee to pay any rental towards his house property. An exemption is available under such HRA. The exemption is based on the least of the following: –

An amount equal to 50% of the yearly salary received (applicable to major Indian metros and 40% in other cases)

Rent paid in excess of 10% of the salary received in a year

5. An employee should structure his salary to receive travelling allowance. Such an allowance is paid by the employer to the employee to meet his cost of travel on tour or on transfer from his work. This allowance can be completely exempt if the employee utilizes an amount equal to or more than the allowance.

6. Another option that is available to the employee is transport allowance. Such allowance is exempt up to Rs. 800/- per month i.e. 9600/- per year as a maximum deduction is available against this allowance.

7. In case a salaried employee has children, he should ask his employer to pay him children education allowance. A deduction of Rs. 100/- per month per child up to a maximum of two children is available.

8. In addition to the above allowances, an employee is entitled to receive perquisites from his employer. The tax on such perquisites is generally borne by the employer and is tax exempt for the employee. Perquisites include payments by the employer to the employee such as car conveyance, free food and beverages, interest free or concessional loan, sweeper/gardener/cook allowance, leave travel concession etc. These options are generally available as a part of salary structuring which an employee can provide to his employer.

9. Other general deductions u/s 80 C is also available to the salaried employee. Under this section, he can make investments in approved FD’s, Equity oriented MF’s, PPF etc. He can also pay his life insurance premiums. The total benefit available under this section if Rs. 100000/-.

10. An employee can also make several donations u/s 80g and use that to reduce his total income. Such donations offer either 100% deduction or 50% deduction depending on the institution to which the donation is made.

[Source : https://www.bajajallianz.com/Corp/life-insurance/save-tax.jsp]

Factors Determining the Scope and the Limit of a Tax Saving Plan

There has been a drastic rise in food prices. Be it vegetables, spices, condiments or the common day-to-day edibles, the price hike is sensational. The scenario not only affects your purse string but also curtails your focus on saving. At the end of the day, your thrust has to be on minimizing expense and maximizing saving. Inflation does tend to come in your way. Under such an eventuality, you should look forward to cashing in your chips with a Best Tax Saving Plan. It may be tad more helpful than before in streaming your expenses.

For minimizing expenses

There is an important psychological logistic to consider. If you have the ready money, you are more than likely to spend it. The proposition gives rise to unnecessary wastage. It is the psychological angle that drives you on to shell out money from your pocket. Under such an eventuality, it pays to gain by controlling the strings of expenditure. There are different means whereby you can lock in your money in the schemes of investment. The tax saving plan is one of the avenues to choose.

You are the winner

It all boils down to counting on the points of gain. You have lots to gain and little to lose by embarking upon investment ventures that facilitate the prospect of tax saving. There are legal ways to save tax, and every single tax payer has to broach upon the useful plans on tax saving. The leading insurance facilitators have plenty in store with respect to tax saving. The tax ability of your income is one of the factors of determination. According to the limit imposed, you can opt for a suitable tax saving plan.

The calculation strictures

A fiscal planner considers a large number of factors for calculating a plan that makes for tax-saving. First, it is your gross income that merits attention. Second, a certain part of your gross earning contributes to the provident and other funds of the benefit. So, deduction happens to be an important area of calculation. Third, the taxable limit comes into play. The amount you end up paying as income tax is another focus of the calculation. Then, you may also have other options for income earning. For instance, you can earn by renting your property, and putting the same out on sale.

Determining the best policy

the scope of the Best Tax Saving Plan calculation also includes the short- and long-term gains that you are likely to make from the other investment avenues. You have reasons to gain by fixing your money in the schemes of deposits. Similarly, you have cuts of profits to make by locking your capital in stocks, bonds and shares. All these factors go hand in hand to decide the look and nature of your saving plan. You may inherit property, and that might be another source of gain. But then, every gain comes at a price. You will have taxes to pay. Similar is true if you receive gifts that exceed a certain price bracket. Lottery winnings also culminate in tax payment. With the help of a saving plan, you can partly manage to mitigate the tax payment.

[Source: http://onlinelifeinsurance1.weebly.com/blog/factors-determining-the-scope-and-the-limit-of-a-tax-saving-plan]

What Affects Your Decision to Buy Insurance

Risk aversion is the primary reason for people to avail of insurance. At the same time, there are some factors which discourage people for ignoring it.

A large number of people are optimist. They do not think that something can go wrong in their lives. Insurance does not make any sense to them. Are you among those people? Or have you come across such people?

Well, no wonder. There are several such examples around us. Especially people who are young take life as it comes. But there are millions of incidents which exemplify the critical role of insurance in one’s life. Accidents can happen with anyone at any point of time. Problems can come calling without giving any advance notice. Yes, that is the reality of life and you cannot shy away from it.

Still, people tend to find reasons to not buy insurance or buy very less amount of coverage. Here are some of those major factors which influence people’s decisions.

Income and wealth

There are different dimensions of income and wealth vis-a-vis insurance. They all are interlinked. A person looks for insurance if he has created assets through income and wealth.

The net worth of assets directly influences the amount of coverage. At the same time, a wealthy person tends to ignore insurance coverage for some assets.

It is generally observed that the degree of risk aversion gradually declines with the increase in income and wealth. Similarly, if a person has a limited number of assets, he could be more protective and averse to risk.

This is a human tendency, well-supported by research studies.

Premium loading

Since tax saving Plans insurance is a service provided by profit-making companies in both private and public sectors, it involves certain costs towards operations and management. These are generally termed as administrative costs which the insurer incurs towards the buying transaction and subsequent deployment of funds. Many times, a higher amount of premium loading de-motivates a person.

In the industry, there is a concept of zero-loading. However, rarely any company follows this concept. Given the high costs of infrastructure and resources, insurers have no alternative but to charge customers.

However, at times, these charges are unreasonably high and exploitative.

On a positive note, the Insurance Regulatory and Development Authority of India (IRDAI) is increasingly focusing on e-Governance and this is likely to bring down the transaction and administrative costs by several times. Also, the Authority is setting limits to premium loading, and it is not that insurers can charge whatever they want.

Lock-in period

The lock-in period is another major deterrent to buying insurance. This is especially true with life insurance. Under section 80C of the Income Tax Act, one can claim exemption of up to Rs 1 lakh for buying life insurance policies. This limit was recently increased under the Union Budget 2013-14 by Rs 50,000. Therefore, one can invest up to Rs 1, 50,000 under life insurance and claim income tax deductions.

It is a huge benefit and people can save a large part of their income going in the form of tax. Just imagine, if you were in the tax bracket of 30 per cent and a deduction of an additional Rs 50,000 brings it down to the bracket of 20 per cent. This single step can have a lasting impact on your tax returns and you get much more in the form of savings and investments.

[Source: http://blog.hdfclife.com/factors-that-impact-your-decision-to-buy-insurance]

5 points to note about tax saving

The need for you to be actively engaged in your personal tax planning is of particular importance. By structuring a suitable mix of investments for your portfolio, you can pay less tax and ensure that you have the right investments to help you achieve your goals.

1) Have a holistic approach to tax planning

Good tax management can go a long way toward enhancing your return. But the decision needs to be made in conjunction with your overall portfolio and not in an ad-hoc fashion.

Most individuals rarely think about tax planning from an investment point of view. Hence one finds that they do not approach an investment with a perspective of whether or not it fits in with their overall portfolio. The approach is often just grabbing up investments that will give them the tax break, irrespective of whether or not it will help them reach their determined financial goals or fit into an overall investment strategy.

Tax planning investments are no different from conventional investments. Hence, it is imperative to obtain an in-depth understanding of all investment avenues available which offer tax benefits and choose suitable ones that will help tax saving plans and achieve goals.

2) Don’t leave tax planning for the fag end of the financial year

Along a similar vein, one should not consider tax saving as once-in-a-year ritual to be repeated at the end of every financial year. Most procrastinate and wait until the last minute. The result is a portfolio full of insurance schemes and investment decisions made in a tizzy.

Most investors in a crazy dash to meet their Section 80C requirement will opt for unit linked insurance plans, or ULIPs, and endowment plans and often end up with products that do not suit their need.

Life insurance should never be bought with the intention of saving tax. Tax saving is just one of the benefits that come along with it. The main benefit is the provision of finances in the case of death of the policy holder.

Taxes can be saved with other tax-saving instruments such as equity linked saving schemes, tax-saving bonds and government bonds, post-office savings schemes and Public Provident Fund.

3) PPF and NSC are not similar

Another mistake individuals tend to make is to think of the Public Provident Fund, or PPF, and National Savings Certificate, or NSC, along the same lines. Granted, both offer tax saving benefits under Section 80C, both are backed by the government, and both offer assured returns, but they are very different in their structure.

On the point of liquidity, NSC scores simply because of the lower lock-in period. The NSC VIII Issue is for 5 years and the NSC IX Issue is for 10 years. PPF is much longer at 15 years and can even be extended by a block of 5 years on maturity.

On the return front, the rate for PPF is fixed by the Reserve Bank of India and is reset every financial year. It currently stands at 8.7% per annum. In the case of NSC, the rate of return is locked at the time of investment and during the tenure of the investment it remains insulated from any changes in rates. Currently the rate is 8.5% (NSC VIII) and 8.8% (NSC IX) per annum.

The return in both cases is compounded and handed over on maturity. In the case of PPF, it is compounded annually, but half-yearly where NSC is concerned. But the interest earned in the case of NSC is taxed, unlike PPF where it is completely exempt from tax.

4) Tax saving is more than fixed-return instruments

Individuals tend to look at the Senior Citizen Savings Scheme, or SCSS, 5-year deposits, NSC and PPF as the best tax saving plan investment avenues. But you can also invest in an equity linked savings scheme, or ELSS. These are diversified equity mutual funds that offer a tax benefit under Section 80C. They have the lowest lock-in period of just three years.

As on January 5, 2014, the ELSS category average delivered an annualised return of 27.55%. Do note, that was just the category average. Individual funds could have delivered even more. For instance, the chart topper was Reliance Tax Saver (Growth) with an annualised return of 40%.

Having said that, keep in mind that these are equity funds which means, the return is far from guaranteed. So pick a good fund that has shown consistent performance and stick with it over the long haul. Don’t be in a tearing hurry to sell your fund units on completion of three years. Exit from the fund when the market is rallying so you walk away with a profit. If this means hanging on for a few more years, do so.

5) Take into account the entire package

Tax saving is more than just investments and goes beyond Section 80C.

If you have made a donation to a charity that offers a tax deduction, avail of it. If you are paying premium on a medical insurance policy for yourself and dependents, be sure to claim the deduction.

Also, if you are servicing a home loan or an education loan, you are eligible for income tax deductions. Under Section 80C, you can even show the expenses of your child’s education to avail of a deduction.

When deciding how much to invest to max your deduction under Section 80C, take into account children’s tuition fees, principal repayment on home loan, contribution to employees provident fund, or EPF, and any life insurance premium you are paying.

[Source: http://www.morningstar.in/posts/30076/5-points-to-note-about-tax-saving.aspx]

Life Insurance is one of the best tax saving tools

Tax planning is not only a basic duty of everyone towards the progress of nation but it is also important for our own financial planning. It helps you reduce your income tax liability and also ensure a better future due to compulsory savings in highly safe government approved schemes.

How to calculate tax?

Taxable income is calculated on the basis of income from salary, house property, business and profession, capital gains and income from other sources. Calculate tax payable on the gross taxable income for the whole financial year (i.e., from 1st April to 31st March) using a simple tax rate table. Then minimize your tax payable amount through sensible tax planning by comparing and choosing the best tax savings plan based on your age, social liabilities, tax slabs and personal preferences. You should choose your investment options in such a way, that the post tax yield is the highest possible keeping in mind the basic parameters of safety and liquidity.

While drawing up a tax savings plan, it is crucial to remember that investing in any of the financial product just to save taxes may actually turn out to be harmful in the long run. There are many tax saving avenues available, good financial planning involves maintaining a right mix of investments in debt and equity related instruments, which not only save tax but also benefit you financially.

Under Section 80C of the Income-Tax Act, 1961, an individual can invest up to Rs 1.5 lakh, which includes investments in Public Provident Fund (PPF), life insurance premiums, national savings certificates of India Post, employees’ contribution to Provident Fund, tax-saving mutual funds, five-year bank and post office fixed deposits.

While we see there are various tools for creating your  tax saving plans one good option is insurance policy. Life insurance plans are effective way to save taxes when doing your tax planning. You can walk into your bank, enquire about tax-saving investments, and step out with a life insurance policy. You may even buy a policy from your investment advisor who always impresses you by counting the infinite benefits of buying retirement policy to save taxes.

Thus, individuals can get a tax benefit for the purpose of their financial planning through investments in insurance products under the Rs 1.5 lakh deduction limit under Section 80C of the Income Tax Act. The major way in which the benefits are obtained is through the insurance route as insurance companies have the policies that offer this benefit over a period of time.

But, as a buyer you need to be careful while buying an insurance policy. Lots of people end up buying a policy that won't offer any tax benefits. Even the money received by their nominee in case of death will be taxable if the policy does not cover the buyer for 10 times the annual premium. Sometimes agents as well as aggregator sites sell insurance policies that are not eligible for tax savings plan. Clarify with your insurance agents for tax benefits. Insurance agents are bombarding buyers with attractive benefit illustrations without educating them on the tax implications.

[Source:https://taxsavingplansinindia.wordpress.com/2015/09/18/life-insurance-is-one-of-the-best-tax-saving-tools/]

Factors Determining the Scope and the Limit of a Tax Saving Plan

There has been a drastic rise in food prices. Be it vegetables, spices, condiments or the common day-to-day edibles, the price hike is sensational. The scenario not only affects your purse string but also curtails your focus on saving. At the end of the day, your thrust has to be on minimizing expense and maximizing saving. Inflation does tend to come in your way. Under such an eventuality, you should look forward to cashing in your chips with a tax saving plans. It may be tad more helpful than before in streaming your expenses.

For minimizing expenses

There is an important psychological logistic to consider. If you have the ready money, you are more than likely to spend it. The proposition gives rise to unnecessary wastage. It is the psychological angle that drives you on to shell out money from your pocket. Under such an eventuality, it pays to gain by controlling the strings of expenditure. There are different means whereby you can lock in your money in the schemes of investment. The tax saving plan is one of the avenues to choose. 

You are the winner

It all boils down to counting on the points of gain. You have lots to gain and little to lose by embarking upon investment ventures that facilitate the prospect of tax saving. There are legal ways to save tax, and every single tax payer has to broach upon the useful plans on tax saving. The leading insurance facilitators have plenty in store with respect to tax saving. The tax ability of your income is one of the factors of determination. According to the limit imposed, you can opt for a suitable tax saving plans.

The calculation strictures

A fiscal planner considers a large number of factors for calculating a plan that makes for tax-saving. First, it is your gross income that merits attention. Second, a certain part of your gross earning contributes to the provident and other funds of the benefit. So, deduction happens to be an important area of calculation. Third, the taxable limit comes into play. The amount you end up paying as income tax is another focus of the calculation. Then, you may also have other options for income earning. For instance, you can earn by renting your property, and putting the same out on sale.

Determining the best policy

The scope of the tax saving plan calculation also includes the short- and long-term gains that you are likely to make from the other investment avenues. You have reasons to gain by fixing your money in the schemes of deposits. Similarly, you have cuts of profits to make by locking your capital in stocks, bonds and shares. All these factors go hand in hand to decide the look and nature of your saving plan. You may inherit property, and that might be another source of gain. But then, every gain comes at a price. You will have taxes to pay. Similar is true if you receive gifts that exceed a certain price bracket. Lottery winnings also culminate in tax payment. With the help of a saving plan, you can partly manage to mitigate the tax payment. 

[Source: http://onlinelifeinsurance1.weebly.com/blog/factors-determining-the-scope-and-the-limit-of-a-tax-saving-plan]

Tax Saving Plans - Tax Free Bonds 2015-16: Features & Benefits

Tax Saving Plans - Tax Free Bonds 2015-16: Features & Benefits from Mihir Shah

Visit to know more on Tax Saving Plans

Five tax things that will help you ensure financial freedom

Financial freedom liberates an individual from the constant monetary worries and tensions that are part of everyday life but getting there requires a lot of work and effort. There are several things that can ensure that you can have financial freedom but the area of taxation requires a lot of attention as this can prove to be a road block in the effort. Too much or too little attention to the tax aspect can effectively eat away at the efforts to ensure financial freedom that you as an investor have been working towards. However a little bit of work on the tax angle can pay handsome dividends. Here are some ways in which this can be done so that your financial freedom is achieved. 

Invest according to your goals and not just to save tax  

One of the most important points when it comes to taxation is that there are several tax deductions that are available for individual when they invest in specific instruments. One of the most popular routes is the benefit of a deduction under Section 80C. Here investment in specified instruments like Employees Provident Fund, Public Provident Fund, National Savings Certificates, Senior Citizens Savings Scheme, Equity Linked Savings Scheme, Life Insurance premium etc is eligible for a deduction upto Rs 1.5 lakh a year. This is a golden opportunity for an individual to plan their goals and then ensure that the amounts are invested that would achieve the goals and at the same time save tax. Often this angle of combining goals and tax saving plans investment is missed out. People do not invest according to their goals which leads to a position where they struggle to complete the tax requirements and at the same time their goals remain unmet. This is something that needs to be avoided so that one investment can yield multiple benefits.

Boost for retirement planning  

The biggest financial goal for every individual is to plan for their retirement and this requires a huge sum of money. It often takes decades to plan and invest for retirement and the challenge on this front is big. A little bit of attention to the tax aspect can ensure that there is little to worry about on this front too. There are instruments like the Public Provident Fund and the Employees Provident Fund which provide double benefits. On one hand the amount invested gives a deduction from the taxable income to the individual under Section 80C but even greater is the benefit that is received on the payout. The amount earned on these schemes as interest is tax free so this reduces a huge burden when this is earned or when this is received. This can help in ensuring that the goal of retirement planning is tackled and freedom from this tension is achieved for an individual. Medical expenses taken care of

Powering education

 Most parents are worried about the education of their children due to the high cost involved. This is an area that provides for an improved career and earnings prospect in life. There is however a large cost that can come for achieving as this has spiralled in the last few years this but some small tax steps can ease the situation for the individual. An education loan for the purpose of higher education will ensure that the financial aspect of the process is met but at the same time it will also give a best tax saving plan

benefit to the individual when the loan is repaid. The interest that is paid on the loan will be allowed as a deduction for 8 years. This will also remove worries about meeting the hig education costs and making it affordable. 

Wealth creation

Equity is the best asset class that can help in the process of wealth creation and this benefit can be multiplied by also ensuring that the tax benefits are taken with it. Equity oriented investments like shares and equity oriented mutual funds have double benefits as the dividends are tax free and at the same time long term capital gains is charged at zero per cent rate which also makes the gains tax free. This can be used for the necessary asset allocation and the tax benefit will ensure that the goal of wealth creation takes place without taxes eating into the effort leading to another area that provides financial freedom.

[Source: http://www.moneycontrol.com/news/tax/five-tax-things-that-will-help-you-ensure-financial-freedom_2395101.html]

Life Insurance: an apt tax saving tool for women too

In 2015, women are much ahead of just being homemakers! Be it any profession, they often become the frontrunners and win the race much like their male counterparts. Contrary to the popular notion, they earn hefty salaries; they run their families hand in hand with the men.

Therefore, it is equally important for women to save tax too alongside having a well-planned financial goal. Tax planning involves taking into consideration various factors such as the age of the asses see, total income earned and the financial goals of the asses see as an individual and from the perspective of her family.

Most women start looking at tax saving avenues only in the January-March quarter of the financial year so as to submit the proof of investments to their employer by the end of that financial year. This is the time of the year when all financial advisors, banks or other financial intermediaries will also start approaching individuals with their tax saving ideas. However, it is prudent to consider and start investing early for tax-planning purposes. Today, there are numerous investment options available to woman investors which help save taxes.

Among other financial products, insurance should definitely be a crucial tax saving option for a woman investor to include in her financial portfolio. Women often do not consider insurance, both life and health, as priority. However, with rising medical costs and growing incidents of lifestyle related illnesses, it makes sense to invest in an insurance plan that covers such exigencies. Investing in insurance is not only quite hassle-free, but it also provides for projected living costs, education expenses and retirement benefits.

Under Section 80C of the Income Tax Act, individuals have been provided many tax reliefs such as tax free investments of up to Rs. 150,000. One of the best tax saving plan options under this category is life insurance. It is a known fact that a life insurance policy is the most cost effective tool to provide financial protection to a woman’s family in case of unforeseen eventualities. However, the quantum of life insurance depends upon many factors such as income, expenses, liabilities, goals etc.

Term insurance may be a right instrument for lump sum life insurance cover, whereas ULIPs are the best option for steady and sustained investment with an investment goal of 10-15 years. Since, tax benefit is the inherent advantage which comes with this product; she should consider this option only after analyzing her needs. It is also important to know that for policies starting April 1, 2012 and later, Section 80C of the Act currently allows a deduction on premium paid on life insurance policy only if the annual premium paid is less than 10% of the sum assured.

In 2013, the limit of the annual premium was increased from 10% to 15% of the sum assured for persons with disability or severe disability or suffering from diseases or ailments specified in the Income Tax Act. Thus, for these people, if the annual premium paid was up to 15% of the sum assured, the same could be availed as a deduction below Rs 1.5 lakh tax limit under Section 80C.

Another important option is for premium paid for health insurance. Under Section 80D of the Income Tax Act, one can avail deduction of up to Rs 15,000 for self, spouse and dependent children, while an additional Rs 20,000 is available for parents above the age of 60 (who fall in the senior citizens category) on premium paid for a health insurance plan.

These limits can include expenses of up to Rs 5,000 on preventive health check-ups. This is especially beneficial to women over the age of 30 – who are advised to have routine health check-ups as a matter of routine in order to detect and prevent specific illnesses. Cash payments for health check-ups are eligible for income tax deduction but health insurance premiums paid in cash are not.

Notwithstanding the above mentioned advantages, a detailed analysis should be done on the requirement and benefits of insurance policies before buying the right scheme. And, this is true for any financial instrument. Finally, she should review her insurance cover from time to time and increase the coverage to meet her financial goals. While tax-saving is important; the primary goal must be protection.

[Source: http://lifeinsurance.bajajallianz.com/tax-insights/life-insurance-an-apt-tax-saving-tool-for-women-too/]

Top Five Best Tax Saving Tips for 2015

When it comes to investment, you must aware with all current industry trends. In this post, PolicyBoss shares some important tax saving tips for the year 2015. Each tip will definitely help every tax payer to save his hard-earned money with effective investment planning strategy.

Life Insurance policies offer best tax saving plan to help you save up to Rs...u/s 80C. You can also save tax u/s 80CCC, 80D and 80 DDD.

• Cut down your tax payments

Person can cut down all tax payments by taking benefit of all exemptions as well as deductions. Also, ensure income-tax file for every family member. To make more money, you have to work hard on proper investment planning based on the modifications done by the Indian Government associated to investment strategy.

• Planning for old age family members

It is advisable to tax saving plans are separate independent income tax-file for your elder family members. You can do it through gift offered by you to them. In fact, buying online health insurance policy India for old age family members is also a good idea to gain some tax benefits under Section 80D.

• Tax planning for children

In case of married children, create a separate income-tax file for your daughter-in-law if not done. For unmarried and studying children, create a separate income-tax file through gift. For a minor child, buy child insurance online for long term perspective.

• Tax planning for couple

Industry experts suggest tax payers to create a separate income-tax file of the spouse and take care of non-clubbing provisions. Maximize tax deduction separately under section 80C for you and your spouse. Make payment of health insurance premium for you and avail tax deduction.

• Investment in Term Insurance Plans

Those who buy online life insurance policies can avail tax benefits under section 80C of the Income tax act, 1961. If you have a huge loan for house, car or education loan for your child, then investment in term plans is necessary.

[Source: http://blog.policyboss.com/investment-plans-in-india/top-five-best-tax-saving-tips-2015/]