Friday, 25 April 2014

What can be maximum saving on tax by some one earning salary above Rs 7 lacs?

Friend , first of all , you should know that salaried class has very few options when it comes to save on tax. As you have asked for saving tax by investing in ASSETS , maximum saving of tax ,generally can be of Rs 1 lakh under 80C,80CCC & 80 CCD, Rs. 20,000/- under section 80CCF  and however in case of investment on house property it can go upto Rs2.5 Lakh.

While the return is directly proportional to risk associated with the investment , I would suggest the best investment in today’s circumstances by which you can save more tax and get the best return out of Investment is PURCHASING or Constructing house by taking loans. Following reasons compel its consideration

1. Real Estate gives fair return compared to any form of investment.
2. You can REDUCE your income , maximum Rs 2,50,000 now – 1,50,000 as interest on loan u/s 24 and Rs 1,00,000 as Principal payments u/s 80C (previously it was limited to 20,000)
3. Suppose you sale the said property , you get Indexation benefit by which you will find that long term capital gain is minimal to nil.
4.By staying in your house ,you save on rent and still claim HRA.(Grey Area)

So, if you are young and having no residence in your name , I would advise buying a home by taking fixed home loan of a fair amount to gain maximum on front of tax and return .

If you do not want then , in my view the best bet of investment should be following

1. Equity linked Pension Scheme- at least Rs 30000 per annum .
2. Mutual fund units which applies money to approved equity so that you can claim deduction 80C .Ask your agent or read the mutual fund scheme whether 80 C deduction can be claimed on investments.
3. I would advise taking Mediclaim policy on your family including parents and claim additional Rs 10,000 or Rs 15,000 of deduction . Although its an expense , yet in case of unfortunate medical emergencies, money saved is money gained.
4. Save money through PPF in your son or daughters name . maybe around Rs 20000 to Rs 30000 . It still has charm of money multiplier at the rate of 8 % . Interest is tax free and account is non attachable even by the court .
5. ULIP——at the moment I do not feel the right time to get in this product because the stock market is in boom and the purchase cost of ULIP is very high , thereby the investment is quite risky. In case market goes down, you can consider it.
6. Lastly, at least 20% of your saving should be invested in Equity market directly. Do not invest if you do not want to keep your investment for less than one year.

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