Skip to main content

Your guide to tax planning in 2013

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

 


The most important rule of tax planning is that it is no different from financial planning. The Section 80C offers a wide range of options and you should choose one that fits into your overall financial plan. Allocate your 1 lakh limit across different Sec 80C options as dictated by your goals, following the same principles of asset allocation that apply to other investments.


The Belapurbased PSU bank employee wants to save for the education and marriage of his two daughters. Since these goals are 15-20 years away, he has been advised to invest in diversified equity funds. So, he has started an SIP of 3,000 in an ELSS fund, thus aligning his tax-saving investment with a long-term financial goal. ELSS funds serve a twin objective in my financial plan.


Are you ready for risk?
ELSS funds invest in stocks and carry the same risk as any other equity fund. Besides, it is best to invest in equity mutual funds in monthly driblets. Investing a large amount at one go may have been a good strategy when the Nifty was floundering at 2,700 levels and a PE of 11-12 in early 2009. But it would be so when the Nifty has crossed 6,000 and is trading a tad above its long-term average PE of 18.


Small investors should not attempt to get on to the ELSS bus now—at least not in a lump-sum mode. If your risk profile allows you to invest in these funds, stagger your investments across 2-3 SIPs between now and 31 March.


The same logic applies to investments in Ulips. Putting a lump sum in equity through a Ulip is risky, especially when you are buying a single premium plans. The good thing is that unlike the ELSS funds, Ulips allow you an alternative asset allocation model. Put your money in the debt option instead of the equity fund in the Ulip and then gradually shift small amounts to the equity option. Most insurance firms allow 10-12 switches free of charge in a year. Similarly, avoid putting large sums into the NPS, especially if you have an aggressive portfolio.


New tax rules for insurance
If you plan to buy an insurance policy to save tax this year, keep in mind the changes in the tax rules relating to life insurance. An insurance plan will be eligible for tax deduction and the income will be tax-free only if it covers the policyholder for 10 times the annual premium.


The clause introduced in Budget 2012 will further bring down the returns from traditional policies. As it is, these policies gave very low returns of around 5-6%. Now, this is likely to fall to roughly 4-5%. This is because a larger life cover would require a bigger sum going into mortality charges every year. Also, the service tax rate has been enhanced.


Small savings more attractive
While the Finance Ministry wants you to stop looking at life insurance purely as a tax-saving instrument, bank representatives and agents continue to push these high-cost, but low-yield, products down the throats of taxpayers. Taxpayers wanting to invest in PPF are struggling because the government has abolished the commission payable to agents for opening new accounts. Ironically, this coincides with the PPF and other small savings schemes becoming attractive after the government made their returns market-linked in November 2011. The interest rates offered by small savings schemes are now pegged to the yield of government bonds.


However, the attractiveness of these options is likely to come down. Bond yields have come down in the past one month and are likely to recede even further on expectations of a rate cut. This could translate into lower rates for small savings schemes, such as the PPF, NSC and the Senior Citizens' Saving Scheme (
SCSS). The 10-year bond yield is at 7.8% and could slip further to 7.77% by December.


The interest rate of small savings schemes is calculated on the basis of the average yield during the year and is announced every year by the government. With the annual average dropping to .25%, the PPF interest rate could be lower at 8.5% in 2013-14. It could fall further in the following years. Though the PPF rate will change every year, the SCSS and NSCs will have a uniform rate till maturity. So, if you plan to invest in the SCSS or NSCs, do so this year to lock in at the high rates.


The SCSS is especially the best option for senior citizens because it combines tax savings with regular income. Till was working, my provident fund contribution and insurance premiums used to take care of my tax planning. So I needed an option that gives regular income as well as tax savings. Now, Although he will get a tax benefit only on 1 lakh, he gains from locking in at a high rate of 9.3%. There is a possibility of the interest rate coming down in April 2013.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Mirae Asset Healthcare Fund

Best SIP Funds to Invest Online   Mirae Asset Global Investments (India) has launched Mirae Asset Healthcare Fund. The NFO of the fund will be open from June 11, 2018 to June 25, 2018. Mirae Asset Healthcare Fund is an open-ended equity scheme investing in healthcare and allied sectors. The scheme will invest in Indian equities and equity related securities of companies that are likely to benefit either directly or indirectly from healthcare and allied sectors. The investment strategy of this scheme aims to maintain a concentrated portfolio of 30-40 stocks. Healthcare is a broad secular theme that includes pharma, hospitals, diagnostics, insurance and other allied sectors. The fund will have the flexibility to invest across markets capitalization and style in selecting investment opportunities within this theme. Neelesh Surana and Vrijesh Kasera will manage this fund. In a press release, Swarup Mohanty, CEO, Mirae Asset Global Inves...

How to Decide your asset allocation with Mutual Funds?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) How to Decide your asset allocation ? The funds that base their equity allocation on market valuation have given stable returns in the past. Pick these if you are a buy-and-forget investor. Small investors are often victims of greed and fear. When markets are rising, greed makes the small investor increase his exposure to stocks. And when stocks crash to low levels, fear makes him redeem his investments. But there are a few funds that avoid this risk by continuously changing the asset mix of their portfolios. Their allocation to equity is not based on the fund manager's outlook for the market, but on its valuations. Our top pick is the Franklin Templeton Dynamic PE Ratio Fund, a fund of funds that divides its corpus between two schemes from the same fund house-the...

Reliance Regular Savings Fund - Debt Option

Reliance Regular Savings Fund - Invest Online     The scheme aims to generate optimal returns consistent with moderate levels of risk. It will invest atleast 65 per cent of its assets in debt instruments with maturity of more than 1 year and the rest in money market instruments (including cash or call money and reverse repo) and debentures with maturity of less than 1 year. The exposure in government securities will generally not exceed 50 percent of the assets. The fund uses a mix of relatively low portfolio duration with active investments in higher-yielding corporate bonds. It does not take aggressive duration calls but tries to improve returns by cherry-picking corporate bonds. This is reflected in the fund's returns matching the category and benchmark for five years - at 8.4 per cent - but lagging behind the category during a raging bull market in bonds in the last one year. The fund has been a consistent but not chart-topping performer in the income category. Despite its ...

How to generate a UAN Online

Best SIP Funds Online   In order to make Employees' Provident Fund (EPF) accounts portable, the Employees' Provident Fund Organisation (EPFO) had launched the facility of Universal Account Number (UAN ) in 2014. Having a UAN is now mandatory if you have an EPF account and are contributing to it. So far, you got this number from your employer and every time you changed jobs, you had to furnish this number to the new employer.  However, in order to make it easier for you to get a UAN , and without your employer's intervention, the EPFO now allows you to go online and generate a UAN on your own. This facility can be used by freshers, or new employees, who are joining the workforce as well as by employees who have older EPF accounts but do not have a UAN as yet. As a new employee, you can simply generate a UAN and provide the number to your employer at the time of joining, when you need to fill up forms for your EPF contribution. As per a circula...

Income Tax Basics for beginners

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Tax is a compulsory payment made to the Government, but there are ways to optimise it   Income tax is an instrument used by the government to achieve its social and economic objectives. Simply put, tax is duty or tariff that income earning individuals pay to the Government in exchange of certain benefits such as law and order, healthcare, education and a lot more. With proper planning, your tax liability can be reduced and optimised effectively, leaving you with a greater share of your income in your hands than being paid out as tax. Income earned in the twelve months contained in the period from 1st April to 31st March (Financial Year) is taken into account when calculating income tax. Under the Income Tax Act this period is called the previous year.   ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now