| |  Tax planning is not only a basic duty of every one of us but 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. | |  - Calculate your taxable income under all heads i.e., Income from salary, house property, business & 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 (we may provide a tax table link here)
- Minimize your tax payable amount through sensible tax planning by comparing and choosing the best tax saving scheme based on your age, social liabilities, tax slabs and personal preferences
- You should choose you 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.
Life insurance plans are effective way to save taxes when doing your tax planning. | |  Individual Tax Rates for FY 2010-11 | Who are allowed for deduction? | Individual tax payers and Hindu Undivided Family | | What are the eligible savings? | Premiums paid towards procuring life insurance or keeping a life insurance plan in force for – - In case of an individual: himself/ herself, spouse, children
- In case of an HUF: any member
| | What are the limits on deduction? | Deduction are restricted to investments upto Rs 1,00,000 in savings specified under Section 80C (including life insurance premiums). The limit of deduction under Section 80C will be part of the overall limit prescribed under Section 80CCE. | | What happens in case the amount of premium is in excess of 20% of the sum assured? | Deduction will be allowed only for premiums upto 20% of the sum assured, if the amount of premium paid in a financial year for a particular plan is in excess of 20% of the actual sum assured | | When is the benefit not allowed? | This tax benefit will be reversed if the plan is terminated/ cease to be inforce within 2 years after the date of commencement of the plan | Deductions under Section 80CCC towards premium paid for pension plans | What are the deductions allowed? | The premium paid towards a pension plan (excluding interest or bonus accumulated or credited to policyholder’s account, if any), not exceeding Rs 1,00,000 is eligible for deduction from the total income | | What about the amount received under the plan? | he amount received on surrender (whole/ part) of the annuity plan, or those received as pension are taxed as income | | What are the limits on deduction? | Deduction are restricted to investments upto Rs 1,00,000 in savings specified under Section 80C, 80CCC and 80CCD. The limit of deduction under Section 80CCC will be part of the overall limit prescribed under Section 80CCE. | Deductions under Section 80D towards premium paid for medical insurance | Who are allowed for deduction? | Individual tax payers and Hindu Undivided Family | | What are the eligible premiums? | Premiums paid by any mode other than cash towards procuring a medical insurance for – - In case of an individual: himself/ herself, parent(s), spouse, dependent children
- In case of an HUF: any member
- In case of individual assessee – Himself/Herself, spouse, dependent children and parent or parents.
- In case of HUF assessee – any member of HUF
| | What are the limits on deduction? | - Self, spouse and dependent children: Deduction up to Rs. 15,000
- Parents: Additional deduction up to Rs. 15,000
However, a higher amount of up to Rs 20,000/- is permitted if the person, for whose health insurance the premium was paid, was 65 years or age or more at any time during the financial year in which the premium was paid
| Tax benefits under Section 10(10D) for life insurance plans | What are the amounts received that are exempt from tax? | Any sum received under a life insurance plan, including the sum allocated by way of bonus on such a plan is exempt from tax | | When is the benefit not allowed? | - Sum received under Section 80DD(3), or
- Any sum received under a Keyman Insurance Plan, or
- Any sum received other than as death benefit under an insurance plan which has been issued on or after 1st April, 2003 and if the premium paid in any of the years during the plan term is more than 20% of the sum assured
| Disclaimers- The above tax rates are subject to change from time to time. You are advised to consult your tax advisor. | | |
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