T he first step in tax saving through family tax planning is to adopt the concept of divide and rule.

e. The simple rule is

that each family member must have his or her independent source of income so as to legally become an independent
tax payer under the provisions of the income tax law.

In case the entire income of a family belongs to just one member, the tax liability is much higher than when the same
income is spread among different members of the family.

Now, under the income tax law it is not possible to arbitrarily divide one's income amongst different members of the
family - and then pay lower tax in the names of different family members. However, this goal can be achieved by
intelligent use of the facility of gifts and settlements.

Thus, for example, even if a taxpayer's parents are not paying income tax today but if they receive some gift from
friends or relatives or from anyone else in the world, the income so generated would belong to them.

In this manner, independent income tax files can be started for different family members by developing independent
funds for each person through gifts thereby resulting in separate independent sources of income which would then be
taxed separately to income tax.

Once the income is spread among more people, chances are some of them would attract lower rates of tax. Also,
each one would then be entitled to independently claim exemptions, deductions, rebates, etc.

Generally, any gift you receive from various members of your family and specified relatives is not considered your
income but a capital receipt. Thus, no income tax is payable on gifts received from relatives - and also gifts received
from parties other than relatives upto a sum of Rs. 50,000 and at the time of marriage up to any amount.

Care should, however, be taken to ensure that any gift which is received should be a genuine one. The person
making the gift, called the donor, should have proof of his or her having the source for making the gift.

The other important point to keep in mind in the case of gifts is that the provisions of Section 64 of Income Tax Act
prohibit any direct or indirect transfer of funds between an assessee and his/her spouse.

Thus, a husband should not make any gift to his wife; likewise, the wife should not make a gift to her husband. If the
gift is made between spouses, it would attract the provision of Section 64 and lead to clubbing of the incomes of the
spouses.

To achieve the best results of gift, and to avoid clubbing of income, you may receive gift from any relative other than
your spouse, and, in the case of a daughter-in-law from her father-in-law.

A trust for minor children eliminates clubbing of income

The gifts made to a minor child would similarly result in clubbing of income. Hence, from the point of view of tax
planning a trust could be created for the welfare of the minor child with a specific condition that no part of income
should be spent on the minor child during the period of minority.
If this simple technique is adopted then there will be no clubbing of income of the minor child with the income of the
parents. The clubbing provisions do not apply when you make gifts to your major children.

Your major children are your great tax savers

All your major children can help you save your income tax. You can freely gift money to your major children without
attracting the payment of gift tax. This amendment makes it a good idea to make liberal gifts to your major children so
that the income, if any, arising from these investments in years to come can be taxed in the hands of your major
children.

For example, if you have fixed deposits let us say of Rs 20 lakh (Rs 2 million) and you have a major son as well as a
major daughter then it makes sense to gift away Rs 500,000 to each of them.

After receiving the gift amount the children also make investment in bank fixed deposit and each of them receives
yearly interest of say, Rs. 45,000. On this amount the son as well as the daughter will not pay income tax because
the amount is below the exemption limits of Rs 150,000 and Rs. 180,000, respectively.

Thus your major children can now be great source of tax saving and you can enjoy the benefit of lower income tax
incidence in the family as a whole. If, however, due to some reasons you do not feel inclined to make huge gifts to
your major children, then you may give interest-free loans to your major children so as to legally reduce your taxable
income. It is lawful to grant interest-free loans to your major children from your own funds.

Your parents and in-laws can save you taxes

Might sound incredible to most readers but the fact is that your own parents as well as your own in-laws can become
legal tools of tax planning for you and your family. If you want to achieve this dictum then all you are requested to do
is just to give away a portion of your funds either as a gift or a loan to your parents as well as your in-laws so that in
years to follow your income tax burden become light as the income on funds transferred by you to them which would
bring in income would be taxed in their hands.

With the increase in the limit of exempted income for individuals, women tax payers and senior citizens, it is now a
great time for having income tax files for all.

Separate income tax file for a daughter-in-law

Under Section 64 (1) (a) of the IT Act, if the father-in-law or mother-in-law makes any gift to his or her daughter-in-
law, i.e., their son's wife, on or after 1 June 1973, the income arising to the daughter-in-law in respect of the gifts so
made would be liable to be included in the total income of the father-in-law or the mother-in-law making the gift.

However, where such a daughter-in-law receives a gift not from her father-in-law or mother-in-law or her husband but
from her father or mother or uncle or aunt or uncle-in-law, etc. then the income arising to such daughter-in-law in
respect of such a gift would be liable to be assessed as the income of the daughter-in-law separately.

Such income would not be included in the total income of the father-in-law or the mother-in-law or the husband of
such a lady.
Besides, if the daughter-in-law makes an investment of such gifted amount, the income arising to her out of such
investment would also be liable to be assessed separately.

Similarly, if she were to join a partnership firm as a partner with the help of such gifted money, the interest arising to
her would be assessable to tax in her separate assessment.

Such interest or salary as a working partner would not be liable to be included in the income of her husband or father-
in-law or mother-in-law or any other relative. If she is a partner of any firm carrying on any business, her husband
could also be a partner in the same firm.

Now, from assessment year 1993-94 her share income from the firm would not be clubbed with the income of the
husband. This is illustrated in the following example.

Example Tax planning for a nuclear family

Mr. A has a major son named Mr. B, who gets
The concept of joint family is cracking down. Nuclear family concept is
married on 18.1.2008. Mrs. B receives a sum
on a rise. Under the present scenario for a nuclear family there is
of Rs 4,00,000 as gifts from her father, mother
imperative need of tax planning so as to cut down taxes.
and other relatives, on the occasion of her
marriage. The simple methodology of tax planning for a nuclear family is to have
separate income tax file for self, spouse and all children as well as the
Mrs. B joins a partnership firm along with C, D Hindu Undivided Family.
and E who are outsiders. Her interest from the
For major children the tax planning is easy and simple, namely to
said firm in respect of the accounting year
resort to the concept of gifts and loans. As far as the minor child is
ended on 31.3.2008 relevant to the
concerned the best answer could be achieved by having a separate
assessment year 2008-2009 is Rs 44,000.
income tax file of the minor child through his 100 per cent specific
beneficiary trust as mentioned in the preceding paragraph.
The income of Mr. A from his separate
business is Rs 43,000 while the income of Mr. The Hindu Undivided Family file can also be opened. In case the
B from his own separate business is, Rs nuclear family adopts tax planning by having income tax files for
72,000. different family members and thereafter takes liberal advantage of the
provisions relating to tax deduction, then it would be possible to

In this case Mrs. B would be liable to be achieve best tax planning for a nuclear family.
assessed separately on interest from the
Tax planning by DINKs
partnership firm amounting to Rs 44,000 and
Working couples who have no children are known as DINKs (Double
tax payable would be nil.
Income No Kids). Substantial tax planning is needed for them even in
the initial years of their married life. The best tax planning which
This sum of Rs 44,000 arising to Mrs. B would
DINKs should adopt is that each one of them should take full
not be liable to be included along with the
advantage of income tax exemptions and deductions.
sum of Rs 43,000 being the income of her
father-in-law Mr. A or with Rs 72,000 the
income of her husband, Mr. B.
The present exemption limit for the financial year 2008-09 is Rs 150,000 for every individual male tax payer. In
addition, for a woman tax payer the exemption limit would be Rs 180,000. Thus, for the financial year 2008-09,
DINKS would be able to enjoy a combined exemption limit of Rs. 330,000.

Never in the past the tax exemption slabs were so very attractive. They should also make investments in a residential
house by taking a loan and thus save income tax up to the maximum extent (each of them). They should also plan a
separate income tax file of HUF.

How can I save Taxes this year?

Some of the Sections of Income Tax Act, 1961 are detailed below which detail few exemptions
and categories of exempt income that you can take advantage of:

Section 80C: Investment in specified instruments and expenses

Section 80C gives every income tax payer up to a maximum of Rs. 1,00,000 tax free income in a
year if they invest in or buy the following instruments. Please not that this is a combined total of
Rs. 1,00,000 and not an individual figure for every instrument:

1. Premium for Life Insurance or ULIP

2. Provident Fund (PF) contribution

3. Public Provident Fund (PPF) - only up to Rs. 70,000 in a year

4. Repayment of home loan principal

5. Equity Linked Savings Schemes (ELSS) of Mutual Fund Companies

6. Infrastructure Bonds

7. National Savings Certificates (NSC)

8. Tax Saving Fixed Deposits with Banks

9. Tuition Fees of children

Comparison of 80C Investment Avenues

Type of 80C Lock In Returns Risk Taxation of
Instrument Period Returns
Equity Linked Savings 3 years Market Linked High No tax
Scheme (Mutual Fund) (58% Category
Average for yr ending
Dec 28,2007)
Life Insurance 2 years 6% Low No tax
Premium
 
ULIP Premium 1 3 years Market Linked High No tax
PPF (fixed returns) 15 years 8% Low 2 No tax

Home Loan Repayment 5 years NA NA NA

Infrastructure Bonds 3 years 6% Risk Interest is
(fixed returns) (min) Free taxed
NSC (fixed returns) 6 years 8.16% Risk Interest is
Free taxed
Tax Saving Fixed 5 years 8%-8.75% Risk Interest is
Deposits Free taxed
(fixed returns)

Notes:
1: ULIP premium needs to be at least 1/5th of the sum assured to qualify under Section 80C
2: PPF returns are set by the Government of India and can be revised either upwards or
downwards in any year.

Section 80D: Health Insurance Premium

You can take advantage of an annual deduction of Rs. 15,000 from taxable income for payment
of Health Insurance premium for self and dependants. For senior citizens, this deduction is Rs.
20,000.

Section 80E: Interest paid on educational loans

You can claim a deduction on the interest paid on loans taken for higher education for yourself,
your spouse and children. There is no limit on the amount of deduction you can claim.
The only thing to keep in mind is that the program for which the loan is taken should be a
graduate or post-graduate program in engineering, medicine or management or a post-graduate
course in the pure or applied sciences.

Section 80G: Donations to Charitable institutions

You can claim a deduction for any donation that you might have made to a charitable fund or
institution. However, please note that these donations should be made only to specified
institutions. And a proper proof of payment must be provided for the same. Based on the
classification of the charity , you can claim either 100% or 50% of the donated amount as
deduction. The deduction might also be subject to a certain limit again based on the type of
charity that you are donating money
Section 24: Interest paid on housing loan

Under Section 24, a maximum of Rs 1,50,000 can be deducted from your taxable income as
interest repayment for a self occupied house. Please note that this deduction is not available if
you the house is still under construction and you do not have occupation of the house.

Provisions that you should take advantage of if you are a salaried employee:

Section 10(13A) : House Rent Allowance

You can take advantage of the provisions under this section if you are renting an
accommodation. These provisions will not be available to you if you stay in a rent-free
accommodation or live with your family or in your own house.
Under Section 10(13A), HRA is exempt to the least of the following: i) 50/40 per cent of basic
salary= Dearness Allowance (if, applicable), ii) excess of rent paid over 10 per cent of basic
salary; and iii) actual HRA received.
Lets illustrate this calculation with an example:

Assumptions

HRA per month = Rs 15,000

Basic monthly salary = Rs 30,000
Monthly rent = Rs 14,000
Rental accommodation is in Delhi.

Exemption

The HRA exemption would be the least of the following:

1. Actual amount of HRA: Rs 15,000

2. 50% of salary (basic component + dearness allowance) = 50% x (30,000 + 0) = Rs 15,000
3. Actual rent paid - 10% of salary (basic component + dearness allowance)= Rs 14,000 - [10%
of (30,000 + 0)] = 14,000 – 3,000 = Rs 11,000
Rs 11,000 being the least of the three amounts will be the exemption from HRA.
The balance HRA of Rs 4,000 (15,000-11,000) would be taxable.
Please note that HRA exemptions are only available on submission of rent receipts or the rent
agreement.

Paying Rent to parents or relatives

If you want to pay rent to your parents or any relatives (like uncle/cousin) whom you are staying
with. You will need to treat them as landlords. And request the owner of the house (which will
be one of your parents) to declare it in his/ her personal income tax return. This will prevent any
litigation in the future.

Section 10 (14) Rule 2BB(10) : Transport Allowance

Transport allowance granted for commuting between your residence and place of work is exempt
up to Rs. 800 a month. You can take advantage of this provision to get a tax exemption of Rs
9600 annually by providing your employer with bills or a self declaration.

Section 17(2) : Medical Reimbursement

You can claim exemption up to Rs 15,000 annually on actual expenditure incurred on your
medical treatment or for treatment of any of your dependants. Moreover, there is no restriction of
approved hospitals or clinic for the same. This is exempt only on provision of actual bills.
However, if the amount is paid out as an allowance not a reimbursement then it would be fully
taxable.

Modifications By Union Budget 2010

According to Union Budget 2010-11, a few changes have been made in Income Tax Saving Schemes structure. Here
is a glimpse to new additions in tax saving methods :

 The relaxation limit under section 80C has been inceased to Rs. 2 lakhs.
 The presumptive tax limit has also been raised to Rs 60 lacs.
 Announcement of a deduction of Rs 20000 on investment in infra bonds

In India, the middle class feels the heat of Income Tax more than anyone else. However the intensified tax system
poses great stress on the earner's thinking to manipulate different ways to save tax. Here is a list of certain steps
which can help you save your income and minimize your Income Tax.

House Rent Allowance

Applicable If  A portion of your salary is marked as House Rent Allowance or HRA
 You are paying rent of your house

Conditions  The house should not be in your kids, spouses or your own name.

Max Deductions  The total amount of rent paid or the amount earmarked as House Rent
Allowance in your payslip, whichever is less, will be deducted from your taxable
income.

Limitations  It should not be more than 50 percent of salary for those living in metro cities
or 40 percent of salary for others
 If you are paying more than Rs.5000 per month as house rent, you will have
to submit a lease document
 Rent receipts should have a revenue stamp.

Section 80C and Section 80D

Section 80C Deductions

Section 80C of the Income Tax Act allows certain investments and expenditure to be tax-exempt. The total limit under
this section is
Applicable If  Contribution to Provident Fund or Public Provident Fund
 Payment of life insurance premium
 Investment in pension Plans
 Investment in Equity Linked Savings schemes (ELSS) of mutual funds
 Investment in specified government infrastructure bonds
 Investment in National Savings Certificates (interest of past NSCs is
reinvested every year and can be added to the Section 80 limit)
 Payments towards principal repayment of housing loans.Also any registration
fee or stamp duty paid.
 Payments towards tuition fees for children to any school or college or
university or similar institution. (Only for 2 children)
Conditions  Upper Limit is Rs. 1,00,000 (Rupees One lakh) which can be any
combination of the above list.

Deductions  

Limitations  The investment can be from any source and not necessarily from income
chargeable to tax.

Section 80D
Medical Insurance
Applicable If  Premium paid on medical insurance for oneself, spouse, parents and children
 Cheques paid by proprietor firms

Conditions  The house should not be in your kids, spouses or your own name.

Deductions  Up to Rs 30,000 (additional to Rs.1,00,000 savings)

 Up to Rs. 20,000 (for senior citizens)

Interest on Housing Loans

(See Next Section)

Life Insurance Plan

Applicable If  All life insurance plans gives you the tax benefit

Conditions  You should have Life Insurance Policy

Max Deductions  Complete amount invested in life insurance policy is tax free.
 Payout from life insurance policy is tax free.

Limitations  Go for plan which is suitable to your life and your financial planning.
 You need not buy every year new policy.
 If you think that you have already invested enough in life insurance plan but
want to invest again then you should go for ULIP plans.

Home Loans
Applicable If  You have taken a Home Loan from any bank

Conditions  The house should be in your kids, spouses or your own name.

Max Deductions  Only principle repayment can be exempt

 Tax deduction on the interest component comes under section 24 and will
depend upon whether home is rented or self occupied.

Limitations  Over a period of time the principle payment increase and the interest
payment decrease.

Education Loans
Applicable If  You have taken an Education Loan from any bank

Conditions  The loan should be in your kids, spouses or your own name.

Max Deductions  Only principle repayment can be exempt

Limitations  The interest that you pay will be tax deductable.

Tax Deductions on Investment

 Investment in under monthly income scheme of the post office
 Investment in Debentures or Bonds of an institution/ authority/ public sector company/ cooperative society or other
such organization notified by central government.
 Investment in with banking institutions
 Investment in under other schemes which are notified by central government like national saving schemes, time
deposit schemes, recurring deposit schemes.
 Investment in units of UTI and Mutual Funds (under Section 10(23D) of the Income Tax Act)
 Investment in such authorities which are working for planning & development of cities and village
 Investment in financial institution working for Industrial Development of India
 Investment in co-operative societies
 Investment in under National Deposit Schemes as notified by Central Government
Investments and Payments
National Savings Certificate (NSC)

Investments In multiple of Rs. 100/-

Interest Rate Return at interest rate of 8%

Maturity Period 6 years

Upper Limitation No

Lower Limitation Rs.100/-

Availability of Loans Yes

Mode of Operation Singly, jointly, or by a minor with his/her parent or guardian

Max. Deductions  Under section 88 of the Income Tax Act, 1961 any person can take benefit in
income tax on amount invested in this scheme
 Under section 80L of Income Tax Act, 1961 there is a provision of benefit on
interests coming from scheme.

Public Provident Fund (PFF)

Investments From your Salary

Interest Rate Return at interest rate of 8%

Maturity Period 15 years

Upper Limitation Rs. 70,000/-

Lower Limitation Rs. 500/-

Availability of Loans The first loan can be taken in the third financial year from the date of opening of
the account, or upto 25% of t credit he amount at at the end of the first financial
year.

Mode of Operation Singly, jointly, or by a minor with his/her parent or guardian (Nomination facility
available)

Max. Deductions  Under Section 88 of Income Tax Act, 1961 there is a provision of tax benefit
by investing in this scheme
 Interest on this scheme is tax free.

Special Schemes for Retiring People

Government Employees
Interest Rate Return at interest rate of 8%

Maturity Period 3 years

Upper Limitation Total retirement benefit

Lower Limitation Rs.1000/-

Max. Deductions According to Income Tax Act, 1961 interest on this scheme is tax free.

Public Sector Employees:

Interest Rate Return at interest rate of 9.5% payable half-yearly on 30th June and 31st
December respectively

Maturity Period 3 years

Upper Limitation Total retirement benefit

Lower Limitation Rs.1000/-

Mode of Operation Retired PSU employees in his/her own name or with the spouse, jointly.

Max. Deductions According to Income Tax Act, 1961 interest on this scheme is tax free.

Dividend
According to Income Tax Act,1961 there is a provision benefit in Income Tax if assessee has an income as a
dividend on investment in any of the following:
 Shares
 Mutual Funds
 Unit of UTI
This dividend can be given by any company or co-operative society.

Infrastructure Bonds: Investment in bonds issued by specified Infrastructure companies is also eligible for Section
80C deductions. Investment in Infrastructure bonds is just one of the various options available for the purpose of
Section 80C deduction.

Bank Term Deposits: Term deposits with scheduled bank for minimum tenor of 5 years.

Term deposit with Post Office: Minimum tenor 5 years.

NABARD Bonds: Investment in notified bonds issued by National Bank for Agriculture and Rural Development
(NABARD) is also eligible for Section 80C deduction.

Ten ways to save income-tax

D. Murali
Mr Sinha is in a giving mood. Are you in a taking mood?

Save the saved tax

*This is no tip, one may argue. But, no. I mean, yes. Assuming that you fit in the second or
the third slab, earlier you were paying at a higher effective rate, that is either 22 per cent or
35.1 per cent. With the removal of the older surcharges, the ef fective tax rate gets reduced
to 20.4 and 30.6. Okay, this percentage talk is confusing. The difference is real money that
Sinha is not interested in snatching from you. Looked differently, this is cash coming back
into your pockets, so take care of it b efore it is dissolved, as a Tamil saying goes, like
asafoetida in the sea. How? By putting the saving in a piggy bank. You can call the piggy by
any name - wiggy, niggy, or, even Sinha. What if, next year, he levies new taxes? You can
always pay out of t his bank and not out of your pocket. The money was always his.

How to save but not get shaved off

*The best way to save these days is in the PF and PPF, in spite of the reduced rates of
interest. Reason is this: Sec 80L deduction towards bank interest has fallen drastically to Rs
9000, because nobody wants people to put their idle money in bank depos its and keep
saving. And, more importantly, the average saver does not want to take the risk of riding
the stock market. We were fearing the worst in this Budget, that Sinha would tax PF
withdrawals. But that didn't happen. So, it continues to be the oas is in a desert of dried
money trees. Get the best out of the Sec 88 rebate by investing the maximum, setting
apart funds for food, water and rent for your family.

Move houses

*Economic criteria are the new weed spreading their tentacles to grab anybody and
everybody who looks like an assessee. No phone, no credit card, no house, no foreign
travel, no car and so on are no solution, unless you want to descend from your present
yuppie status, real or imaginary, to the BPL - short for `below poverty level'. Is there no
way out? Yes, you can use somebody else's credit card. Risky. Have a PP number.
Cumbersome. Use auto. But, you want the josh or the zip. Live in somebody else's h ouse.
No, I wouldn't suggest that. Go to the villages. You whine, but why not state as your place
of residence an address outside the urban limits, assuming you are being caught only
because of that criterion. This facility could be exploited at least ti ll the draftsmen discover
the loophole and plug it by specifying, not the place of residence of the assessee, but the
location of the house. Only, this may need the approval of your spouse, for he/she has been
watching one too many of the popular teleser ials about the one-to-many relationships.

Get a new house loan

*Housing loans are becoming attractive for three reasons: One, falling interest rates. Two,
higher tax deduction towards interest. Three, tax clearance certificate is no longer required.
Sinha wants more people to own houses, to have a roof above their h eads, but more
importantly, perhaps, to get into the tax net by owning a house, when the property is
located in one of those hit-list towns/cities. Even if you had own funds to deploy, it may be
worthwhile going in for a loan to build/ buy a house. The o nly people who would complain
are those who took a loan before 1999 and have to be contented with a smaller exemption
limit of Rs 30,000 while the newer borrowers get five times the benefit. To kill the envy, the
clue is `new for old'. Get a new loan to pay the old one. But the property remains in your
hands. Sell it to your brother-in-law and buy it back. That would involve registration, stamp
duty and so on. The best solution is to sell the old house at the best price, square off the old
loan, identif y a bigger house, buy it with a fresh loan and enjoy the benefit. If you work out
the financials on a spreadsheet, it may leave you richer by p% over the next n years. And,
since like rats and cats one tends to be lingering around in one's own locality, you might
have moved down from your fourth floor barsati to the ground floor of the same building.

Rev up the rebate

*Now there are two rebates, one at 20 and the other at 30 per cent. Sinha has thought of
one more way to divide people. We were all getting used to slabs and corresponding rates
and got along amicably with one another till he offered a higher standard de duction for
women. Men became jealous of women for one more reason. But, ironically, women who
earned more were any way not getting the benefit and so were also envious of the other
women who got the extra deduction. All along, however, rebate was at a s ocialistic 20 per
cent, even if you are not chauvinistic enough to sneer at the special rebate for women. Now
comes the colonial technique of giving preferential treatment to one group, those with
income not exceeding Rs 1 lakh. They get 30 per cent reba te. Is that attractive enough for
you to shift your slab? If you can `manage' that, it is worth the try.

Lower your income

*The best way to lower income is not to earn any at all. Too radical, but my friend tells me
of how his friend would go on `loss-of-pay' leave to earn less and get out of the tax net.
You wouldn't want to follow his model, unless the opportunity cost of going to work more
than offsets what pittance you end up getting at your desk. Are there other ways to show a
reduced total, apart from making simple arithmetic mistakes which would be so obvious that
the first clerk in the Department could spot it? If y ou have already exhausted the housing
loan idea, you could try the deduction towards repairs route. But, if you are investing only
Rs 5000 in Sec 88 avenues, your saving would be Rs 500 only. Weigh the costs and benefits
before going below the line.

Run a lorry

*I have always thought of that, when I see a line of cabs outside Viveka College. The
incentive lies in the Budget. New commercial vehicles are eligible for accelerated
depreciation at 50 per cent - that is, half the cost. Two years flat, and you set off three-
fourths of your original investment against your income, provided you have been driving
around and earning fare and tips. No earnings? Carry forward the depreciation forever and
ever.

Perk off

*Does that sound offensive? But what to do? Sinha says he is after all the perks in whatever
name and he would value them at cost to the company. Does the clue lie there? The
company should show it at nominal value, so, even if the perk gets added to emp loyee's
income, the addition is minimal. Where would the real cost go? No, I am not teaching you
accounting here.

Escape capital gains

*The Budget provides one more avenue to escape from capital gains tax, when you book
profit from sale of shares and securities. Invest the gains in IPOs, that is primary issues.
You have more questions? Are there any IPOs happening? How to choose the bes t one?
What if I don't get allotment? Should I keep on trying? How long should I attempt the IPO
route? And, what if all my gains get reduced in the process, by way of postage and other
expenses? I think I could pass the buck by asking you to refer to th e Sunday edition of BL.

Split the deposits

*The ceiling on interest beyond which the nasty TDS sword would fall has fallen. From Rs
10,000 to Rs 2500. Because people were avoiding the earlier ceiling by splitting the
deposits. But, nothing prevents you from engaging in a similar exercise now too, on a larger
scale.

Fall in line*I shouldn't be telling you this but am compelled to because the penalties have
become heavier. Ten times, to say the least. From Rs 500 to Rs 5000 if you fall under the
eco-crit (short for the new economic criteria) and fail to file a return , Rs 25000 if you don't
maintain books of accounts, and so on. What is the moral? One way to save money is not to
pay penalty. And how else not to pay penalty but to fall in line.

Besides the above, the following investments/expenditure are also subjected to Tax-
exemption

Public Provident Fund (PPF)

National Savings Certificates (NSC)

Post Office Scheme (POS)

Kisan Vikas Patra (KVP)

Life Insurance Plan

Investment in Pension Plans

Home Loans/Education Loans

Investment with Banking Institutions

Housing Rent Allowance

Tuition fees of full time education for 2 children

ELSS of Mutual Funds

Investments in Bank Fixed Deposits for 5 years

Dividends
Charity contributions