Perception on Tax Planning and Investment Pattern

among Academicians
A Dissertation Submitted in Partial Fulfillment of the
Requirements for the Award of the Degree of

Master of Philosophy
in
Commerce

by

Pallavi V
(Reg. No 1610012)

Under the Supervision of

Anuradha P S
Associate Professor

Department of Commerce

CHRIST (Deemed to be University)

BENGALURU, INDIA
July 2018
 APPROVAL OF DISSERTATION

Dissertation entitled “Perception on Tax Planning and Investment Pattern among

Academicians” by Pallavi.V, Reg. No. 1610012 is approved for the award of the degree of
Master of Philosophy in Commerce.

Supervisor:

Chairman:

General Research Coordinator:

Date: ……………………..

Place: Bengaluru

ii
 DECLARATION

I Pallavi V hereby declare that the dissertation, titled “Perception on Tax Planning and
Investment Pattern among Academicians” is a record of original research work undertaken by
me for the award of the degree of Master of Philosophy in Commerce. I have completed this study
under the supervision of Dr. Anuradha P S, Associate professor Department of Commerce.

I also declare that this dissertation has not been submitted for the award of any degree, diploma,
associateship, fellowship or other title. I hereby confirm the originality of the work and that there
is no plagiarism in any part of the dissertation.

Place: Bengaluru

Date: …………………
Pallavi V
Reg No: 1610012
Department of Commerce
Christ (Deemed to be University)
Bengaluru

iii
 CERTIFICATE

This is to certify that the dissertation submitted by Pallavi V, Reg. No. 1610012 titled ‘Perception
on Tax Planning and Investment Pattern among Academicians’ is a record of research work
done by her during the academic year 2016-2018 under my supervision in partial fulfillment for
the award of Master of Philosophy in Commerce.

This dissertation has not been submitted for the award of any degree, diploma, associateship,
fellowship or other title. I hereby confirm the originality of the work and that there is no plagiarism
in any part of the dissertation.

Date: …………………

Place: Bengaluru

Dr Anuradha P S
Associate Professor
Department of Commerce
Christ (Deemed to be University)
Bengaluru

Dr Theresa Nithila Vincent

Head of the Department
Department of Commerce
Christ (Deemed to be University)
Bengaluru

iv
 ACKNOWLEDGEMENT

I hereby take this opportunity to thank all the supporting pillars who helped in completion of my
research and the dissertation. Writing this thesis has made a great impact on me.

First of all I would like to thank the management of Christ (Deemed to be University) for giving
me an opportunity to conduct a research study and supporting me completing the same.

I would like to express my deepest gratitude to my MPhil supervisor Dr Anuradha P S, Associate

Professor, Department of Commerce who has been my constant source of support throughout this
research study. She has been a guiding spirit and a great mentor during the tenure of this
dissertation.

I wish to acknowledge Dr Tomy Kallarakal, Associate Dean, Dr Nithila Vincent, Head of the
Department of Commerce for their guidance and support in completion of this course.

I would like to thank Dr Uma V R, Associate professor, Department of Commerce, for graciously
helping me out with my research study. I would also like to place on record my deepest
appreciation to other faculty members from the department of commerce, Christ University for
providing me with all necessary direction while carrying out this research study. Their valuable
suggestions have helped me in improving the quality of this dissertation.

My deepest gratitude to my parents, Mr. Venkatesh H R and Mrs. Shylaja K R, my sincere thanks
to my husband Mr. Nikhil Bharadwaj K B and other family members for their support and
motivation in completion.

I would also like to take this opportunity to express my sincere thanks to my friends, for providing
me with all necessary inputs and motivating me constantly for completion of this dissertation.

Thank you!

Pallavi V

v
 ABSTRACT

Tax planning is the most important financial plan to be drafted by any taxpayer. It reduces the tax
burden. An effective and efficient way of utilizing the provisions of tax laws in order to reduce tax
burden by an assessee is termed as tax planning. In today’s situation the State and Central
Governments of the country are facing difficulties to increase the tax revenue, as the rate of tax
compliance is indicating decreasing trend. Hence tax planning has become the need for the hour.

The research study aims at analyzing the investment pattern and the awareness level on various
tax planning schemes available to academicians. The main purpose is to ensure increase in the rate
of tax compliance and assist the academicians in planning their tax. This would help in reducing
the incidence of tax to the maximum extent possible.

The study is conducted in the city of Bengaluru and the sample for the study includes the
academicians from private educational institutions. Stratified sampling technique was adapted to
collect data from 365 respondents. Structured questionnaire was used to collect the data. Statistical
tools such as one way ANOVA, mean, factor analysis, percentage analysis etc. are used to analyse
the data.

The findings of the study indicate that the extent of familiarity of academicians about various tax
saving schemes is low, they prefer to invest in those instruments which are safe and less risky. The
factors that influence their investment decisions are personal factors such as security and safety of
family, retirement benefits; most of the respondents prefer tax avoidance and tax evasion instead
of tax planning to reduce tax burden.

Keywords: Tax planning, Tax avoidance, Investment decisions, Tax deductions, Academicians,
Tax knowledge.

vi
 TABLE OF CONTENTS

CONTENTS Page

Approval of dissertation……………………………………………………… ii

Declaration…………………………………………………………………… iii

Certificate……………………………………………………………………. iv

Acknowledgement…………………………………………………………… v

Abstract……………………………………………………………………… vi

Table of Contents…………………………………………………………… .. vii

List of tables…………………………………………………………………. xi

List of figures………………………………………………………………... xii

List of abbreviations…………………………………………………………. xii

CHAPTER 1

INTRODUCTION

1.1 Introduction………………………………………………………… … 1

1.2 History of income tax in India……………………………………….. 1

1.3 Reforms in personal income tax structure in India…………………… 3

1.4 Tax planning………………………………………………………….. 4

1.5 Difference between Tax evasion, avoidance and tax planning………. 6

1.6 Tax Planning for Employees…………………………………………. 6

1.7 Deductions from Salaries for the AY 2017 - ’18…………………….. 7

1.8 Deductions under Chapter-VI-A …………………………………….. 8

vii
1.9 Savings and Investment in India ………………………………………… 10

1.10 Reserve bank of India initiatives to improve the financial literacy in India 11

1.11 Chapterisation …………………………………………………………… 11

CHAPTER 2

REVIEW OF LITERATURE

2.1 Introduction ……………………………………………………………… 12

2.2 Research Gap…………………………………………………………….. 30

CHAPTER 3

RESEARCH DESIGN AND METHODOLOGY

3.1 Introduction ……………………………………………………………… 31

3.2 Significance of the study………………………………………………… 31

3.3 Problem statement……………………………………………………….. 32

3.4 Research questions………………………………………………………. 32

3.5 Research objectives……………………………………………………… 32

3.6 Operational definition ………………………………………………….... 33

3.7 Research methodology………………………………………………….. 34

3.8 Collection of data……………………………………………………….. 34

3.9 Sampling………………………………………………………………… 34

3.10 Sampling technique…………………………………………………….. 34

3.11 Questionnaire development…………………………………………….. 35

3.12 Questionnaire validation………………………………………………… 36

viii
3.13 Reliability and validity………………………………………………….. 37

3.14 Statistical tools used………………………………………………….... 38

3.15 Limitations of the study……………………………………………….. 38

3.16 Scope of the study……………………………………………………… 38

CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

4.1 Introduction…………………………………………………………… 39

4.2 Demographic profile…………………………………………………. 39

4.3 Level of familiarity of Academicians on Tax Planning Schemes……. 44

4.4 Impact of familiarity of tax planning schemes on investment……….. 47

4.5 Pattern of investment that exist among academicians……………….. 48

4.5.1 Investment preferences…………………………………......... 48

4.5.2 Factors influencing investment decisions……………………. 50

4.5.3 Satisfaction level of academicians ………………………....... 53

4.5.4 Risk and return perception of the academicians……………… 54

4.6 Period of tax planning………………………………………………… 56

4.7 Tax planning perception of academicians……………………………. 57

4.8 Procedure of tax planning for academicians…………………………. 60

4.8.1 Allowances given by the employer…………………………….. 61

4.8.2 Amount to be invested to save tax…………………………....... 62

4.8.3 Tax saving schemes……………………………………………. 62

ix
 CHAPTER 5

FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 Introduction…………………………………………………………… 63

5.2 Findings

5.2.1 Extent of familiarity of academicians on various tax planning

Schemes……………………………………………………………… 63

5.2.2 Pattern of investment…………………………………………… 63

5.2.3 Perception of academicians towards tax planning……………… 64

5.3 Suggestions…………………………………………………………… 65

5.4 Conclusion……………………………………………………………. 65

5.5 Suggestions for future research ……………………………………… 66

REFERENCES

APPENDIX 1: QUESTIONNAIRE

APPENDIX 2: PAPER PRESENTATION

APPENDIX 3: PUBLICATION

x
 LIST OF TABLES
Sl. No. Title Page

1.1 Tax system in India 2

1.2 Rates of income tax AY 2016-17 3

1.3 Rates of Income Tax AY 2017-18 4

1.4 Deductions u/s 80C to 80U 8

2.1 Research articles on tax structure, tax evasion and tax avoidance 12

2.2 Research articles on tax awareness and tax planning 16

2.3 Research articles on Investment preferences 20

3.1 Operational definitions of various terms 33

3.2 Division of samples 34

3.3 Results of content validation 36

3.4 Cronbach alpha case summary of the data 37

3.5 Reliability statistics of the data collected 37

4.1 Age group of respondents 39

4.2 Respondents based on gender 40

4.3 Annual income of respondents 41

4.4 Academic experience of respondents 42

4.5 Stream of respondents 43

4.6 Extent of familiarity of Respondents on Tax planning Schemes 44

4.7 Mean Value for Interpreted Extent of familiarity 46

4.8 Regression values 47

4.9 Pattern of saving among academicians 48

4.10 Investment preferences of academicians 49

4.11 Prioritized investments 50

xi
4.12 KMO and Bartlett’s Test 50

4.13 Eigen values of the factor extraction 51

4.14 Rotated component matrix 52

4.15 Satisfaction level of existing investments 53

4.16 Return perception of investors 54

4.17 Risk perception of investors 55

4.18 Formulation of tax plan 56

4.19 Service of tax consultant 56

4.20 Tax planning perception of academicians 57

4.21 List of allowances 62

List of figures
Sl. No. Title Page

4.1 Age group of respondents 39

4.2 Male and female respondents 40

4.3 Annual income of respondents 41

4.4 Academic experience of respondents 42

4.5 Stream of respondents 43

List of abbreviations
BD Bank deposits

PPF Public provident funds

NPS National pension scheme

PF Provident fund

POS Post office saving scheme

xii
LIC Life insurance policy

EQ Equity shares

TB Treasury bills

COD Certificate of deposits

CP Commercial papers

MF Mutual funds

G/S Gold and silver

RS Real estate

ELSS Equity linked saving scheme

RGES Rajiv Gandhi equity saving scheme

FD Fixed deposits

RBI Reserve Bank of India

xiii
 CHAPTER 1 - INTRODUCTION

1.1 : INTRODUCTION
The present study provides the findings of descriptive research study that was conducted
among academicians in the city of Bengaluru; the study concentrates on the investment
pattern and tax planning schemes, extent of familiarity and preference of investors.

In this introductory chapter the rationale behind the study is explained and a clear picture
of the whole thesis is provided in a nutshell. The chapter begin with an introduction to
history of Income Tax in India and its appraisal, tax planning, tax evasion and compliance
of tax payers with the relevant statistics is provided to justify the problem statement with
respect to Income Tax. The theoretical background used and the final process in which
research is conducted is described.

1.2 : HISTORY OF INCOME TAX IN INDIA

India is a developing country. Tax plays a major role in the development of fiscal policy
by the government; in order to make it a developed country the Indian government requires
funds. One of the major sources of funds is by levying taxes. Government also levies taxes
so as to spread equality of income in the country. More the person earns more he has to pay
tax. India has a well-developed tax structure with clearly distributed authority between
Central and State Governments and local bodies. As per the Indian tax system the taxes are
divided as Direct Taxes and Indirect Taxes (Goyal, 2008)

As per Constitution of India, it is binding on the Government to levy taxes on persons. The
Central Board of Direct Taxes, which is a part of the Department of Revenue under the
Ministry of Finance of the Indian government, is vested with the power of collection of
taxes The CBDT functions as per the Central Board of Revenue Act of 1963. In last 1015
years, Indian taxation system has undergone remarkable reforms. The tax laws have been
simplified and the tax rates have been rationalized resulting in better compliance, ease of
tax payment and better enforcement. ( Kaushik, Assessment of Individual Income Tax, Tax
Planning and Saving in India , 2012)

1
 Excise duty, service tax, sales tax are very common examples of indirect taxation. Currently
some of the taxes have been subsumed with GST. Direct Taxation system requires a person
to pay taxes directly commonly referred as Income Tax. According to Income Tax Act
1961, every person, who is assessed under the income tax act and whose income crosses
the exemption limit of 2,50,000 (2017-18) shall be chargeable to the income tax at the rate
or rates prescribed in the Finance Act. Such income tax shall be paid on the total income
of the previous year in the relevant assessment year (Investment landing, 2013) Income tax
is an annual tax levied for each assessment year (also called the tax year). Assessment year
commences from 1st April and ends on the next 31st March.

Table 1.1: India’s Tax system

UNION GOVERNMENT STATE GOVERNMENT

1. Income tax, other than agricultural 1. Land revenue

income. 2. Taxes on agricultural income
2. Corporate tax 3. Excise and other duties in relation
3. Excise duty, other than alcoholic liquors to agricultural land
for human consumption, opium and 4. Excise duty on alcoholic liquors
other narcotic drugs.
4. Customs duty and octroi
5. Taxes on capital value of assets
6. Stamp duty in respect of certain
financial documents
7. Taxes on inter-state sale of goods
8. Taxes on goods and passengers carried
by railways, sea or air.
9. Taxes not specifically enumerated in the
state list and concurrent list.

Source: (Savla, 2015)

2
1.3 REFORMS IN PERSONAL INCOME TAX STRUCTURE IN INDIA
Bringing changes to the tax system is vital fiscal decision to be made by the authorities.
The initiative to reform the taxes began in mid-1980 and the introduction of Liberalization,
Privatization and Globalization (LPG) policy by Prime Minister, ManMohan Singh in
1991, motivated and influenced the considerable changes in the tax system.

Personal income tax structure in India consist of taxation of income of individuals, Hindu
undivided family (HUF), unregistered firms, association of persons, local authorities and
every artificial juridical person. Among the above persons who form a part of personal
income tax, individuals are the major contributors of tax revenue to the government.
Salaried class constitutes maximum number of tax payers in the country who pay prompt
and timely taxes to government in the form of Tax Deducted at Source (TDS).

Table 1.2: Rates of Income Tax AY 2016-17

Income Level Rates

Up to 2,50,000 Nil

2,50,001 to 5,00,000 10%

5,00,001 to 10,00,000 20%

10,00,001& above 30%

Source: (Gaur, Narang, & Gaur, 2017-18)

The table 1.2 presents the Income Tax Rates applicable to individuals, Hindu Undivided Family
as per the Income Tax Act for the assessment year 2016-17. An individual whose gross total
income after deducting all applicable deductions does not exceed Rs 2,50,000 then he/she need
not pay any tax for that assessment year. The tax rate applicable is 10% for the Income level
between 2,50,001 to 5,00,000. 20% and 30% tax rates are applicable for income levels
exceeding 5 lakhs and 10 lakhs respectively.

3
Table 1.3: Rates of Income Tax AY 2017-18

Income Level Rates

Up to 2,50,000 Nil

2,50,001 to 5,00,000 5%

5,00,001 to 10,00,000 20%

10,00,001& above 30%

Source: (Gaur, Narang, & Gaur, 2017-18)

The table 1.3 presents the Income Tax Rates applicable to individuals as per the Income Tax
Act for the assessment year 2017-18. The table reflects the decrease in the rate of income tax
for those individuals whose gross total income falls in the second tax slab as compared to the
tax rates for the assessment year 2016-17.Currently, income up to Rs.2.5 lakhs is fully exempt
from paying taxes, while income from Rs.2.50,001 to Rs.5,00,000 is taxed at 10%, and
Rs.5,00,001 to Rs.10,00,000 income bracket is taxed at 20%. All income above this amount is
taxed at 30%.

There will be changes in the rate of tax based on the finance act amendment every year,
proposed by the Finance Minister in the Parliament.

1.4 : TAX PLANNING

Disposable income is the money left in the hands of the people of a country to meet their regular
expenses; this income is reducing due to increased burden of income taxes in the form of
prompt payment of taxes. This obligation towards the government put the taxpayers in a
situation where they will have to decide whether to comply with the government rules and
regulations with respect to prompt payment of tax or is there any scope to reduce the tax burden.
To increase the disposable income and to reduce the tax burden legally the mechanism of tax
planning need to be adapted by an individual assessee.

The mechanism of tax planning works out to be beneficial by effectively utilizing loopholes in
the Income Tax Act, 1961. This method will help in reducing the tax burden. Any individual
to successfully implement the tax planning strategies must be equipped with thorough

4
knowledge of income tax provisions as per the Act governing the tax system in the country.
Tax planning is classified into two types based on the tenure of benefit of the same, as, long
term tax planning and short term tax planning.

Any person as defined by the Income Tax Act 1961 must keep themselves updated with all
necessary information about various exempted incomes mentioned under section 10,
exemptions allowed under section 80C – 80U so that proper tax planning is implemented to
reduce tax burden as well as efficient investment planning to get additional benefit in the form
of additional income for future contingencies. Salaried class particularly must be aware about
investment avenues and tax exemptions that benefit them to the maximum level as they do not
have another source of income. This knowledge will help salaried people to increase the level
of income. But in the present situation the familiarity level of this cluster of population about
the tax provisions and investment avenues based on the findings of previous research is very
low; the main reasons for this result is low familiarity level, increased complexities, ever
changing tax propositions, tax slabs which are beyond the understanding capacity of a layman
who is completely unaware of the tax jargons.

Hence it is present day’s necessity to have thorough and up – to –date knowledge about taxes
just like any other issue, subject, or a law.

Tax planning is possible through appropriate savings and wise investment decisions. Tax
payers normally plan their tax liability only towards the end of the financial year. This leaves
them with little option to invest or save with the available income. But the real problem existing
is that the common man is unaware of the various avenues available for saving tax, so it very
much necessary to provide them the basic necessary education about how to plan their income
tax by making wise investment decisions and saving right amount of their income for future
uncertainties.

As mentioned earlier, to increase the amount of disposable income in the hands of tax payers,
planning his/her income in a way so that the incidence of tax is reduced is very important. In
order to fulfill this necessity of one’s life, gathering information about various allowances and
deductions and keeping updated with the frequent changes in the tax provisions has become
the need of the hour.

5
1.5 : DIFFERENCE BETWEEN TAX EVASION, AVOIDANCE AND TAX PLANNING

Each taxpayer is obligated to voluntarily disclose his/her income and tax liabilities through
legal compliance. When a tax payer deliberately or consciously fail to furnish inaccurate or
false data or cheat the State and central government by violating the legal tax provisions, this
act of violating the income tax provision is termed as tax evasion. Tax evasion is considered as
unethical and illegal. Whereas, Tax avoidance, is an art of escaping the burden of tax without
breaking the tax laws. However, this kind of tax planning demands a thorough knowledge of
the provisions of the tax laws and relevant legal decisions as well as other statutes affecting
any aspect of taxation. In this context, it is worth noting that taking advantage of the loopholes
in law provides only short run benefits because, as and when the loopholes in the law are made
public or sometimes even earlier, legislature steps into plug the loopholes.

1.6: TAX PLANNING FOR EMPLOYEES

Any amount of investment at the end of the financial year to reduce tax burden is considered
as an act of tax avoidance and not tax planning. A person should invest at the beginning of the
year to save tax for two major reasons one, we will end up investing the money earned without
putting a second thought for it and secondly, we will lose interest or appreciation for the
investment for the whole year. Hence investing decisions must be made in the beginning of the
year i.e., month of April to enjoy the tax benefits and return on investments.

Almost every type of salary, or remuneration of an employee; government or private, is

covered under the head income from salaries. Therefore, it becomes very important for an
employee irrespective of his position in the job, to be aware about the fundamental principles
of income tax. As per the present statistics the community of employees are the major
contributors to the government treasury after the business institutions because the salaried
income is been accounted properly and due to provision of Tax deducted at source (TDS) the
scope for tax evasion is curbed for the salaried class. Due to this salaried taxpayers are the
worst hit in every situation where there is a serious economic crisis such as inflation in the
country leading to uncontrolled rise in prices. Because of all these difficulties faced by the
individual employee, tax planning is of great importance to each employee as it leaves the
maximum amount of salary after payment of taxes with them. This could be achieved only by
availing maximum amount of tax exemptions, deductions and relief. Therefore, tax planning is
a standard method to be adapted by the salaried class to minimize tax liability by availing the

6
benefits of various incentives, concessions, allowances, rebates and relief provided, in the
context of existing tax laws.

Measures to be taken by an employee while planning their salary income to get maximum
benefits of tax planning are as follows:

a. Tax on salaries can be reduced to minimum if salary is divided in to different

allowances (which are not taxable or which are partially exempt from tax) and
perquisites. It should also ensure that, dearness allowance form a part of basic salary
and it is fully taxable. Only those allowances which are been provided by the employer
under the employment agreement can be claimed as an exemption from tax and will
result in tax reduction.
b. The taxpayer must be aware about the employee welfare schemes provided by the
government such as Recognized provident fund, Approved Superannuation fund,
gratuity fund etc., any payment received by these schemes at the time of maturity is
fully tax exempt and any amount invested towards these schemes during tenure of
employment is also exempted from tax.
c. Travel concession if provided by the employer should be claimed to the maximum
possible extent without attracting any incidence of tax and must avail deductions under
Section 80C of the Income Tax Act to the maximum possible extent.

1.7: DEDUCTIONS FROM SALARIES FOR THE AY 2017 - ‘18

Income Tax Act, 1961 provides various types of deductions and allowances to the employees
from time to time. Income chargeable under the head “Salaries” shall be computed after
allowing these deductions. For the present study only the planning of salaried income is been
concentrated and not any other heads of income. Total income for the study covers only the
salary income of individuals. As per the Income Tax Act of 1961, which is been amended every
year during the annual budget the individuals are provided with various allowances and
perquisites and deductions. The deductions which an individual can avail are listed in the table
1.4.

7
1.8: DEDUCTIONS UNDER CHAPTER-VI-A

Deductions are considered to reduce the tax burden of the person and it is provided in respect
of certain expenditures incurred by the assessee towards medical treatment, higher education
etc., for the relevant financial year. They include deductions under Section 80C to 80U of the
Act.

Table 1.4: Deductions u/s 80C to 80U

No. I.T Section Category

1. 80C Total amount invested towards any of the following: Up to Rs 1.5 Lakh.

Contribution towards approved PF including PPF; Premium paid towards life

Insurance Policy not exceeding 20% of the total sum assured; . Subscription
towards NSC; Any annuity or Deferred Annuity Plan; Investment in any
approved Mutual Fund Investment and UTIs Unit Linked Insurance Plan;
Contribution to UTIs Retirement Benefit Plan, Payment of tuition fees
towards any two children of the assesse; Repayment of housing loan- principal
amount- towards self-occupied residential property; Investment in Equity
Linked Savings Scheme/Approved Infrastructure Bonds, Pension
Fund/Deposit Scheme, Fixed Deposit of any Scheduled bank/Housing
Finance Corporation for not less than 5 years and Investments in Equity
Shares/Debentures of approved public financial institutions or Companies

2. 80CCC The amount of premium paid towards IRDA approved Pension Fund

3. 80CCD Amount paid / deposited in an approved Pension Scheme of Central

Government and the amount contributed by the employer as his/her share
towards pension account of the individual tax payer

4. 80CCD(1B) Under this section the amount deposited in National Pension Scheme (NPS)
notified by central government up to Rs. 50,000/- can be claimed as deduction

5. 80CCE Total of Deduction u/s 80C, 80CCC & 80CCD Not exceeding 1.5lakhs is
claimed as deduction from gross total income.

8
 5. 80D Medical Insurance Premium paid by any mode other than cash.

6. 80DD Any expenditure for Medical, Nursing and Rehabilitation incurred on

dependent relative suffering from Permanent Physical Disability, Autism,
Cerebral Palsy and Multiple Disability. And any deposit made under LIC,
UTIs Scheme and other IRDA approved insurers for the benefit of physically
handicapped dependent

7. 80DDB Actual expenses met on medical treatment of self, or dependent relative

suffering from terminal diseases like Cancer, AIDS, Renal Failure etc.

8. 80E Interest on repayment of loan taken from charitable/financial institution for

self, spouse, children higher education for a maximum of 8 years.

9. 80EE Interest on loan for acquiring residential house property, sanctioned during the
financial year 2016-17.

10. 80G Donation paid to Prime Minister’s Relief Fund, National Defense Fund, Funds
of Universities or Educational Institution of national fame, National Trust for
welfare of persons with Autism, Cerebral Palsy, Mental Retardation and
multiple disabilities; Donation to National Children’s Fund, Jawaharlal Nehru
Memorial Fund, PMs Drought Relief Fund, any Charitable or Religious
Institutions, Corporation established for promoting interest of the members of
a minor community.
11. 80GG Deduction in respect of rent paid by the individual with no house owned by
self, spouse or a minor child can be claimed as deduction

12. 80 TTA Savings Bank account interest up to maximum of Rs. 10,000

13. 80U Persons suffering from permanent physical disability and includes Autism,
Cerebral Palsy, Multiple Disability, Person with disability and severe
disability.

Source: (Gaur, Narang, & Gaur, 2017-18)

9
1.9: SAVINGS AND INVESTMENT IN INDIA

In most of the developing countries savings of domestic households and investments play a
very important role in the overall growth of the economy. In case of India the major source of
saving into the economy flows from all three sectors viz, public, private and household sector.
The major contributor of savings is from household sector in our country. The saving by these
households are either in the form financial assets and physical assets such as real estate, gold,
silver and other precious stones, it also constitute insurance policies, bank deposits, pension
funds and other saving schemes. The term investing means, employing or put to use the funds
(money) in some securities or assets which will help in growth of investor’s wealth. The money
for investment can be sourced from either savings, ancestral property or through borrowed
funds.

The investments are classified based on its nature into two: financial investments and real
investments. The investment made by the investor who invest their money in financial
securities such as shares, debentures, bonds, mutual funds etc., and real investments are those
investments made in physical, tangible assets such as land, building, vehicles, machinery etc.,
According to (F.Amling) as stated in his article, purchase of financial or real assets purchased
by an individual or an institutional investor that generate returns in proportion to the risk
assumed over the investment period.

Financial literacy can be defined as the ability of a person(s) to develop, monitor and efficiently
use the available financial resources to enhance the well-being of one self in the society. In
today’s world to make wise investment decisions or efficient investment planning, it is very
much necessary to assess the financial literacy of the population. Hence, financial literacy is a
mixture of financial knowledge, skill and familiarity, expected behavior to make sound
financial decisions.

As per the global survey conducted by standard and poor financial services (S&P) less than
25% of adults are financially literate in south Asian countries. The survey also confirms that
the financial literacy in India is very poor when compared with rest of the world. India need to
work on financial literacy because, 76% of India’s adult population does not understand the
financial concepts and terminologies. The income and wealth in India is very unevenly
distributed among the population where a myth is followed on financial literacy and financial
status which say- “literate” or “rich” is also financial literacy. (Sud, 2017)

10
1.10: RESERVE BANK OF INDIA INITIATIVES TO IMPROVE THE FINANCIAL
LITERACY IN INDIA

The Reserve Bank of India is taken a lot of initiatives and measures to increase the financial
literacy of the population in India. The project titled “PROJECT FINANCIAL LITERACY” is
one of the major initiatives taken the RBI to educate the people of India about the financial
opportunities available to them. This project aimed at providing necessary education and
information to the common man on various aspects and concepts of banking. Target group of
population were school and college students, women, rural and urban poor, defense personnel,
senior citizens of a family. The RBI has also created a link on its website, to give information
about the functional areas of banks and its services to general public.

1.11: CHAPTERISATION

The thesis has been organized into five chapters:

a) The first chapter introduces the concept of taxation, need for tax planning and various
deductions applicable under Income Tax Act 1961.
b) The second chapter covers the review of literature on investment pattern, tax planning
techniques and saving habits of different class of people.
c) Third chapter deals with research problem, scope of the study, sampling design,
statistical tools used and limitations of the study.
d) Fourth chapter presents the data analysis, interpretation of research findings on
familiarity level, investment pattern, tax planning techniques, risk and return
perceptions of investors etc.,
e) Chapter five gives the summary of findings, suggestions and conclusion.

11
 CHAPTER 2 - REVIEW OF LITERATURE

2.1: INTRODUCTION

This chapter provides with an overview of previous research studies conducted on investment
pattern of various salaried class people, saving behavior and factors influencing the investment
and saving habits; tax planning measures adapted, tax evasion and tax compliance factors. It
focuses on finding the research gap in the previous studies conducted which act as the base on
which the present study is conducted.

This chapter is broadly classified under following heads:

a. Appraisal of Indian Income tax structure, Tax evasion and compliance

b. Level of tax familiarity and tax planning schemes
c. Investment and saving pattern of respondents

Table 2.1: Research articles on tax structure and tax compliance.

Sl Research Article Author (S) Research findings

No

1. Assessment Of Rajiv Kaushik The method of calculating an

Individual Income Tax, individual’s tax liability is been
Tax Planning And explained by the researcher.
Saving In India

2. The Debate Over Edward B. Hymson The researcher suggested that hybrid
Replacing the Present tax structure is best when compared
Income Tax with an with having flat or progressive tax
Alternative Tax Structure structures for better compliance.

12
3. Personal Income Tax Dr. Radha Gupta During the evaluation of Indian tax
Structure In India: An structure, the author suggested that to
Evaluation improvise the tax revenue collection
there is a need for tax payer friendly
reforms

4. Income Tax Department Dr. Sanjeeb Kumar Dey As per the assessment made based on
of India: A Summary the secondary data available from the
Assessment Income Tax department the major
contributors to the treasury are
individuals not the corporate.

5. A Comparative Study of Mr. The comparative analysis of different

Tax Structure of India NishantRavindraGhuge, tax structures present to us that Indian
with respect to other Tax Structure has a wide scope for
Dr.VivekasantraoKatdare
countries development when compared to other
developed countries.

6. Myth and reality of the Priyesh
imbricating concepts of Siddharth Dang
tax avoidance and evasion
Sharma and The author has differentiated and
provided the clarity between tax
evasion, tax avoidance and tax
planning. He has appraised the tax
planners by telling when tax planning
is adapted an individual will pay very
less amount of tax to the government.

7. Tax Evasion and AmitaiEtzioni The perception on tax evasion shows

Perception ofTax that increased tax rates, flat tax
fairness: A Research note structure are the causes for evasion.
And suggests that loopholes have to
be reduced.

8. Tax Administration Das-Gupta, Researcher suggested that positive

Reform And Taxpayer Arindam;Ghosh, incentives for voluntary compliance
Compliance In India Shanto;Mookherjee, and penalty and prosecution for non-

13
 compliance also effects the rate of
compliance.

9. Influence Of Sanders, Debra L;Reckers, Familiarity about the penalty for

Accountability And Philip M J; Govind S Iyer evading tax and nature of
Penalty Awareness On accountability will positively
Tax Compliance influence tax compliance.

10. Tax evasion in the David Joulfaian; Tax evasion is high with respect to
presence of negative high income earners than low income
Mark Rider,
income tax rates earners. Misstatement of income is the
technique applied by this class of
earners.

11. Confidentiality And Laury Susan and sally The results disclose that if there is
Taxpayer Compliance Wallace breach in the confidentiality of tax
payer information in public and fear
of penalty then there will be better
compliance but the study does not
adhere to all other factors of
compliance and does not propose any
theoretical model.

12. Effect of Tax Avoidance J. F. Adebisi, and D.O. Utilization of tax revenue for the
and Tax Evasion on Gbegi betterment of society and low rates of
Personal Income Tax tax and better relationship between
Administration in Nigeria tax authorities and tax payers will
reduce tax evasion and avoidance.

13. The Ethics Of Tax Temitope Olamide The study presents its findings that
Evasion: Perceptual Fagbemi and corrupt government, differentiation
Evidence From Nigeria among citizen and unfavorable tax
OlayinkaMarteUadiale
system is the major cause for tax
Abdurafiu Olaiya Noah evasion.

14
 14. Tax Evasion In India: Lalit Wadhwa Tax evasion is caused due to
Causes And Remedies discriminative tax system and lack of
Dr. Virender Pal
knowledge on tax compliance, hence
friendly and co-operative
administration; educated tax payers
are the remedy for decreasing tax
evasion.

15. Tax Literacy As An Dajana Cvrlje Tax literate people are well educated
Instrument Of Combating for fulfilling their tax responsibilities;
And Overcoming Tax increased knowledge about tax will
System Complexity, Low build strong tax morale.
Tax Morale And Tax
Non-Compliance

Tax is one of the complex topics with lot of problems in the form of tax evasion and avoidance.
Decreasing amount of tax revenue being a major concern to the finance department of any
country, a lot of studies is conducted to find out the factors that influence the growth in tax
compliance rate.

Tax structure adapted by a country majorly impacts the compliance behavior and investments
of a taxpayer. According to (Edward, 2013) Aimed at comparing two tax structures flat or
progressive. The researcher analysed both the tax structures keeping the benefits derived out
of these two systems and found that progressive tax structure provide taxpayers with lot of
options to save as there is different rate of tax charged at different levels than flat tax. And
suggested hybrid system for a developing economy as it generate better revenue to the
government.

In contrary to the view point of (Edward, 2013); the study conducted by (Gupta, 2013)
suggested that more than the tax structure of the country it is the taxpayer friendly reforms that
will induce them to allocate their funds in various investment avenues that help in reducing tax
and save. Simplifying the tax laws and lowering the tax rates will increase the compliance rate
and will encourage taxpayers to plan their taxes in a way to reduce their burden. A comparative
analysis of Indian tax structure with respect to that of six major economies is done by (Ghuge

15
& Katda, 2016) to identify cause for poor tax planning and increased evasion. The study
analysed and recommended that there is need to bring some changes to the system of tax by
introducing taxpayer friendly reforms, simple tax laws, low tax rates etc. these reforms will
impact on the rate of tax evasion and thereby increase tax planning by the individuals. To justify
this analysis, ( Dey, 2014) studied the Indian tax structure to find the major contributors to tax
revenue and it was found that individual tax payers are the major contributors hence reforms
in their favour will induce tax payer compliance. In addition to this discussion on tax revenue
collection another factor which influence the compliance rate is tax evasion. According to
(Etzioni, 1986) tax evasion can be decreased by reducing the tax rates. (Gupta, Ghosh, &
Mookherjee, 2004) Inducing penalties and prosecuting for the act of tax evasion can also reduce
tax evasion. In the view point of (Sanders, Reckers, & Iyer, 2008) creation of familiarity among
tax payers on the ill effects of evading tax can decrease the amount of tax evasion. A study
conducted by ( Joulfaian; & Rider, 1996) disclosed that evasion and avoidance is high in case
of high income earners, hence by disclosing the confidential information of these tax payers
will result in increased compliance(Laury & Wallace, Confidentiality and Taxpayer
Compliance, 2005). But according to (Hastuti, 2014) creating familiarity about tax will
positively impact the compliance behaviour of tax payers and disclosure of government
responsibility towards public and utilization of tax revenue for betterment of society(J. F &
D.O, 2013) and for fulfilling the needs of tax payers (Fagbemi , Uadiale , & Noah , 2010) will
impact tax payers’ compliance. Educating tax payers can be one of the major steps to be taken
by officials to build strong tax morale ( Cvrlje, 2015) , thereby increase the tax revenue to the
government.

Table 2.2: Research articles on tax familiarity and tax planning

Sl.no Research study Author(s) Research findings

1. A Critical Study on Tax Anu Theresa Jose; The respondents of the study are private
Planning Techniques Dr.Nirmala Joseph sector employees and they feel that
Adapted by Assessees Complexity in tax provisions is the
Taxable Under the Head reason for them to not comply, tax
Income From Salaries planning option for salaried class is
available under section 80 C

16
2. Awareness and Practices of Sanjeeb Kumar Dey Familiarity on tax provisions of Lectures
Tax Planning by Salaried of Odisha is bad and there is uniformity
Employees: A Case Study in tax planning measures.
of Lecturers in Odisha
3. A Study of Awareness of CA Shilpa Vasant Basic familiarity is presented about tax
Tax Planning Amongst Bhinde and the salaried class does not prefer
Salaried Assessees going to tax consultant because of the
cost.

4. Tax Planning among Reshma Mathew Working women project Poor familiarity
Working Women with on various tax planning schemes and
Special Reference to Cochin most preferred investment avenues are
City insurance and bank deposits.

5. Tax Awareness and Tax Sarfaraj Mansuri; Basic tax familiarity is reflected among
Planning Among Individual the accountants, corporate employees
Dr. Yagnesh Dalvadi
Assessee: A Study and government employees, but they
lack familiarity on tax planning and tax
planning schemes.

6. A Study on the Salaried Mrs.R.Vasanthi The corporate employees, bank

Assessees Satisfaction on employees and other employees are the
Tax planning schemes With respondents for the study and they are
Reference to the Coimbatore highly satisfied with the risk coverage
City and returns generated by insurance and
hence it is the preferred investment.

7. Tax Planning among College Ledid Bin Abdul Fixed deposits, gold, real estates are
Teachers, with Special Khader preferred investments. Housing loan is
Reference to MES Ponnani the major tax relief, 80C deductions are
College effectively used for reducing tax by the
lecturers of MES Ponnani College. But
complexity in taxation procedure is still
a concern and they plan their taxes at the
end of the year.

17
8. A Study on Tax Planning Mrs.R.Vasanthi Extent of familiarity of corporate
Pattern of Salaried Assessee employees are high on tax planning
schemes, people with high returns and
seniors are investing in non-
governmental schemes which generate
high returns.

9. Determining Tax Literacy of PuneetBhushan, Familiarity level is not too high,

Salaried Individuals - An YajuluMedury employees from non-government offices
Empirical Analysis are much aware about tax. Measures
need to be taken to increase tax literacy
of salaried class.

10. Tax Literacy as an Dajana Cvrlje Secondary data analysis show that
Instrument of Combating increased tax literacy of tax payers
and Overcoming Tax System significantly influence tax morale, tax
Complexity, Low Tax compliance and thereby increase the tax
Morale and Tax Non- revenue to the government. Hence
Compliance efforts are to be put to replace
punishments and penalties with proper
tax education.

11. Tax Planning Practice By Sanjeeb Kumar Dey The familiarity level about tax
Individual Assessee: A Case provisions among self-employed, private
Kamal Kumar
Study of Twin City of employees and government service
Varma
Odisha respondents is very low. The respondents
are not aware about various benefits
available to them under the income tax
act and are unaware about importance of
filing of returns.

12. Income Tax Planning: A Savita, Lokesh The respondents include: teachers,
Study of Tax Saving Gautam, railway employees, shopkeepers,
Instruments advocates and commission agents. Their
preferred tax saving instrument for

18
 investment is life insurance policy and
provident fund.

13. A Study on the Awareness of V.Suganya The study conducted among private
Tax Planning Measures sector employees revealed that social
Among Private Sector science and science graduates highly
Employees in Madurai City depend on tax practitioners for tax
planning and filing of tax returns is also
done by auditors due to lack of
familiarity on the tax provisions and
filing procedures.

Tax planning and tax knowledge are major factors influencing the compliance rate of tax payer.
An attempt is made by various researchers to assess the extent of familiarity on tax provisions
and tax planning techniques taking into consideration different types of respondents. According
to (Jose & Joseph, 2016) complexity in tax is the reason for non-compliance. In addition to this
finding (Dey S. K., 2015) assessed very poor familiarity of tax provisions among the salaried
employees. According to (Mathew, 2016) lack of familiarity will curb the investment in various
tax planning schemes. Study conducted by (Bhinde, 2013) and (Mansuri & Dalvadi, 2012)
contradicted the above situation of familiarity level by stating basic familiarity about tax rates,
filing of returns, exemption limit is present among the respondents.

The most preferred tax planning schemes is bank deposits and insurance (Vasanthi, 2015) the
satisfaction from insurance risk coverage is the reason for it being preferred and (Jose & Joseph,
2016) salaried class take up section 80C deductions for planning tax. To add to preferred tax
planning schemes, the study conducted by (Khader, 2017) housing loan is the major tax
reliever for the respondents and section 80C is the only section effectively used to reduce tax
burden.

Most of the articles reviewed suggested that there is a need to provide tax education among the
salaried employees so that it will help them to be financially literate. Various measures are
been suggested to increase the tax literacy in the study conducted by (Bhushan & Medury,
2013) as increased literacy will influence the tax morale and compliance ( Cvrlje, 2015).

19
After reviewing the above articles here comes a need for a study which can help the salaried
class in making tax decisions which is aimed beyond providing suggestions for increasing tax
literacy and tax compliance. In other words a practical solution to the salaried employees to
plan their tax and reduce their burden by giving thorough procedure of tax planning is
necessary.

Table 2.3: Research articles on Investment preferences

Sl.no Research Paper Author(s) Research findings

1. Saving and Investment Dr. N. Srividhya And Bank deposits are chosen investment
Behaviour of Teachers - An S. Visalakshi by teachers to secure future. Risk free
Empirical Study investors and are satisfied with the
amount of return generated from the
investments.

2. Nest Egg (Savings) and Dr. Bhawana The familiarity level of lecturers on
Venture (Investment) Bhardwaj, financial securities are good but still
Pattern of College Teachers the preferred investment are bank
Dr. Nisha Sharma,
– A Study (Pondicherry and deposits LIC schemes due to the safety
Dr. Dipanker Sharma
Tamilnadu State) factor influencing the investment
decisions.

3. Income, Saving and Mr.C.Sathiyamoorthy The results show that, money is

Investment Pattern of & saved by the lecturers of Bahra
Employees of Bahra University to secure future of family.
Dr. K. Krishnamurthy
University, Solan Investments bearing low risk are
mostly preferred. PPF, NSC, LIC and
bank deposits are common avenues.

4. An Analysis of Investors Bharathraj Shetty M. The salaried employees from different

Attitude towards Various MuthuGopalakrishna sectors are of the perception that safety
Tax planning schemes n; Prashant Mane of funds or savings influence their
investment decisions. Availing tax

20
 benefits is the major reason for
investment.

5. Investment Pattern of Dr. N. Dharani ;Dr. Women working from railways,

Working Women in M. Inbalakshmi;J. schools, hospitals, government offices,
Dindigul District Murugapandi private companies, coolies,
agriculturists prefer Pension plans and
fixed deposits for investments.
Children education and to avail tax
benefits are the motives of investment.
The respondents present insufficient
knowledge about tax planning
schemes.

6. An Analysis of Income and Rajeshwari Jain It is been found fixed deposits and gold
Investment Pattern of are the preferred by women employees
Working Women in the City as investments. Increase in the income
of Ahmedabad level will positively influence the
amount of saving.

7. Saving and Investment Dr. Varsha Virani Income influences the savings of
Pattern of School Teachers – school teachers of Rajkot city and bank
A Study With Reference to deposits are again preferred over other
Rajkot City, Gujarat avenues. The purpose of investment is
children’s future and retirement needs.

8. A Study of Investment Yogesh P. Patel; The research findings are quite

Perspective of Salaried Charul Y. Patel different from other research as the
People (Private Sector) corporate employees (private) prefers
to invest in schemes that are high risk
and return oriented such as stock
market investment. The traditional
avenues are not preferred much by the

21
 sample under study. But safety and
return on investment are factors
influencing the investment decisions.

9. A Special Study on S. Umamaheswari & Poor financial planning is evident due

Coimbatore Based Salaried M. Ashok Kumar to lack of familiarity.
Investors’ Awareness,
Attitude, Expectation and
Satisfaction Over their
Investments

10. Investment Preferences of Puneet Bhushan Life insurance policies, bank deposits
Salaried Individuals towards and mutual funds are preferred
Yajulu Medury
Financial Products investment avenues for salaried
individuals. Demographic profiles of
respondents do influence the choice of
investments.

11. A Study of Saving and Deepak Sood Respondents save their income in bank
Investment Pattern of deposits and insurance policies to face
Dr. Navdeep Kaur
Salaried Class People with future uncertainties. Factors such as
Special Reference to returns, risk tolerance, tax benefit and
Chandigarh safety influence the choice of
investment.

12. Savings and Investments L. Pandiyan Savings is the major factor influencing
Attitude of Salaried Class in investment among the population.
T. Aranganathan
Cuddalore District While analyzing the attitude of the
respondents towards saving and
investment: “tough task but good for
future” perception is considered to be
most influential.

22
13. A Study of Investor Brahma Bhatt The preference of students, retired
Behavior on Investment persons, and self employed and
P.S Raghu Kumari
Avenues in Mumbai Fenil unemployed respondents of the study
Dr. Shamira Malekar is shifting over the financial securities
which are high return generators but
impact of gender and age on choice of
instrument is very much evident.

14. Investors Attitude Towards K. Jothilingam Main objective for investment was to
Investment Avenues – A secure retired life. Gold and mutual
Dr. K.V. Kannan
Study in Namakkal District funds are preferred more and shares
and pension fund are least preferred
investment avenues.

15. A Study on Investors’ R Jayasathya The findings of the research study

Investment Pattern in states that mutual funds are preferred
G Rekha
Various Avenues investment which is followed by life
insurance policy.

16. A Study on Preferred Ashly Lynn Joseph, Respondents are more aware about
Investment Avenues Among Dr. M. Prakash various investment avenues like
the People and Factors insurance, bank deposits, small savings
Considered for Investment like post office saving

17. Investment Preferences and Dr. Taqadus Bashir, The analysis of risk behavior based on
Risk Level: Behavior of Hassan Raza Ahmed; gender reveal that women are more
Salaried Individuals Sheraz Jahangir; risk averse than men and they prefer to
Samina Zaigham; invest in less risky investments.
HifzaSaeed
.
&SameeraShafi

18. Factors Influencing Samreen Lodhi Financially literate person take up high
Individual Investor risk; age determine the risk taking
Behavior: An Empirical capacity of an individual. The return in
Study of City Karachi

23
 the form of dividend is given more
importance than capital appreciation.

19. A Study of Perceptual N. Viswanadham, Investors are investing in a very

Factors Influencing Edward N, Dorika systematic manner for a future need.
Investors Buying Behavior And D.Mwakapala But the companies trading in the stock
in Tanzanian Equity Market market should take necessary steps to
monitor insider trading and adapt
better marketing strategies.

20. Factors Affecting Ms. Lubna Ansari, The results show that age and income
Investment Behaviour influence the investment decision; the
Ms. Sana Moid
Among Young Professionals young professional chosen for study
are risk averse. The purpose of
investing is growth and additional
income.

21. Investment Pattern of Dr. R. Ganapathi Most preferred investment avenue by

Government Employees in the government employees in Madurai
Madurai City is insurance and is followed by bank
deposits, public provident fund,
national saving certificate, post office
saving and government bonds. Least
preferred investment is equity and
debentures.

22. Investment Preferences of Dr.G.Shanthi, Gold investment is preferred by

Salaried Women Employees women and next preferred investment
R. Murugesan
is bank deposits.
Familiarity about traditional schemes
and avenues is prominent among the
respondents but lack familiarity on
modern investment instruments.
23. A Study on the Perception G. Durai Murugan, Dr Government securities are preferred
and Attitude of Investors G.Chandrasekaran investment

24
 Towards Investment
Schemes in Tirupur District
(With Special Reference to
Salaried Class)

24. A Survey of the Factors Ambrose Jagongo The factors that impact the investment
Influencing Investment decisions of people trading in
Vincent S. Mutswenje
Decisions: The Case of investment are reputation of the firm
Individual Investors at the and its status; earning capacity, past
NSE performances and per unit price of
share.

25. A Study on Preferences and B.Saranya, Demographic factor influences the

Level of Satisfaction G.B.Karthikeyan investment decisions is proved in the
Towards Post Office study. Post office saving sis preferred
Savings Schemes (With due to high liquidity, tax benefits,
Special Reference to safety of funds.
Coimbatore City)

26. A Study on Individual Amudhan.S, Preferred investment avenue is bank

Investors Satisfaction Level Poornima J, deposits and highly satisfied avenue is
of Existing Investment also bank deposits and insurance
Dr S Senthilkumar
Schemes in Salem Districts policies due to low risk and security for
investment.

27. A Study of Investor’s Dr Sambhaji Mane The respondents are financial

Familiarity and Selection of illiterates as the familiarity and
Mr.Ravi Bhandari
Different Financial preferred investment are traditional
Investment Avenues for the avenues. The purpose of investment is
Investor in Pune City uncertain future, wealth creation and
additional income.

28. Factors Affecting Manoj Kumar, Factors that influence investment in tax
Taxpayers’ Decisions in VikasAnand saving bonds are history and financial
Saving Tax by Investing in performance of the firm, liquidity and

25
 Tax Saving Bonds: A Study lock in period of the instrument, risk
in U.P. State, India associated with the investment and tax
benefit.

29. A Study of Investment MeghaGoyal, Bank deposits and post office savings
Behavior of Middle Income are preferred avenues. Factors like-
Dr. Anukrati Sharma
Group towards Different children education, security of family,
Kinds of Investment risk bearing capacity will influence
Avenues financial decisions and the sample are
low risk takers.

30. A Research Paper on PriyaVasagadekar Respondents of the study are bank

Investment Familiarity employees, corporate employees, LIC
Among Indian Working agents and other small firm employees.
Women With Reference to They prefer low risk investment. The
Pune Region extent of familiarity portrayed by the
respondents is not sufficient enough to
make wise investment decisions. As
the study is conducted only on working
women, the analysis shows that
women depend on family and friends
for any financial decisions.

31. A Comprehensive Study Dr.Abhishek Janvier The working women from different
Among the Working Frederick, sectors are chosen for the study and
Women towards the reveal that they are not aware about tax
Dr. Sebastian .T.
Familiarity of Tax planning rates, and its effect. Safety is the
Joseph And Mr.
schemes in Allahabad. motive for investment and public
Jonathan Joe Pereira
provident fund is the preferred
investment avenue due to low risk.

32. Determinants of Savings Santosha Kumar The study reveal that the old mentality
Behaviour: A Study on the Mallick of Indians over saving is not changed,
Rural Households of India the purpose of saving is to fulfill long
term needs of the family.

26
 Dr.
SathyaSwaroopDebas
ish

33. Demographic Influences on Bhushan Singh And Demographic factors influence rural
Rural Investors’ Savings and Dr. Mohinder Singh investment decisions; the investors in
Investment Behavior: A the village of Kangra are unaware
Study of Rural Investor in about various modern investment
The Kangra District of avenues available for investment.
Himachal Pradesh

34. A Study Pertaining to Uma maheshwari Safety, additional income and capital
Investment Behaviour of appreciation are the main motives for
Dr. M. Ashok Kumar
Individual Investors in saving and investing. Preferred
Coimbatore City avenues are saving accounts,
insurance, gold, silver and other
traditional low risk bearing avenues.

35. An Empirical Study on Jyoti Gupta The level of financial literacy among
Financial Literacy Level of women is a concern and a model is
Dr. Manish Madan
Salaried Females in Delhi been suggested by the researcher to
assess the financial literacy according
to which the financial behavior,
knowledge and attitude of working
females towards their money matters
affect their financial literacy level.

36. A Study on Behavior of AnjumSayyad; Akbar Most preferred financial investment is

Investors Towards Post Sayyed bank deposits and majority in Pune
Office Saving Schemes in hold their saving in post office
Pune City schemes. Safety security of funds and
tax benefits are the motives for
investing in these schemes.

37. A Study on Preferred Sonali Patil and Safety is the major factor influencing
Investment Avenues Among investments. Bank deposits are

27
 Salaried People with Special KalpanaNandawar preferred over other avenues and self-
Reference to Pune, India familiarity is more than compared with
other sources of familiarity.

38. Investment Preferences of SunitaTotala Motives for investment are tax benefit,
Salaried Persons of Indore returns, safety, liquidity, hedge against
inflation.

39. Investment Pattern of B.Thulasipriya Factors influencing the investment

Government Employees - decisions of government employees
An Empirical Study are education level, age of investors.
Bank deposits are preferred investment
and the purpose for saving and
investing securing future of children
and retirement needs.

40. A Study on Middle Income ArumughaKani.A The study reveals that the extent of
Persons Investment Pattern familiarity among the middle income
in Tirunelveli City earners is poor and the major factors
effecting the decisions are complex
procedures of investment and poor
familiarity.

From the above articles reviewed on investment pattern followed different group of
respondents, the preference of investment is influenced by risk, return aspects of each
investment avenue (N & S, 2013); low risk investment avenues are preferred. According to
(Sathiyamoorthy & Krishnamurthy, 2015) LIC, NSC, PPF and bank deposits are common
among risk free avenues. The factors influencing investment decisions of respondents are
consolidated based on previous research studies: (Dharani, Inbalakshmi, & Murugapandi,
2014) and (Mane, Gopalakrishnan, & Muthu, 2013), found out that availing tax benefit,
security of family, (Virani, 2014)(Jain, 2014) analysed impact of income level on investment
decisions. And return on investment as per study conducted by (Patel & Patel, 2012) will
influence the choice of investments

28
Life insurance policies, bank deposits (Umamaheswari & Ashok Kumar, 2013) and (Sood &
Kaur , 2015), PPF and POS (Samudra & Burghate, 2012) Mutual funds (Bhushan & Medury,
2013) are preferred investment avenues among the salaried class. The mindset of Indians is not
changed with respect to savings ( Debasi & Mallick, 2017) the main purpose of investment are
children education (Mane, Gopalakrishnan, & Muthu, 2013), retirement needs and security of
family (Sood & Kaur , 2015), (Bhavsar, 2013).

In contrary to the above view point a study conducted by (Brahmabhatt , Kumari, & Male,
2012) speak about shift of preference towards high risk and return oriented avenues among
respondents; pension funds are least preferred and mutual fund investment is gaining
importance (Jothilingam & Kannan, 2013)

Familiarity of respondents over traditional investment avenues such as insurance, bank deposits
and post office saving is comparatively good(Joseph & Prakash, 2014), a financially literate
person take up risky investment ( Lodhi, 2014), due to financial literacy ( Mane & Bhandari ,
2014)and security of funds (Murugan & Chandrasekaran, 2014), traditional avenues such as
bank deposits, insurance and public provident fund are highly preferred(Frederick, Joseph, &
Pereria, 2017)

Age and income of individuals will significantly influence the choice of investment and
consideration to risk aspect (Thulasipriya, 2014) due to risk factor and lack of familiarity on
financial securities equity and debentures are least preferred by salaried class(Ganapathi ,
2014). In the point of view of (Shanthi & Murugesan, 2016)familiarity towards gold and other
ancient investments are prominent among women employees and they depend on family and
friends in making any financial decisions (Vasagadekar , 2014). As per ( Gupta & Madan ,
2016) financially literacy is very low among the respondents. The study conducted by(Jagongo
& Mutswenje , 2014) reputation of firm; earning capacity and firm’s past performance
influence the trading in National Stock exchange. The motives for choosing an preferred
investment are safety of funds, and availing tax benefits(Patil & Nandawar, 2014) and liquidity,
hedge against inflation are other factors or motives (Totala, 2016) for choosing an investment

Based on the above literature reviewed on investment pattern and factors influencing
investment preference is the major objective for the study. But no study is conducted to
understand the double aspects covering tax planning schemes and investment preferences as it
helps in solving two major issues prevailing in the present financial system, one poor taxation
and financial literacy and second poor financial and tax planning.

29
2.2: RESEARCH GAP

As a pre-imperative of tax planning, each tax payer needs to know their assessment
commitments in the right perspective and the measures of tax planning available to them so
that they can make best use of their earnings by reducing the incidence of tax. This could be
achieved only by availing maximum amount of tax exemptions, deductions and relief that are
available under the Act. A better familiarity about the existing tax laws and the tax saving
instruments is necessary to achieve this objective. Salaried employees are major contributors
to the government treasury. The provisions of Tax Deducted at Source (TDS) enable them to
be prompt tax payers to the government. The articles reviewed here focuses on investment
pattern of various salaried class people, saving behavior and factors influencing the investment
and saving habits.(Dey S. K., 2015) Assessed very poor familiarity of tax provisions among
the salaried employees The nature of the respondents in terms of their profession/employment
considered by the previous researchers are from the public, private employees from varied
organizations and few lecturers from a couple of colleges and Universities. Academicians in
particular among the salaried class employees have not been addressed. The teaching
community of Bengaluru comprising of school teachers, pre university lecturers and higher
education teachers are considered in this study. Further, an analysis about the extent of
familiarity among the salaried investors over various investment avenues and tax planning
schemes is been conducted but no research study has tried to analyse the impact of familiarity
of tax planning schemes over investment preferences, this gap is also covered in the study.

30
 CHAPTER 3 - RESEARCH DESIGN AND METHODOLOGY

3.1: INTRODUCTION

This chapter clearly defines the research methods adapted in the study. It provides the reader
with the research objectives and questions, significance of study, method of data collection,
questionnaire tool construction, tools used for data analysis in the study. This chapter also
defines the problem statement, keywords, sampling technique and division of sample;
reliability and validity of data is also discussed in this chapter.

3.2: SIGNIFICANCE OF THE STUDY

Finance department of government of India is facing a major financial crisis due to declining
trend of deposits into the government treasury from one year to another, which is resulting in
the increased rate of tax avoidance and tax evasion. As per the statistics provided by the Central
Board of Direct Taxes (CBDT) and other tax analysts, only 1.9 crore Indians pay taxes. Out of
these 1.9 crore people, 93.3% of the population declare income within ten lakhs, 6.6% of
taxpaying population declare income ranging between ten lakhs and 1 crore and only 0.1 % of
the above population disclose income more than 1 crore. In comparison to previous 10 years
the revenue in the form of tax collection is increased but, the number of tax payers to the
government treasury is decreased. As per the reports furnished by the tax department in regard
with the tax collection, the major contributors for the tax revenue are salaried class who are
either motivated to pay taxes voluntarily or pay taxes compulsorily in the form of TDS
deducted by the employer. Due to this, the tax burden on these middle level income earners is
increasing year to year. Hence it is the necessary to help them effectively plan their income in
such a way that their incidence of tax can be reduced to maximum extent possible and increase
the amount of disposable income in the hands of salaried employees. When compared with
other salaried class employees, teaching fraternity lack tax planning skill as they are specialized
in one particular subject of interest and have very less information or knowledge about income
tax. The research study is conducted with main purpose of examining the knowledge of
academicians on various investment schemes and their tax planning.

31
3.3: PROBLEM STATEMENT

As per the present situation in India, approximately 1.5% of the population are paying prompt
taxes to the government(anonymous, 2017) and out of these around 14% of the total revenue
is collected in the form of income tax in the government treasury by the salaried employees,
this group of taxpayers are obedient in complying with tax provisions. One of the main issues
faced by academicians in Bengaluru is poor familiarity with respect to provisions of income
tax act and investment in the modern securities such as financial securities because of which,
they end up paying huge sum of money due to bad or no tax planning; the perception of
taxpayers on payment of income tax is influencing them not to comply with tax laws. Most of
the academicians are not familiar with respect to the benefits that they get for paying on-time
taxes and meeting their other income tax obligations. Percentage of tax evasion is more than
tax planning. Tax consultant’s service is too expensive for an individual assesse who is
struggling to save the amount of tax to increase the disposable income.

3.4: RESEARCH QUESTIONS

• What are the motives for investment and determinants of preferred investments?

• Is there any impact made on the investment decisions of academicians based on the
extent of familiarity on tax planning schemes?

3.5: RESEARCH OBJECTIVES

• To examine the preferred investment avenues and the associated factors considered for
investment among the academicians

• To study the level of satisfaction and the perception towards risk and return among the
academicians on their investments.

• To determine the extent of familiarity of academicians on various tax planning schemes

and its influence on their investment.

• To examine the perception on tax planning among academicians.

32
3.6: OPERATIONAL DEFINITIONS

Table 3.1: Operational definitions of various terms

Terms Definition Citation

Tax planning Tax planning is the arrangement of one’s affairs in such a (Savitha &
manner that the tax planner may either reduce the incident of Gautham, 2013)
tax wholly or reduce it to maximum possible extent as may
be permissible within the framework of the taxation land.

Investment INVESTMENT (Jain, 2014)

pattern
Investment in finance, the purchase of a financial product or
other item of value with an expectation of favorable future
returns.
(Anonymous, NA)
PATTERN

Consistent and recurring characteristic or trait that helps in

the identification of a phenomenon or problem and serves as
an indicator or model for predicting its future behavior.

Academician A member of an association or institution for the

advancement of arts, sciences, or letters

For the study the academicians include the faculty members

of private schools, colleges and deemed universities.

Tax Degree to which a taxpayer complies (or fails to comply) (taxes, 2017)
compliance with the tax rules of his country, for example by declaring
income, filing a return, and paying the tax due in a timely
manner.

33
 Tax Tax familiarity is the principle of being aware of what tax (Vittoratos, 2016)
familiarity laws and principles are, or can be applicable to you

3.7: RESEARCH METHODOLOGY

Research study: Descriptive research is a type of research which aims at describing the
population under study. The present study is based on Descriptive Research, where the nature
of academicians towards tax planning is been studied.

3.8: COLLECTION OF DATA:

The present research study is descriptive in nature, for the purpose of collecting data both
primary as well as secondary sources are been adapted in the study to fulfill the objectives of
the research. Secondary data is collected from various sources such as taxation books, journals
and newspapers and other research websites.

Primary data for the study is collected through a structured questionnaire. Assessment Year
2017-‘18 is selected as the period of study. Validation of questionnaire is done by taking the
expert perception in the field of taxation. The process of validation is presented in 3.12

3.9: SAMPLING

The total sample considered in this study is 385. This number is determined as per (Krejcie &
Morgan, 1970); according to this if the population size for the study is more than one lakh then
the size of the sample should be 384.

3.10: SAMPLING TECHNIQUE:

Stratified sampling technique is been chosen for determining the sample for the study. The
entire teaching community of Bengaluru is divided into three strata viz., school teachers, pre
university lecturers and higher education teachers. The division of the total population is
presented in table 3.2

34
Table 3.2: Division of samples

Strata Population Number of sample % of sample

School teachers 65,77,053 251 65.2%

Pre university teachers 19,84,711 76 19.7%

Higher education teachers 15,18,813 58 15.1%

Source: (Ministry of Human Resource Development Statistics, 2015)

3.11: QUESTIONNAIRE DEVELOPMENT

Questionnaire Development comprising of:

a. To ascertaining the familiarity level of the population on tax planning schemes, the
various tax planning schemes provided by the provisions of Income Tax Act, 1961
(with amendments to the finance bill every assessment/financial year) have been
taken to check with the respondents as their extent of familiarity.
b. Investment preferences & risk return perceptions: To understand the respondents
investment and saving behavior, all the possible investment avenues which is
available to an investor.

Questionnaire has 4 sections:

1. Demographic factors

2. Familiarity level: This section aim at ascertaining the familiarity level of the population
on tax planning schemes.

3. Investment preferences & risk- return perceptions: To understand their investment and
saving behavior.

4. Tax planning: To find the perception of the academicians towards tax planning

35
3.12: QUESTIONNAIRE VALIDATION

Two types of validation is done:

1. Face validity : Face validation was done by Mrs. Deepa George, (MSc, MPhil in
statistics),

2. Content validity: Content validation is done by chartered accountants, their comments

are been considered for questionnaire development and validation. Questionnaire was
finalized by making all the changes that were specified during the process of validation.
The validation is presented in table 3.3.

Table 3.3: Results of content validation

Sl. Name Membership Comments

Number
No

1. KAVITHA 521932 No comments

2. VARUN 236272 There were one or two repetitions of certain

deductions. I personally felt that for one of the
questions, the choices were ranging from 1 to
9...it could have been restricted to the range of 1
to 5 as it would be difficult to choose when the
range size is large and may lead to incorrect
choices

3. HARISH AGARWAL Chartered No comments

Accountant,
working as a
tax consultant
in EY

4. ASHWINI MAGOD 239136 Provisions of Income Tax are accurate however

few questions were repeated for example
Question 9 and 10 answers are similar as one

36
 says details of deductions along with the section
in the next question it's the deduction details
without section.

5. SWETHA 232928 Provisions of Income Tax are accurate in the

questionnaire.

3.13: RELIABILITY AND VALIDITY

Table 3.4: Case summary of the data

Frequency (N) Percent (%)

Valid 385 100.0

Excluded 0 0

Total 385 100.0

Source : primary data

Table 3.5 : Reliablity statistics of the data collected

Cronbach’s alpha N of items

0.8410 121

Source : primary data

37
3.14: STATISTICAL TOOLS USED

1. Bar graphs and pie charts are applied to present the demographic profile.
2. Regression is adopted to study the influence of familiarity of tax planning schemes on
the investment preferences
3. To study the perception towards tax planning One way ANOVA is used
4. Factor analysis is been conducted to find the factors influencing the investment
decisions
5. Familiarity of the respondents on various tax planning schemes is analysed using mean

3.15: LIMITATIONS OF THE STUDY

1. The study finding is based on the response of only the academicians of Bengaluru city
hence generalization of findings may not be feasible.
2. The study is based on the assumption that the respondents have only one source of
income i.e. salary income.

3.16: SCOPE OF THE STUDY

Tax planning is a vast topic to be studied; the scope of the present research is limited to
familiarity on tax planning and investment pattern adapted by academicians in the city
of Bengaluru. The study on tax planning is based on the income earned during the
Assessment year 2017-18.

38
 CHAPTER 4 - DATA ANALYSIS AND INTERPRETATION

4.1: INTRODUCTION

This chapter briefly describes the analysis of the data and presents the same in the form tables
and diagrams. The data collected through structured questionnaire from academicians are
analysed using various statistical tools and the same is interpreted to present the final research
findings of the study.

4.2: DEMOGRAPHIC PROFILE

Table 4.1: Age group of respondents

Number of %
Age group
respondents

Below 30 115 29.9

30-44 196 50.9

45-60 74 19.2

Source : primary data

NUMBER OF RESPONDENTS

Below 30 30-44

19% 45-60
30%

51%

Figure 4.1: Age group of respondents

39
Interpretation

Table 4.1 and figure 4.1 represents the number respondents participated in the survey classified
based on their age. The table also represents the respondent population in percentages. The
survey consisting of 30% of people belonging to the age group of less than 30 years, majority
of respondents belong to the age group of 30 to 44 years with 51% of population representing
the group. And 19% of respondents belong to the age group of 45 to 60 years.

Table 4.2: Respondents based on gender

Gender Frequency (N) Percentage (%)

Male 161 41.8

Female 224 58.2

Source : primary data

NUMBER OF RESPONDENTS

male female

42%

58%

Figure 4.2: Male and female respondents

Interpretation

Table 4.2 and figure 4.2 represents the number respondents participated in the survey classified
based on their gender. The survey had 58% female respondents and 42% of male respondents
participating in it.

40
Table 4.3: Annual income of respondents

Number of %
Annual income
respondents

Up to 2.5lakh 55 14.3

2.5-5lakh 238 61.8

5-10lakh 85 22.1

10lakh and above 7 1.8

Source : primary data

NUMBER OF RESPONDENTS
Upto 2,50,000 2,50,001 – 5,00,000
5,00,001 –- 10,00,000 10,00,001 and above

2%
14%
22%

62%

Figure 4.3: Annual income of respondents

Interpretation

Table 4.3 and figure 4.3 represents the number of respondents and the percentage of
respondents participated in the survey classified based on their annual income. The survey had
maximum representation of respondents who earn an annual income ranging between Rs
2,50,001 to Rs 5,00,000, i.e., 62%. 22% of the respondents were earning their income within
the slab of Rs 5,00,001 to Rs 10,00,000. 14% of respondents fall in the category of income

41
ranging between Re 1 to Rs 2,50,000. 1.8% of respondents fall in the category of annual income
10 lakh and above.

Table 4.4: Academic experience of respondents

Number of %
Academic experience
respondents

less than 5yrs 101 26.2

5-9yrs 109 28.3

10-14yrs 80 20.8

15yrs and above 95 24.7

Source : primary data

NUMBER OF RESPONDENTS
Lees than 5 years 5 – 9 years
10 – 14 years 15 years and above

25% 26%

21%
28%

Figure4.4: Academic experience of respondents

Interpretation

Table 4.4 and figure 4.4 represents the number respondents and the percentage of respondents
participated in the survey classified based on their academic experience. There are 26% of
respondents participated in the survey with less than 5 years of teaching experience, 28% of

42
sample had 5 to 9 years of academic experience, 21% of academicians reported 10 to 14 years
of experience and 25% of respondents had more than 15 years academic experience.

Table 4.5: Stream of respondents

Number of %
Faculty
respondents

Science 175 45.5

Commerce 65 16.9

Social sciences 145 37.7

Source : primary data

NUMBER OF RESPONDENTS

Science Commerce and management Humanities and arts

38%
45%

17%

Figure 4.5: Stream of respondents

Interpretation

Table 4.5 and diagram 4.5 represents the number respondents and the percentage of
respondents participated in the survey classified based on their stream or department of
specialization. The study constituted 45% of population from faculty of science, 38% of the

43
respondents belong to the faculty of humanities and arts, 17% of the population is represented
by the faculty of commerce

4.3 LEVEL OF FAMILIARITY OF ACADEMICIANS ON TAX PLANNING

SCHEMES

Table 4.6: Extent of familiarity among respondents on Tax planning schemes

Tax planning schemes Mean Faculty

Sukanya Samriddhi Account 1.71 Science

1.90 Commerce

1.77 Social science

FD 1.84 Science

2.04 commerce

1.97 Social science

ELSS 1.63 Science

1.70 Commerce

1.64 Social science

Health Insurance Policy 2.08 Science

2.15 Commerce

2.17 Social science

National Pension Scheme 1.61 Science

1.60 Commerce

1.53 Social science

RGES 1.49 Science

1.46 Commerce

44
 1.54 Social science

Voluntary provident fund 1.46 Science

1.78 Commerce

1.48 Social science

Unit Linked Investment 1.68 Science

Plans
1.65 Commerce

1.59 Social science

National Saving certificate 1.70 Science

1.96 Commerce

1.79 Social science

Life insurance policy 2.13 Science

2.06 Commerce

2.04 Social science

Senior citizen saving scheme 1.58 Science

1.81 Commerce

1.69 Social science

Public provident fund 1.85 Science

2.52 Commerce

1.99 Social science

Source : primary data

Interpretation

The extent of familiarity about various tax planning schemes available for investment were
analysed. For this purpose a three point scale was used. Three point weights are assigned for
‘fully familiar’, two for ‘partially familiar’ and one for ‘not familiar’. Analysis was under taken

45
based on mean values for the total respondents in each department or faculty. The mean value
above 2.5, the extent of familiarity was considered to be high, and the same was considered to
be low when it was below 2.0.

Table 4.7: Mean Value for Interpreted Extent of familiarity

Mean value Interpretation

Above 2.5 High

2.0 - 2.5 Moderate

Below 2.0 Low

Interpretation
With regard to science faculty, the extent of familiarity was moderate on life insurance policy
(2.13), and health insurance (2.08). Low extent of familiarity on tax planning schemes with
respect to Public provident fund (1.85)’, ‘ELSS – tax saving mutual funds (1.63)’ tax saving
fixed deposit schemes’ (1.84) is revealed through analysis. Tax saving bank fixed deposit
schemes (1.58), Rajiv Gandhi Equity saving scheme (1.49), Voluntary provident fund (1.46),
National pension scheme (1.61), National saving certificate (1.70), Unit linked investment plan
(1.68), Sukanya Samridhi account (1.71)

Among the respondents belonging to faculty of commerce the extent of familiarity was high
on public provident fund (2.52), The extent of familiarity was moderate on ‘investment in NSC
(2.43), ), Tax saving bank fixed deposit schemes (2.04), on life insurance policy (2.06), and
health insurance (2.15). The extent of familiarity was low on tax planning schemes in respect
of ‘ELSS – tax saving mutual funds (1.70)’ senior citizen saving scheme (1.81), Rajiv Gandhi
Equity saving scheme (1.46), Voluntary provident fund (1.78), National pension scheme (1.60),
National saving certificate (1.96), Unit linked investment plan (1.65), Sukanya Samridhi
account (1.90).

Among the respondents belonging to faculty of social sciences the extent of familiarity was
moderate on health insurance plans (2.17), and life insurance schemes (2.04). The extent of
familiarity was low on tax planning schemes in respect of Tax saving bank fixed deposit
schemes (1.97), ‘ELSS – tax saving mutual funds (1.64)’ senior citizen saving scheme (1.69),
46
Rajiv Gandhi Equity saving scheme (1.54), Voluntary provident fund (1.48), National pension
scheme (1.53), National saving certificate (1.79), Unit linked investment plan (1.59), public
provident fund (1.99), Sukanya Samriddhi account (1.77). For survey results see table 4.6

4.4 IMPACT OF FAMILIARITY OF TAX PLANNING SCHEMES ON INVESTMENT

Regression analysis help us to analyse the relationship between dependent and independent
variable. In the present study regression is used to analyse the impact of familiarity of
academicians on various tax planning schemes on their investment. The results of
regression are presented in table 4.8

Table 4.8: The Regression Values

R R Adjusted Std. Beta P
Square R Error of value
Square the
Estimate

Mutual funds .084a .007 .04 3.28569 -0.84 0.101

Fixed deposit .073a .005 .03 2.66105 0.73 0.152

Life insurance .063a .004 .01 3.25724 0.063 0.216

Source: primary data

Interpretation
Table 4.8 presents the regression and beta values. The R-Square values show that 4% in case
of mutual funds, 3% in case of fixed deposit and 1% in case of life insurance of the population
will have variation with respect to familiarity level influencing the investment choices.
The beta co-efficient help us to analyse the degree of change in the variables. The beta value
for mutual funds is negative -0.84 which show that increase in one unit of extent of familiarity
of mutual funds will decrease the choice of it being preferred for investment by 0.84. Fixed
deposits assume a positive beta value 0.73 which show that for every unit increase in the extent
of familiarity will increase 0.73 possibility of the fixed deposit to be chosen for investment by
academicians. Life insurance policy assume a positive beta value 0.063, this imply that for
every one unit increase in the familiarity level will increase the choice of life insurance for
investment by 0.063. The p value for all three avenues, mutual funds (0.101), fixed deposit
47
(0.152), and life insurance (0.063) is more than significant p value 0.05 and hence they are
statistically insignificant.

4.5 PATTERN OF INVESTMENT THAT EXIST AMONG ACADEMICIANS.

To study the pattern of investment among academicians; saving habits of academicians,
preferred investment avenues, risk and return perceptions and satisfaction level of the
academicians on their investments and factors influencing investment decisions are
analysed.

Table 4.9: Pattern of saving among academicians

Percentage of Frequency Percent
savings
Up to 10% 144 37.4
10%-20% 108 28.1
20%-30% 118 30.6
30%-40% 4 1.0
above 40% 11 2.9
Total 385 100.0
Source: primary data
Interpretation
Out of 385 respondents maximum of respondents i.e., 144 respondents save up to 10% of their
income annually; 118 academicians save 20% to 30% income annually; around 28% of people
i.e 108 respondents annually save 10% to 20% of their income. Only 4 academicians save 30%
to 40% and 11 respondents saving is beyond 40% of their income.

4.5.1 INVESTMENT PREFERENCES

A list of investment avenues were given to academicians to rank based on their choice
of investments. 1st rank is assigned to those preferred first and 12th to the least preferred
avenue. The ranks given by academicians are presented in table 4.10.

48
Table 4.10: Investment preferences of academicians

Investment 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th
avenues/ranks

BD 102 45 53 50 44 29 19 12 16 9 3 3

POS 80 80 69 28 26 29 12 17 22 12 1 9

PPF 59 67 44 44 62 18 19 31 21 14 2 4

LIC 57 57 40 62 11 42 31 8 21 32 9 15

Real estate 53 25 34 50 45 50 17 24 10 9 16 52

Shares 45 52 37 33 33 21 27 65 28 18 25 1

Gold/silver 39 48 30 42 72 44 31 18 14 9 18 20

COD 29 24 49 52 34 34 16 25 21 44 28 29

Mutual funds 25 43 42 49 22 58 21 34 15 27 21 28

Bonds 13 9 50 43 28 25 43 25 39 75 23 12

Treasury bills 13 9 50 43 28 25 43 25 39 75 23 12

CP 12 40 41 31 35 9 17 20 32 32 43 73

Source: primary data

Interpretation
Bank deposits have been ranked first by the maximum number of repondents viz., 102
respondents. This is followed by post office saving and public provident fund with 80
respondents ranking it first and 59 respondents ranking Public provident fund first. Commercial
papers, bonds and treasury bills are been ranked least. It is clear from the above frequencies of
ranking that the respondents are very much interested in investing their money in bank deposits,
post office savings and public provident funds

49
Table 4.11: Prioritised Investments
1st rank 2nd rank 3rd rank

1st priority Bank deposits Post office saving LIC

2nd priority Post office savings PPF LIC

3rd priority Post office saving Bank deposits Bonds and treasury
bills

Source: primary data

Interpretation:
Based on the distribution of ranks given by academicians to various investment avenues as per
their preference show that bank deposits, post office saving schemes, public provident fund,
life insurance policies are ranked as preferred investment. These aveneues generate low rate of
return when but carry very low risk on investment when compared with other avenues.
Therfeore it can be concluded that the respondents are more risk averse and avoid making risky
investments

4.5.2 FACTORS INFLUENCING INVESTMENT DECISIONS

Table 4.12: KMO and Bartlett’s Test

Kaiser-Meyer-Olkin Measure of Sampling 0.793
adequacy

Approx. chi-sqaure value 3024.311

Bartlett's Test of Sphericity

Df 66

Sig. 0.000

Source : primary data

Interpretation
KMO measures the sampling adequacy. The measure should be more than 0.05 to conduct
factor analysis satisfactorily. In the table 4.13 the KMO measure is 0.793, it fall into the range

50
of being good (Kaiser, 1974). The chi-square value of Barlett’s test of sphericity is 3024.311
and the significant value is 0.000 which is less than 0.05, indicating that the data is suitable for
factor analysis.

Table 4.13: Eigen values of the factor extraction

Initial Eigen values Extraction Sums of Squared Rotation Sums of Squared
Loadings Loadings
Total % of Cumul Total % of Cumul Total % of Cumul
Varianc ative Varian ative % Varian ative %
e % ce ce

1 5.159 42.989 42.989 5.159 42.989 42.989 4.370 36.414 36.414

2 2.503 20.858 63.847 2.503 20.858 63.847 2.169 18.071 54.485
3 1.002 8.352 72.200 1.002 8.352 72.200 1.751 14.594 69.080
4 .719 5.990 78.190 .719 5.990 78.190 1.093 9.110 78.190
5 .645 5.374 83.564
6 .487 4.055 87.619
7 .417 3.474 91.093
8 .274 2.284 96.154
9 .224 1.868 98.023

10 .136 1.131 99.154

11 .102 .846 100.00

Source : primary data

Interpretation
The percentage of variance attributable to each factor after extraction is presented in the above
table. This value is of significant to determine the number of factors. From the table we have
extracted four factors which influence investment decisions of investors.
The table 4.13 lists the Eigen values associated with each component before extraction, after
extraction and after rotation. From 11 components within the data set, SPSS extracts all factors
with Eigen values greater than 1 and that makes it to four factors. The table shows that the first
factor accounts 42.989% of the variance, second 20.858% of the variance. Third 8.352% of the
variance and fourth 5.990%, all the remaining factors are insignificant.

51
Table 4.14: Rotated Component Matrix
Monetary Fiscal factors Personal Uncertainty
factors factors factors

Emergency need 0.858

Retirement needs 0.723

Security for the family 0.685

Future of children 0.789

Tax rates 0.823

Interest rates 0.642

Regular return 0.729

Acquisition of Wealth 0.844

Prestige Value 0.890

Time period 0.921

Risk tolerance 0.851

Rotation Method: Varimax with Kaiser Normalization.

Interpretation
Table 4.14 indicates that based on factor loadings that these twelve components were reduced
into four factors. The four factors are named as Monetary (factor 1), Fiscal (factor 2), Personal
(factor 3) and Uncertainty (factor 4).

a) Monetary factor includes Regular return, Acquisition of Wealth and Prestige Value
b) Fiscal factor includes Tax rates and Interest rates
c) Personal factor includes Emergency need, Retirement needs, Security for the family
and Future of children.
d) Uncertainty factor includes Time period and Risk tolerance.

52
4.5.3 SATISFACTION LEVEL OF ACADEMICIANS
To find the level of satisfaction among academicians on their investments based on
return, liquidity, risk, tax benefits and inflation are analysed using mean and standard
deviation.

Table 4.15: Satisfaction Level of Existing Investments

Level/criteria Mean Std. Deviation

Return 2.5169 .86322

Risk involved 2.4831 .78086

Tax benefits 2.5143 .90164

Safety 2.4701 .75675

Liquidity 2.6701 .77578

Inflation 2.6156 .85864

Source: Primary data

Interpretation:
Table 4.15 presents the mean and standard deviation values for the satisfaction level of
academicians on existing investments made by them. The mean values for return is 2.5169,
risk involved 2.483, Tax benefits 2.5143, safety 2.4701, liquidity 2.6701, inflation 2.6156.
The standard deviation for return is 0.86322, risk involved is 0.78086, tax benefits is 0.90164,
safety is 0.75675, liquidity is 0.77578, and inflation is 0.85864, the mean values of all the
criteria listed is less than 3, and liquidity has the highest mean value and safety has the least
mean value, hence on an average respondents are highly satisfied with the liquidity covered in
their investments but standard deviation value for safety is lowest, and tax benefits have the
highest variance.

53
4.5.4 RISK AND RETURN PERCEPTION OF THE ACADEMICIANS

Table 4.16: Return Perception of Investors

Investments Mean Std. Deviation

Bank deposits 3.0390 1.05871

Post office savings 3.0442 .98193

Public provident fund 2.9221 .93494

Shares 2.7195 .88932

Bonds 2.7714 .77709

Treasury bills 3.0468 .80874

Commercial papers 2.9870 .83998

Certificate of deposits 2.9429 .81449

Mutual funds 2.6597 .86366

Life insurance 2.7948 .96662

Gold, silver and other 2.6260 .94392

precious stones

Real estate 2.6286 1.23310

Source : primary data

Interpretation

The table on return perception of investors displays the mean and standard deviance values of
investor perception on return from investments. The mean value of Bank deposits 3.0390, Post
office savings 3.0442, Public provident fund 2.9221, Shares 2.7195, Bonds 2.7714, Treasury
bills 3.0468, Commercial papers 2.9870, Certificate of deposits 2.9429, Mutual funds 2.6597,
Life insurance 2.7948, Gold, silver and other precious stones 2.6260, Real estate 2.6286. The
mean values of bank deposits, treasury bills and post office savings are more than 3, which

54
indicates that the academicians perceive that the return from these avenues are moderately low
than other investment avenues.

Table 4.17: Risk Perception of Investors

Investments Mean Std.

Deviation

Bank deposits 3.5974 1.01627

Post office savings 3.5974 1.03657

Public provident fund 3.1117 1.11826

Shares 2.7922 1.08178

Bonds 2.8390 .91004

Treasury bills 3.1169 .94888

Commercial papers 3.0416 .95380

Certificate of deposits 2.7429 .96494

Mutual funds 2.7714 1.02302

Life insurance 3.2312 1.14157

Gold, silver and other 2.8156 1.05809

precious stones

Real estate 2.4442 1.07898

Source : primary data

Interpretation
The table on risk perception of investors displays the mean and standard deviance values of
investor’s perception on risk associated with investments. The mean value of Bank deposits
3.5974, Post office savings 3.5974, Public provident fund 3.1117, Shares 2.7922, Bonds
2.8390, Treasury bills 3.1169, Commercial papers 3.0416, Certificate of deposits 2.7429,
Mutual funds 2.7714, Life insurance 3.2312, Gold, silver and other precious stones 2.8156,
Real estate 2.4442. The mean values of bank deposits, post office savings, public provident

55
fund, treasury bills, commercial papers, life insurance, and post office savings are more than 3,
which indicates that the academicians perceive that the risk from these avenues are moderately
low than other investment avenues.

4.6 PERIOD OF TAX PLANNING

In order to understand whether an individual is opting tax planning or tax avoidance, the
time period of initiating tax plan is very prominent. According to (Lakhotia & Lakhotia,
2015) a person who start to plan tax in the beginning of the financial year is termed as an
efficient tax planner.

Table 4.18: Formulation of Tax Plan

Time period of plan N %
Beginning of the year 115 29.9
No planning at all 26 6.8
End of the year 143 37.1
At any time 101 26.2
Source : primary data

Interpretation
For a successful investment and efficient tax planning, it is very much necessary to access the
time period of such plan. In case of salaried class the time period of financial plan play a vital
role in deciding the burden of tax deducted of source. Tax plan initiated in the beginning of the
year will reduce the TDS deduction by the employer.
The results of tax plan formulation by the academicians revealed that thirty seven percent of
the respondents had formulated their financial plan at the end of the year, followed by thirty
percent of the respondents planning their taxes in the beginning of the year, twenty six percent
at any time and lastly, seven percent of the respondents never planned out their finance.

Table 4.19: Service of tax consultant

Respondents %
Yes 218 57%
No 167 43%
Source : primary data

56
Interpretation:
From the survey, it is been found that out of 385 respondents to the survey, 218 academicians
perception a tax consultant for planning their tax annually and also to file returns, and 167
respondents do not perception any tax consultant or tax advisors to plan their tax. The reasons
for approaching a tax consultant are to avoid mistakes in filing returns, lack of awareness about
tax provisions, complex tax laws.

4.7 TAX PLANNING PERCEPTION OF ACADEMICIANS

One way ANOVA is used to analyse the perception of academicians towards tax planning
based on the faculty to which they belong. The variation between the faculty of academicians
viz., science, social science and commerce faculty; is analysed and presented in table 4.20

Table 4.20: Tax Planning Perception of Academicians

Sum of Df Mean F P
Perception
squares square

Between 5.863 2 4.877 .033 .003

the groups
Pay tax to secure the saved
Within the 229.582 382
money
groups

Total 235.444 384

Between 2.435 2 1.507 4.877 .223

the groups
Tax planning is an important
component of investment Within the 308.671 382
planning groups

Total 311.106 384

Between .962 2 .667 .667 .514

Rate of return from the the groups
investment is influenced by
tax rate. Within the 275.609 382
groups

57
 Total 276.571 384

Between .044 2 .033 1.507 .968

the groups
Income can be increased by
Within the 260.698 382
saving tax
groups

Total 260.743 384

Between 9.172 2 6.560 6.560 .002

the groups
Be a wise investor in saving
Within the 267.072 382
tax.
groups

Total 276.244 384

Between 1.870 2 .748 1.628 .474

the groups
Income tax is the most
complex concept to Within the 477.575 382

understand. groups

Total 479.444 384

Between 1.207 2 .870 .870 .420

the groups
Aim at growth and security of
Within the 265.042 382
money
groups

Total 266.249 384

Between 2.475 2 1.594 2.365 .204

the groups
Tax laws should be simple
Within the 296.523 382
groups

58
 Total 298.997 384

Between 1.952 2 1.184 1.184 .307

Earn more by paying less tax the groups

on income. Within the 314.838 382

groups

Total 316.790 384

Between 2.963 2 2.365 1.594 .095

Financial planning is the groups
complete only after effective
tax planning. Within the 239.235 382
groups

Total 242.197 384

Between 2.211 2 1.395 1.395 .249

the groups
Wealth distribution is
influenced by the tax system. Within the 302.750 382
groups

Total 304.961 384

Between 2.620 2 1.628 .748 .198

the groups
Burden of medical expenses
are covered by planning tax Within the 307.406 382
groups

Total 310.026 384

Source : primary data

59
Interpretation:
The above table shows the output of the ANOVA analysis and whether there is a statistically
significant difference between the group means. We can see that the F value for Money saved
is money lost unless paid tax is 0.033 with p value (0.003) which is highly significant at 0.05
significance level. Thus money saved is money lost unless paid tax perception varies
significantly with the faculties of academicians.

Similarly, The F value for ‘Save tax and earn more’; be a prudent investor is 6.560, which is
highly significant at the p value = 0.002, indicate that this perception of tax planning vary
with respect to the faculty the academicians belong.

Whereas the F ratio for Tax planning is an important part of investment planning is 4.877,
which is not significant with p = 0.223 indicating that perception towards tax planning does
not vary with their stream of coaching.

Similarly The F ratio for ‘Your tax rate affects your investment return’ is 0.667, which is not
significant with p = 0.514; F value for tax saving can add to your income is 1.507 and its p
value is 0.968; the F value for The hardest thing in the world to understand is income tax
1.628 and p = 0.474; Looking for protection and growth has a the F value as 0 .870 and p =
0.420. similarly the F value for Tax should be simple and easy to be understood is 2.365 with
p = 0.204 the F value for Pay less tax; earn more 1.184 and p = 0.307; F value for Tax savings
is a key part of financial planning is 1.594 and p = 0.095; Tax System affects the production
and distribution of wealth seriously has F = 1.395 and P = 0.249; finally the F value for Save
income tax and cover your medical expenses with a smile is 0.748 with p = 0.198 indicating
that all these perception towards tax planning does not vary with their stream of coaching,
that the academicians belong as the p values for all the mentioned perception is more than
0.05 and are not statistically significant.

4.8 PROCEDURE OF TAX PLANNING.

Based on the income tax slabs, a flowchart is presented to help the people who find very
difficult to calculate their tax liability for the year and provide them with various schemes
available for them to invest so as to reduce the tax liability by the end of the year. The flowchart
is constructed based on the following factors: Individual income level; amount of saving

60
required to save tax (tax planning); allowances provided by the employer; avenues available
for investment; final tax liability.
The following diagram/flow chart describes various provisions allowances given by the
employer, the disposable income that an individual can used for savings, different tax planning
schemes available as per the Income Tax Act.

4.8.1: Allowances given by the Employer:

Once the required amount of planning is estimated, an individual should list down the tax free
allowances provided by their employer. The list is as under:

61
Table 4.21: list of allowances
Partially taxable and tax free allowances Taxable allowances
House rent allowance Dearness allowance
Travelling allowance City compensatory allowance
Uniform allowance Skill allowance
Hostel expenditure allowance Fixed Medical allowance
Medical bill reimbursement Entertainment allowance (private
employees)
Telephone allowance Servant allowance
Conveyance allowance Tiffin and lunch allowance
Family allowance
Overtime allowance
Marriage allowance
(Gaur V. , Narang, Gaur, & Puri, 2016)

4.8.2: Amount to be invested to Save Tax:

After making a list of tax free allowances provided, an individual will have to find the
difference between the total income and the allowances provided by the employer to arrive at
the amount which need to be invested in various tax planning schemes to reduce tax liability.

4.8.3: Tax Planning Schemes:

The list of various tax planning schemes and the tax deductions applicable to each of them is
provided in table 1.4.
An individual can decide the amount that he or she would like to invest in any of the tax
planning schemes other than provident fund of Rs 1800 p.m; which is deducted by the employer
from the gross salary of an employee.

62
 CHAPTER 5 – FINDINGS, SUGGESTIONS AND CONCLUSION

5.1: INTRODUCTION

This chapter concludes the entire report. A summary of the research is presented and the
findings of the study are discussed and listed. The conclusion of the report is based on the
findings of the study; hence it may not be taken as a common basis as the results may vary with
the change in the population. But the overall suggestions provided by the study can be
considered to be relevant to the general problems with respect to the major problem of tax
compliance.

5.2: FINDINGS

5.2.1: Extent of familiarity of academicians on various tax planning schemes

 The familiarity of the respondents towards insurance schemes was more in case of
science stream respondents whereas familiarity of commerce faculty was high in case
of public provident fund. Humanities and arts stream academicians did not possess any
high extent of familiarity towards any tax planning schemes, but they are aware about
insurance schemes.
 Academicians from three domains viz., science, commerce and management;
humanities and arts projected very low extent of familiarity towards Rajiv Gandhi
Equity Saving Schemes.
 Familiarity of tax planning schemes does not influence the investment decisions of
academicians as the p values of the regression coefficients are more than
p=0.05.Therefore investment preferences of academicians are not impacted by their
extent of familiarity on tax planning schemes.

5.2.2: Pattern of investment

 Saving habits of the sample revealed that, 144 respondents save up to 10% of their
income annually; 118 academicians save 20% to 30% income annually; around 28% of
people i.e 108 respondents annually save 10% to 20% of their income. Only 4
academicians save 30% to 40% and 11 respondents saving is beyond 40% of their
income.

63
  The analysis of investment preferences revealed that academicians in the city of
Bengaluru prefer those investments that are less risky but generate average return.
Hence Bank deposits, post office saving schemes, public provident funds and insurance
policies. The study also examines the familiarity level and it was clear that the selected
group of investors in the study lack familiarity about various financial securities viz
shares, debentures, and mutual fund etc., due to which these avenues are not much
preferred for investment.
 Factor analysis revealed that out of eleven variables tested and analysed, four factors
were extracted which influence the investment decisions of the sample respondents.
They are named as personal factors, monetary factors, fiscal factors and uncertainty
factors.
 From the analysis of satisfaction of academicians on their investments based on
liquidity, return, risk involved, tax benefits, safety and inflation, it was found that they
were satisfied with their current investments.
 From the analysis of return perception of academicians, it is found that they follow a
conservative approach by investing in low risky investments such as bank deposits,
treasury bills and post office savings
 From the analysis of risk perception of academicians; bank deposits, post office
savings, public provident fund, treasury bills, commercial papers, life insurance, and
post office savings carry low risk than any other investment avenues.

5.2.3: Perception of academicians about tax planning.

 30% of the academicians are efficient tax planners. They do tax planning right from the
beginning of the financial year so as to reduce their tax liability. 63% of the
academicians do tax planning at the end of the financial year so as to reduce tax liability.
7% of the academicians do not plan their taxes. (Lakhotia & Lakhotia, 2015)
 Majority of the academicians prefer taking assistance of tax consultant in filing their
returns or for tax planning. The study reveal that 218 academicians prefer consultation
of tax professionals and 167 respondents plan taxes without any consultation from tax
professionals. Complexity in tax laws is the major reason given for approaching or
consulting a consultant.
 From various perceptions that were analysed, among which only two “pay taxes to
secure the saved money” is 0.03 (p=0.03) and “be a wise investor in saving tax” is 0.02

64
 (p=0.02), show significant difference in the mean value between the faculties and the
rest of the perceptions are statistically insignificant.

5.3 SUGGESTIONS
a) Academicians projected poor awareness on most of the tax planning schemes hence
awareness programs can be held to create basic familiarity of tax planning schemes in
the form of workshops and seminars.
b) Academicians prefer conventional investment avenues which are considered more
secured such as bank deposits, post office savings insurance investment, etc. Modern
investment avenues such as mutual funds, overseas mutual funds, balance funds
(combination of equity and debt), government bonds, Rajiv Gandhi equity saving
scheme and equity linked saving scheme, etc., can be explored by them so as to reap
the benefit of diversification in their portfolio.
c) Modern investment avenues help the academicians in mitigating risk as the investors
can choose a portfolio of investment through which weakness of one investment avenue
is offset by another alternative investment.
d) Conservative investors can still hang on to EPF and PPF schemes as they assume
moderate risk and generate moderate return.

5.4 CONCLUSION
Tax planning is the process of analyzing a person’s financial position in the purview of
tax. Tax planning is done by the tax payer with a sole objective of reducing tax burden.
It is a method that can be adapted by an individual to take advantage of various
deductions and exemptions available under the Income Tax Act. Tax planning is a legal
process of reducing the incidence of tax. In India, the Income Tax Act of 1961, provide
the scope for tax planning to tax payers under section 80C to 80U.

Due to its importance tax planning is become a part of one’s financial life. A mechanism
applied by the tax payers to reduce their tax burden by decreasing the incidence of tax
through availing various exemptions, deduction under the provision of tax laws.
Academicians are one group of salaried class who are very much obedient in timely
payment of taxes, filing of returns etc., the study analysed the familiarity level of the
academicians towards various tax planning schemes and their preference of investment.
The study can be concluded based on the findings that academicians lack familiarity on
65
 various tax planning schemes available to them and prefer to invest in those avenues
that are less risky but generate moderate return. It was also found that very few
respondents actually begin to plan their income in the very beginning of financial year
so that the cost of such planning is spread across the year. These respondents are the
one who actually do rigorous tax planning, rest of the respondents will plan their tax
only at the end of the year and this act of planning in the last minute is generally termed
as tax avoidance. The tax benefits derived out of avoiding tax is for very short term.
Hence, to avail the total benefit of tax it is necessary to start planning well in advance.
Through this paper an attempt is made to reduce tax avoidance by creating a sense of
familiarity to academicians. A flowchart is been designed which can be utilized by
academicians as an assistance to plan their income in order to reduce tax. The main
objective of developing this flowchart is to reduce last minute hurry of people to reduce
tax by opting the mechanism of tax avoidance.

5.5 SUGGESTIONS FOR FUTURE RESEARCH

 A study on Tax planning among salaried individuals with more than one source of
income can be studied.
 A comparative study on the tax planning perception of academicians of both private
and government educational institutions would be interesting area of research.
 A study can be conducted by considering the provisions of house-property loan as
one of the tax planning avenues by a salaried class employees.

66
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 APPENDIX 1: QUESTIONNAIRE

PERCEPTION ON TAX PLANNING AND INVESTMENT PATTERN AMONG

ACADEMICIANS

Dear participant,

I am Pallavi. V from Christ University, Bengaluru currently pursuing my MPhil in commerce

under the guidance of Dr Anuradha P.S (Associate Professor-commerce). This questionnaire
is a part of a research project, “Perception of Tax planning and investment pattern among
academicians” as a requirement for our partial fulfillment of the Degree. Kindly participate by
answering the following questions. Your answers will be kept totally confidential and will be
used for academic purpose only.

QUESTIONNAIRE

PROFILE

1. Age:
i) Below 30
ii) 30-44 years
iii) 45- 60 years
2. Gender :
a) Male
b) Female
3. Academic experience:
a) Less than 5years
b) 5-9years
c) 10-14years
d) 15 years and above
4. Annual income for previous year 2016-17
a) Upto2,50,000
b) 2,50,001 to 5,00,000
c) 5,00,001 to 10,00,000
d) 10,00,001 and above
5. Marital status:
a) Married
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 b) unmarried
6. Faculty of:
a) Science
b) Commerce and Management
c) Humanities and Arts

7. What is the percentage of Income saved per annum?

A. Up to 10% B. 10- 20% C. 20- 30% D. 30- 40% E. Above
40%

FAMILIARITY
8. Necessity of familiarity about tax deduction, exemption, tax planning.
a) Very much necessary
b) Essential
c) Not much necessary
d) Negligible
9. Extent of awareness of the following tax planning schemes
Sl.no Tax planning schemes Not Partially Fully
aware aware aware

10.1 Public provident fund

10.2 ELSS – tax saving mutual funds

10.3 Tax saving bank fixed deposit schemes

10.4 Senior citizen saving schemes

10.5 Rajiv Gandhi Equity saving scheme

10.6 Voluntary provident fund

10.7 New pension scheme

10.8 National saving certificate

10.9 Unit linked investment plan

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 10.10 Life insurance plans

10.11 Health insurance plans

10.12 Sukanya Samridhi account

INVESTMENT PREFERENCES & RISK RETURN PERCEPTIONS

10. What is the percentage of Income saved per annum?

A. Up to 10% B. 10- 20% C. 20- 30% D. 30- 40% E. above
40%

11. Rank the following investment avenues based on your preference to save. (1- highest
and 12 is the least)
Sl.no Investment avenues Rank

1. Bank deposits

2. Post office schemes

3. Public provident funds

4. Equity shares

5. Bonds

6. Treasury bills

7. Certificate of deposits

8. Commercial paper

9. Mutual funds

10. Life insurance policy

11. Precious stones, gold and silver

12. Real estate

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 12. Factors influencing saving habits and investments Rank them in the order of 1- highest
and 12 is the least)
Sl.no Factors influencing saving and investments Rank

1. Emergency need

2. Retirement needs

3. Security for the family

4. Future of children

5. Tax benefits

6. High returns

7. Regular return

8. Acquisition of Wealth

9. Prestige Value

10. Time period

11. Risk tolerance

13. State the level of risk and return associated with the following investments
Level of risk Level of return

Very High Average Low Very INVESTMENTS Very High Average Low Very
high low high low

Bank deposits

Post office
schemes
Public provident
funds

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 Equity shares

Bonds

Treasury bills

Certificate of
deposits
Commercial paper

Mutual funds

Life insurance
policy
Precious stones and
objects
Real estate

14. Satisfaction from present investments

Sl.no Satisfaction Highly Satisfied Neutral Dissatisfied Highly
criteria satisfied dissatisfied

1. Amount of return

2. Risk involved

3. Tax benefits
gained
4. Safety

5. Liquidity (Cash
flow)
6. Hedge against
inflation

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 TAX PLANNING
15. When do you initiate your tax plan during a financial year?
A. Beginning of the year
B. End of the Year
C. At any time
D. No planning at all
16. Perception towards tax planning
(SA- Strongly Agree; A-Agree; N-Neutral; D-Disagree; SD-Strongly Disagree)
Sl.no Statement SA A N D SD

1. pay tax to secure the saved money

2. Tax planning is an important component

of investment planning
3. Rate of return from the investment is
influenced by tax rate
4. Income can be increased by saving tax

5. Be a wise investor in saving tax.

6. Income tax is the most complex concept

to understand.
7. Aim at growth and security of money

8. Tax laws should be simple

9. Earn more by paying less tax on income

10. Financial planning is complete only

after effective tax planning.

11. Wealth distribution is influenced by the

tax system.

12. Burden of medical expenses are

covered by planning tax

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 17. Do you approach a tax consultant for tax planning?
(a) Yes (b) No

If yes, then why do you approach a tax consultant _________________________________

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APPENDIX 2: PAPER PRESENTATION

Presented a research paper titled “Investment Pattern among the Academicians” at

the 5th International conference on Emerging Trends in Global Accounting, Finance
and Taxation by Department of Commerce Kristu Jayanti College on 21st and 22nd
September 2017.

APPENDIX 3: PUBLICATION

Published an article in VISION: Journal of Indian Taxation; Title: “Tax Planning

and Investment Pattern of Academicians: A Study of Educational Institutions in
Bengaluru”
DOI No. : 10.17492/vision.v4i02.11776

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