The document provides information on income tax rates and slabs for the financial year 2013-2014 in India. It also discusses various tax deductions that can be claimed under sections like 80C, 80D, 80DD, 80E, 80G, 80U, HRA exemption, home loan interest deduction, LTA exemption and more. It emphasizes the importance of financial planning, setting financial goals, asset allocation, retirement planning, building a balanced investment portfolio, and getting suitable insurance covers. The key advice includes starting investments early, systematic investing, maintaining an emergency fund, and reviewing one's portfolio periodically.

1. Income Tax &
Financial Planning
for salaried person

2. INCOME-TAX ACT, 1961
It came into force on the 1st day of April, 1962
Applicable amendments as per Finance Bill 2012

3. "It was only for the good of his subjects that he
collected taxes from them, just as the Sun draws
moisture from the Earth to give it back a thousand
fold"
--Kalidas in Raghuvansh eulogizing
KING DALIP.

4. Slab of Income Tax for 2013 -2014
Total Income Rate of tax
Where the total income does not Nil
exceed Rs. 2,00,000/-.
Where the total income exceeds 10 per cent of the amount by which the total
Rs. 2,00,000 but does not exceed Rs. income exceeds Rs. 2,00,000/-
5,00,000/-. - Some tax credit of Rs. 2000 for every person
who has an annual income of upto Rs. 5 lakh
Where the total income exceeds Rs. 30,000/- plus 20 per cent of the amount
Rs. 5,00,000/- but does not exceed Rs. by which the total income exceeds Rs.
10,00,000/-. 5,00,000/-.
Where the total income exceeds Rs. 1,30,000/- plus 30 per cent of the
Rs. 10,00,000/-. amount by which the total income exceeds
Rs. 10,00,000/-

5. Cess on Income tax
• The amount of income-tax shall be increased
by Education Cess on Income Tax @ 2% of
the income-tax.
• An additional surcharge is chargeable @ 1%
of income-tax (not including the Education
Cess on income-tax).

6. Optimal tax planning with section 80C
(Overall limit of ` 1 Lakh)
Eligible schemes under section 80C
1. Life Insurance Premiums
2. Contributions to Employees Provident Fund
3. Public Provident Fund
4. NSC (National Savings Certificates)
5. Unit Linked Insurance Plan (ULIP)
6. Repayment of Housing Loan (Principal)
7. Equity Linked Savings Scheme (ELSS) of Mutual Funds
8. Tuition Fees including admission fees or college fees paid for full-time
education of any two children of the tax payer.
9.5-Year fixed deposits with banks and Post Office Savings Schemes
10.Senior Citizens Savings Scheme (SCSS)

7. Thinking beyond Section 80C
Section Quick Description and Deduction Limit
80D Premium Paid on Medical Insurance Maximum upto `15,000 or ` 20,000 in case of Senior Citizen
80DD Maintenance including Medical Treatment of a ` 50,000 irrespective of the amount
Handicapped Dependent who is a person with
disability
80DDB Expenditure Incurred in respect of Actual Incurred with a ceiling of upto ` 40,000 or ` 60,000 in
Medical Treatment case senior Citizen whichever is lower
80E Repayment of loan taken for pursuing Maximum deduction for interest paid for a maximum
higher education of 8 years or till such interest paid which ever is earlier
80G Donations of certain funds and charitable Maximum deduction allowed can be 50% or 100% of the
Institutions donation subject to the stated limits as provided under this
section
80U Person suffering from Specific disability ` 50,000 irrespective of the amount incurred or deposited.
However incase of disability of more than 80% higher
deduction of Flat ` 100,000 is allowed

8. House Rent Allowance Exemption -
How to Calculate?
Least of the following.
• Rent paid minus 10% of basic salary.
• Actual HRA received by the employee.
• 50% of basic salary, if the location of the
residence is in a metro city.
Calculation Sheet

9. Your home loan and Tax planning
• Repayment of principal amount: Makes
you eligible to claim a deduction up to a
sum of ` 1,00,000 under section 80C.
• Interest is eligible for deduction u/s 24(b)
as follows: Maximum of ` 150,000
• The Union Budget 2013-14 has proposed
a deduction of ` 1 lakh on housing loan
interest under section 80EE

10. ` 5,000 Exemption
According to the Finance Bill, 2012 – Preventive
health check-up cost up-to ` 5000/- is eligible for
Section 80D (Within ` 15,000/- limit).

11. LTA Exemption (Leave Travel Allowance)
Provide the necessary documents
• TWO journeys performed in a block of FOUR calendar
years. current block i.e. 01/01/2010 - 31/12/2013.
• The Exemption will be limited to the journey from the place
of origin to the place of destination by the shortest
possible route WITHIN INDIA
• Original receipts of Ticket must be submitted along with
this claim for example boarding pass in case of flight etc.
• The Exemption is strictly limited to expenses on
Air/Rail/Bus fares only. No other expenses will qualify for
the exemption.

12. Conveyance Allowance
` 800/- per month is granted to meet the expenditure
incurred on conveyance, while performing official duty i.e.
` 9,600/- pa. No Bills are required for this amount.
Professional Tax Deduction
Professional Tax Slab based on Net income in 6 Months
Upto Rs. 21000 NIL
` 21,001 to ` 30,000 100/-
` 30,001 to ` 45,000 235/-
` 45,001 to ` 60,000 510/-
` 60,001 to ` 75,000 760/-
Above ` 75,001 1095/-

13. Invest in Equity and Get Tax Benefits
• A new equity scheme called Rajiv Gandhi
Equity Saving Scheme is being introduced
to promote equity investments. The
scheme will get income tax deduction,
which will be purely applicable to the new
retail investors who will invest directly into
equity up to ` 50,000, with a lock-in period
of three years. The investor’s annual
income should not exceed ` 1,200,000.

14. The benefits of filing income tax return
• Standard Income Proof
• Speeds your loan application process
• Claim your tax refund
-Every person with taxable income (over and above
the tax exemption limit) should file an income return,
even if her/his tax liabilities have been taken care of
by the employer through tax deducted at source (TDS)
• Filing of ITR can be done in 2 ways
-Offline/Traditional paper filing
-Online filing

15. Step to file return online
1. REGISTER on e-Filing website using your PAN
2. Download the applicable ITR Form from Downloads
3. Fill it as per your form 16
4. Generate XML and safe it on the desktop
5. LOGIN the portal
6. Go to e-file –Income Tax Return –upload return
7. Take print out Sign and post it by normal post (No
Courier)

16. Benefits of file return online
1. Easy to access your IT Returns for every year from
anywhere
2. Easy to keep records
3. Saving of Time & money to take services from filing
agent
4. Fast and smooth refund (if applicable)

17. Financial Planning

18. Why Should you Develop a Personal
Financial Plan?
• Achieve your financial goals.
• Achieve financial independence.
• Invest intelligently
• Minimize your payments to tax
• Cover your assets.

19. Goals : The Cornerstone of a Financial
Plan
• Goals keep the future in mind by reminding
you of the rewards.
• Goals entice you to keep the plan in effect.
• Goals provide tangibility for the question.
“Why?”
• No point in telling the dietician that you are going to
have idli…..and then saying ‘Oh my friends forced
me…so I had butter chicken’ .

21. Inflation
• The effect of inflation is the prices of
everything going up over the years.
• Do not keep your money stagnant. If you
just save money by putting it your safe it
will loose value over time.
• When investing, you have to make sure
that the rate of return on your investment is
higher than the rate of inflation.

22. Brokerage and taxation!
• Brokers make money on whatever
transaction you make. Whether you buy or
sell, brokers will make money.
• Brokers tend to encourage you to trade.
• For a short term (less than one year) you
have to pay tax on any capital gain you
make

23. Investment benchmark
• As a general rule, just for the sake of
simplicity, your investments must grow at a
minimum rate of 15% per year to stay ahead
of inflation, tax and brokerage!! Remember
this when making all your investments.

25. Ideal allocation for salaried person
• Begin by protecting yourself from the three
main risks
– Health
– Income and
– Life (Know your Life Value)
• How big should my life insurance policy be?
– One basic rule of thumb is that the death benefit
on your policy should equal seven to 10 times the
amount of your annual salary.

26. Ideal allocation for salaried person
• Have a good medical cover as it helps in the
long terms (costs like medical emergencies for
self and family members, especially if there is
insufficient company cover)

27. Ideal allocation for salaried person
• Make sure 20% of income is set aside for
investment
• Maintain a six-month expense in liquid form
for emergency (in form of cash, bank FDs,
liquid mutual fund)
• Give priority to retirement – a combination of
systematic investments in mutual funds would
be the best option

28. Ideal allocation for salaried person
• Jewellery cannot be considered as investment.
So in this asset class invest in gold funds, gold
coins or at best, plain gold jewellery.
• Balance your plan with a combination of low
and high risk investments

29. Ideal allocation for salaried person
• Treat All Goals independently such as
– Life Insurance
– Retirement Plan
– Investment for set goals
– Permanent Asset
– Liquid Fund

30. Ideal allocation for salaried person
• Education may be the best single
investment you will ever make!

31. Retirement Planning
• Things to remember while planning for
retirement.
• Decide how much income you require to live comfortably
in your post-retirement years.
• Determine how much you need to save regularly, starting
today, to have the right amount. – Calculation Sheet
• Select the right retirement plan, which will help you meet
your post-retirement requirements.
• Start saving now!
• Systematically invest a fixed amount every month for your
post-retirement years and lead a tension free healthy
retirement.

32. Retirement Planning
Save 10% of your income for retirement
Don't underestimate the significance of the savings in the first few
years. Assuming that a 25-year-old person puts away a fixed amount
every month, his savings in the first five years will account for 44% of
his total corpus when he is 60 years old. The later you start, the
more you will need to save. If you have started late, say in your 40s
or 50s, you will have to invest up to 20-25 % of your income if you
want a comfortable retirement.
SMART TIP:
Start an SIP in a mutual fund and automate the process by giving an
ECS mandate to your bank. In this way, your retirement planning will
stay on track.

33. Retirement Planning
Increase investment as your income grows
SMART TIP:
Whenever you get a raise, allocate half of it to savings.
Don't dip into corpus before you retire
SMART TIP:
Instead of withdrawing your EPF balance when you change jobs,
transfer it to the new account by filling 'Form 13' and submitting it to
the new employer. This should be at the top in your list of priorities at
the new workplace.

34. Retirement Planning
• Borrow for education, save for retirement
– Under Section 80E, income tax deduction is available only if the
education loan has been taken for yourself, your spouse or children
– SMART TIP:
An education loan helps inculcate financial discipline in the child. If he is
responsible for the repayment, he gets into the saving habit early in life.
• SMART TIP:
Buy a health insurance cover that continues till you are
70-75 years old. It is difficult to buy one afresh when you
are older and not so healthy.

35. Are your investments suitable to
your Risk Profile?
• What works for friends and relatives, no matter
how well meaning, may not work for us.
• Broadly risk personalities can be categorized at 3
levels – Conservative, Balanced and Aggressive.

36. Well Balanced Portfolio
• Well balanced portfolio means the portfolio which contains all
the asset class in well balanced proportion. Say for Example,
Equity, Debt, Gold, Real Estate, Liquid, Jewellery…etc..
• Here is the example of well balanced portfolio.
– Equity 30%
– Debt 30%
– Gold 10%
– Real Estate 30%
• However, the above is only one example of well balanced
portfolio. In reality, you can build well balanced portfolio
according to your needs, financial goals and risk appetite.

37. Well Balanced Portfolio
• The main logic to build a well balanced portfolio is that, it will
stabilize your wealth in any market conditions. Usually Equity,
Debt & Gold have negative correlation. When Equity is down,
Debt and gold will protect your portfolio and when the equity
will be up, it will give you good capital gains and growth of
your portfolio.
• You should construct your portfolio according to your age,
risk appetite and financial goals and balance it periodically. If
you don’t like any asset class than you can simply omit it
from your portfolio.
• So build your own portfolio and become financially free

38. Final Tips
• Don’t get carried away by what others are doing.
Educate yourself about money management and
investing.
• Starting early is the best strategy.
• Set Goals
• Shake off the old myths
• Avoid take LOANS
• Spend less than you earn - it's the secret to
creating wealth.

39. Final Tips
• Don't use money to make yourself feel good.
Instead, do things that promote self-respect
and creativity so you don't have to seek those
feelings through spending money.
• Don't let the fear of losing money, fear of
failure, or fear of the unknown stop you from
investing.
• Learn from your money mistakes. Don't let
them hobble you.

40. Thank You