I have seen many people forge medical bills for the tax benefit. I know it is not right but many people do it for the obvious reason to save tax. I don’t know how far it is going to save their penny. I did little math out of it and this is what I have figured it out. Continue reading
I have decided to meticulously work out a plan for the financial year 2009-2010. As far as I know, every single individual wants to save up every penny that he pays as income tax. I was wondering whether it is possible and I think it is. Since I have learnt this hard way, I want to share it with you so that you don’t find it hard. Everything that is learnt by me will be shared and this is just for your information only. I am not a financial expert and you better get your advices from the right kind of people. Continue reading
Investing your hard earned money is most important aspect of managing your money. I always feel that without having a financial plan there is no necessity to invest for tax benefit. Since it wont be of any benefit.
I have observed the following pattern, most of the investments happen during the Jan, Feb and Mar months of the year since that is the time people start realizing that they need to have investments in order to benefit from tax. I am totally against this philosophy. It does not make any sense to me. If government gives a tax break it certainly means there is something behind it. Everyone around us don’t think in those terms. We are happy to be in debt in order to get a tax benefit. If you are that category then it would make sense to you not otherwise. I always feel that government should genuinely give tax break say for investing in stocks but it is not so.
According to me, Investment should be made as investment and not for the purpose of tax break. Generally investments are made on Mutual funds, Life-Insurance, ULIP and on similar financial instruments during the start of the year since we get tax benefit on only these financial instruments. These products sell like hot cakes during this time. Since only these products are advertised and shown to the high paid professionals, they prefer these instruments as they are very busy with their life and stick with these. Truth is that not many business man prefer these instruments since they know that it is not for them. These products are tailor made to high paid professionals. Since these professionals can’t think as they have no time to think about all these products. They assume that it is best financial instrument that anyone can get and pour the money. Truth is there are many good financial products which can be used only if planned properly else only last minute pouring of money happens and I am sure most of them would have not got the returns on investment as assured by the agents of these products.
Start planning your financial future as soon as possible. If government gives you a tax break of 1 Lakh think of all possibilities that can be there and then invest your hard earned money else it does not make any sense. You can pour money in either of the products its all the same.
Choice is yours! Either plan up or screw up!
I was wondering as to how to save tax and invest in Stock market. There are numerous options to save tax and was wondering why does government ever give tax breaks when they need money to run the nation effectively and efficiently. So there should be something fishy. I always believe that “There is nothing called FREE FOOD”.
So have you ever noticed or thought about in which government gives a tax break? Only for long term investments, home loans, mutual funds, Life Insurance and so on.. Why does Government gives tax break for such kind of things? I would prefer government giving me tax break on buying Stocks, personal loans, vehicle loans and so on.. but government does not even consider it. Why?? I think the government does not earn or get any money from us in any ways. If that is the case they don’t give the tax break. As simple as that.
Anyways, let us not ponder too much about that. How much ever think about it we can’t formalize a new tax rule. All that we can do is either pay tax or not pay tax. But being a responsible citizen I feel we should pay tax.
I feel Public Provident Fund (PPF) is a very good option for tax benefit. Everyone should have PPF because it is a good option with very less risk. Why I claim that very less risk is because you never know what might happen to the government and what might happen to the money you have provided them to take care of. But it is much safer in the government’s hands.
You can invest in other financial instruments also but I am not sure how much it is safe and what is sum assured. I will get into depth of these topics in the further topics.
See you around!!
Many would be eager not to pay taxes to the government and save up. It is a good thought to do so but have you ever thought in these lines?
1. Why does government always give tax break when we are in debt and that too long term debt such as home loans and why not for personal loans?
2. Why does government give tax break for investing in mutual funds and not for shares?
3. Why does government give tax break for Insurance?
4. Why is tax deducted at source (for Salaried People)?
and ….
These are some of the questions that keep ringing me.. I don’t have any answers for these but all that I can understand is, the taxes are made by the Rich people to ensure that middle class people pay the taxes and they can manage to save up the taxes legally. Government ensures that they try to take out every penny from the people in order to provide facilities to the people. I don’t know how far this is true but the intension is this only.
What is meant by Tax Deducted at source?
That means Before you lay your hands on your hard earned money, government takes its share and provides you the left over. 🙂
Salaried class always gets the Tax Deducted at Source, in short TDS. Whereas the Business class always enjoys the money and at the year end pay the Tax to the government. Honestly Business class is a best way to earn and save up rather than the Salaried class.
Consider this situation: I am a Salaried employee and I need to organise a party for my friends. I need to do that with after tax money (Government takes its share). If I am a Business man and I want to throw a party then I would do that with the money which is not taxed and later I would write it off as a Business meeting expenditure. There are various options for Business man to avoid tax where as the Salaried class is not so blessed.
I can sense many loop holes for a business man. This draws me to a conclusion that Tax rules are made by the Rich and they have made sure to pay less and in turn burden the salaried class.
Many of us are bothered about taxes and we try to minimize the taxes as much as possible. I want to make few things clear.
1. Don’t invest your hard earned money to reduce your taxes.
2. Investment and Taxes should be two different things.
3. Make sure that you learn the basic tax rules that are required.
4. There are lot of loop-holes in the Taxes provided by the government for the good reasons, try to use them and ensure you don’t pay more in taxes.
There are various components in our pay slip such as Basic, H.R.A, and so on. Try learning what each one means and how it is taxed and learn means to minimize the tax as much as possible.
Just for an example:
For H.R.A:
If you are living in your own house and still you want compensation for House Rent Allowance then this is what you should do.
Pay your Parents or Grand Parents an amount every month as Rent. This is not illegal. By this way you will get your tax benefit and also if your parent’s income is less even they wont be taxed. To be on the safer side you pay the rent to a non-working parent in your family.
There are various loop-holes that is present. I don’t know many. I shall update you guys whenever I get these kind of information.
Engineer's Finance 