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 IT’S TIME TO SAVE TAX

The tax saving season has started. In Fact, most tax saving exercises take place in the last three months of the financial exercises take place in the last three months of the financial  year between january and march. There are plenty of tax-saving  investment option available to you to claim a tax deduction : Public Provident Fund (PPF), National Saving Certificate (NSC), Tax-Saving five -Year term deposit, National Pension Scheme  (NPS),among others. Here We Would tell you why Equity Linked Saving Scheme (ELSS) or Saving/Planning mutual funds are the best tax Saving  option for you.

  • Tax benefit under section 80C

It is the Most obvious reason. Your  investment in ELSS are eligible for a tax deduction of up to RS.1.5 Lakh form your gross total income under section 80C of the income tax act. Though you can avail the income tax act. Though you can avail  a maximum deduction of RS.1.5 lakh  under the section, there is no limit on the  under the section, there is no limit on the  amount you can invest in these schemes. you are free to invest more than RS 1.5 lakhs but the extra amount would not Fetch you a deduction. In Short, investing RS 1.5 lakhs  in an ELSS can help you save tax up to RS 46,350 depending on the income tax slab  applicable to you.

  • Lowest lock-in period

All tax saving investment typically come  with a mandatory lock-in period. for  example, Public Provident Fund (PPF), another tax saving instrument permitted  under section 80C,come with a 15- year lock-in period  of five years .ELSS comes  with a lock-in period of three years. you can withdraw the money (redeem in mutual fund ) after three years.

  • A word of caution:

Though ELSS comes with a lock -in period of three of three years, invest in ELSS with an investment horizon of at least five years in mind. This is just to be on a safe side as ELSS invests predominantly in stocks.

  • Benefit From equity exposure

If You are a traditional investor who prefers tax-saving instrument that come with assured returns, you should consider investing in ELSS to take a small exposure to equity. ELSS are consider ideal for first-time investors in stock market. The mandatory lock-in period would help investors to weather the volatility associated with the stock market.

  • Tax - free long -term capital gains

The long -term capital gains arising out of the sale of ELSS units are tax free. if you sell equity mutual fund after a year, they qualify for long term capital gains, which are currently tax-free. since you can redeem your ELSS investment only after the completion of the mandatory three-year lock-in period, it would automatically qualify for tax-free long term capital gains.

  • No maturity date

Most tax-saving investment such as PPF, tax-saving term deposit, among others, come with a maturity date.PPF matures in fifteen years and it can be renewed for another five years. ELSS has no such fixed maturity date or period. You are allowed to continue with the investment ELSS as long as you can.

Finally, it is true that ELSS comes with a bunch of benefits. That doesn't mean that you must invest in it if it meets your investment objective, horizon and the risk profile. Investment experts warn you not to look at tax-planning exercise in isolation. It should always be a part of your financial plan.

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Targeting Retirement of Rs.1 Crore

What to do How Much do I need
to Invest Every month?

? The Amount you need to invest is a result of the rate of return and time

Illustration  : Monthly Investment Amount to Reach  a target Corpus of RS.1 Crore  at age of 60.

 

Age Rate of Return (compounded Annualized)    
  8% 10% 12% 15%
25 4,400 2,700 1,600 7,00
35 10,600 7,600 5,500 3,100
45 29,000 25,600 20,000 15,000
Key Takeaway
  • Start Early
  • Invest Regularly
  • Stay Invested     

Source: Internal Calculation
The above table is illustration purpose only, purely to explain how much to monthly investment is required to RS 1 Crore  at the time of retirement and should not be construed as providing any kind of investment advise or we are not guarantee any returns on investment made is the scheme. calculation are based on assumed above. All figures are indicating in nature and do not represent assured returns in any way.

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Times Are Changing

A Generation Ago Now
Medical Technology Limited Improved by leaps and Bounds
But, Medical costs.... Were Expensive Have Become More Expensive
Plans Post Retirement Pilgrimage ,settle Down quietly Travel the World, Pursue Hobbies
Career Mind Set High job Security, join an Organization and work Till Retirement. More Frequent Job Changes, Lower Job security
But Thankfully..... Lower Income Levels Higher Income Level
Investment Options Limited to Traditional Options, Lack of Awareness Never Option like Mutual Funds Designed Specifically For  Retirement Planning .

"It is not the strongest or the most intelligent who will survive but those who can best manage change."
    -Charles Darwin

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Starting Early Makes an impact !

The below illustration is to schowcase how you need to invest larger sums you delay your retirement saving and how much it costs you in the long run. The % change is reflected over the previous start age.The calculation are done assuming a rate of return of 12% p.a.

Start@25 Yrs Start@35Yrs Start@45Yrs
Investment Amount Per Month 5,000 7,000 11,667
Amount invested 21,00,000 21,00,000 21,00,000
Value of Retirement
Corpus @ 60years of large
3,21,54,797 1,31,51,926 58,28,436
Delay by Years would reduce your corpus by 59.10% 55.68%

    
.......A delay in 10 years cuts your retirement corpus by more than 50% at every steep even though you may invest the same amount over time.

Source :internal calculation
calculation are based on assumed rates of return , and actual returns on your investment may be more, or less. this intended to be indicative of the performance of any specific investment and does not represent a guarantee of returns in this scheme. The above is only
a tool that may help you yearly investment to reach your goal of retirement saving but it should not be construed as proving any kind of investment advice or as a substitute for any kind of financial planning.

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Need For Retirement planning

  • Long Life spans mean longer retirement
  • Joint families giving way to nuclear families
  • Lack of social security benefits in India
  • Maintain he standard of living post retirement with a plan to tackle the unforseen
  • Income streams may dry up
  • Safeguard  against inflation

Monthly expenses of RS.50,000/-

Today will grow to RS 1,90,000/-

After 20 years at 7% inflation rate

Are you investing enough

For your RETIREMENT ?

"It is not your fault if you were born poor.it's definitely your fault if you die poor. "

- Bill Gates

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Goal Oriented Planning

Goal : It is common term used to achieve something in life. The goal that you set for yourself determines the essence of your life.

Likewise, every individual has different financial goal in his life. For Eg: Child's Higher Education, Retirement Planning, Marriage, New Big House.etc, but sometimes a single goal may be an object of stress & consternation. And here, we help our clients to plan according to their requirements to achieve their goals in their specified terms.

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Tax planning is not…

Tax Planning is NOT tax evasion, which is illegal under Indian Laws. It involves sensible planning of your income sources and investments.
Tax Planning is NOT just investing your money blindly into any schemes for benefit of Section 80C.
Tax Planning is NOT too difficult, but one has to practice it with proper time commitment to organize their finances.

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Second Option Services

Many times an individual have a ready plan with him, but need to confirm, clarify or check whether its fine or it would work as per his requirements or need any kind of changes to be made in it before the actual implementation.

Second option services are thus a reconfirmation of your ready plan before the actual execution. It gives comfort to an individual by double checking his ready plan & finding on if the same is on track.

Check Twice & get the right.

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Income Tax Planning

Tax Planning is one of the essential parts of your financial planning. Efficient tax planning helps you to reduce your tax liability. It is done by legitimately taking advantage of all tax exemptions, deductions rebates and allowances while ensuring that your investments are in line with your long term goals.

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