Category: Tax Planning

Investments for Tax Planning and Financial Planning

TAX PLANNING FOR FY April 2005- March 2006.

As per the new budget guidelines of Febuary 2005, tax savings and investments have become more beneficial to individuals, for the following reasons-
· The tax saving options are available and applicable to all Income tax brackets.

· The tax benefit is a 100% saving in the form of a deduction as against a rebate that was allowed for the previous FY. That is, now what ever is invested upto Rs 100000 is a full saving from one’s taxable income.

·The minimum taxable income bracket has been raised. This means, there is more disposable income in the hands of the individual, because earlier a person earning Rs 80000 was paying some tax, but now taxable incomes upto Rs 100000 for individuals and Rs 125000 for ladies will not be charged to tax.

·Investment options with more liquidity and better returns have been added in the available tax saving avenues.

·Home loan interest repayment upto Rs 150000 is allowed over and above the Rs100000 taxable income bracket and the Rs 100000 investments allowed for tax deduction. Which means a person who has taken a housing loan can have a non-taxable income upto Rs 350000.

The eligible investments under Sec 80 C are-
·Investment in PF of the company(12% of basic and DA).
· Investment in PPF.
· Life Insurance schemes.
· Investment in ULIP plans of companies with low lock in period and better returns.
· Investment in ELSS schemes of Mutual funds.
· Repayment of principal amt of home loan.
· Payment of child education fees of Rs 12000 per child upto a maximum of 2 children.
· Investment in NSC schemes of post office.

With an investment of Rs 100000 in the above instruments, one can save Rs 30000 or 30% income tax from the tax payable.

The investment options must be chosen taking liquidity, flexibility and returns into consideration.

Please note, Rs 150000 towards interest repayment on home loan is allowed over and above this deduction.

Since, a window of opportunity is now available upto Rs 100000 to save tax for all income categories, one, must start a systematic monthly investment in the same from April to ensure the investments are spread over the financial year and cash flows well defined.

Do contact us to help you take a right decision on your savings and tax planning, by starting now.

Thanks & best regards,

Dilshad Billimoria
Financial Advisor

Dilzer Consultants Pvt. Ltd.
307 Embassy Center,
11 Crescent Road,
Bangalore- 560 001.

Ph: 91.80.22267168 Mobile: 9845023746 Fax: 91.80.22265380
Email: Website:

“The human mind, when stretched by a new idea, never returns to it’s original shape”