Have an HUF Income Tax File
Many employees, who are Hindus (including Jams and Sikhs), do not have a separate file for the HUF. However, it is possible even without any ancestral property for a Hindu to have a separate status of Hindu Undivided Family (HUF) and get separate exemption of ` 2,50,000 for the Hindu Undivided Family for the income to be earned during the financial year 2017-18 relevant to the assessment year 2018—2019. Besides, a separate deduction up to ` 1,00,000 in respect of investments can be made through the HUF. For this purpose, what one needs is gift from friends and relatives (other than members of the HUF) supplemented by interest-free loans or loans at low rates of interest from relatives and friends. There can be a Hindu Undivided Family with husband and wife only.
Net Income Range |
Income-Tax Rates |
Education Cess |
Secondary And Higher Education Cess |
Up to Rs. 2,50,000 |
NIL |
NIL |
NIL |
Rs. 2,50,000 – Rs. 5,00,000 |
10% of (total income minus Rs. 2,50,000) [*] |
2% of income-tax |
1% of income-tax |
Rs. 5,00,000 – Rs. 10,00,000 |
Rs. 25,000 + 20% of (total income minus Rs. 5,00,000) |
2% of income-tax |
1% of income-tax |
Above Rs. 10,00,000 |
Rs. 1,25,000 + 30% of (total income minus Rs. 10,00,000 |
2% of income-tax |
1% of income-tax |
Surcharge : Surcharge is levied @ 15% on the amount of income-tax where net income exceeds Rs. 1 crore. In a case where surcharge is levied, EC of 2% and SHEC of 1% will be levied on the amount of income-tax plus surcharge.
However, marginal relief is available from surcharge in such a manner that in the case of a person having a net income of exceeding Rs. 1 crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
AMT : In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum Tax (AMT) applies, tax payable cannot be less than 18.5% (+SC+EC+SHEC) of "adjusted total income" as per section 115JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in tutorial section.
Trust for the Children’s Needs
To provide for higher education and marriage of son or daughter, a person requires money at the relevant time. For this purpose, it is necessary to have a plan to keep savings duly invested under a trust for the marriage or education of son or daughter. There can be a hundred per cent specific beneficiary trust and it can be created by the investor himself or through his close friend or relative. Such a trust deed should provide for the accumulation of the income of the trust during the minority of the child so that the money is available for being spent on the education, etc. of the child when he is major. During the minority of the child, the income of the minor child under the trust would not be added with the income of the father or mother as per the principles laid down by the Supreme Court of India in the case of C.I.T. v M.R. Joshi [1995] 211 ITR 1 (SC).
Planning for a Residential House
Every one should plan to have at least one residential house or a flat. Fortunately, under the Income Tax Act, a deduction up to ` 1,50,000 is avilable in respect of interest on borrowed funds for purchase or construction of a residential house. Thus, one’s own savings coupled with borrowed funds from banks and other financial institutions should enable the person concerned to own a house in due course. Further, even the repayment of the loan is deductible under Section 80C of the I.T. Act. Thus, a good deal of tax saving is possible by planning to utilize savings and borrowed funds. He can also save a good deal of income tax.
A Trust for Personal Deity
If a person believes in some God, he can have a trust for one’s own deity and keep on investing the savings through the trust in safe funds like units of mutual funds, bank fixed deposits, immovable property, etc. This would enable him in course of time to spend on personal deity, bhandhara and other such personal religious functions without being required to spend out of his tax saved money. This would also enable the person to enjoy a separate exemption limit of ` 2,00,000 for one’s personal deity.
Invest in Life Insurance Policy
Every one should have a life insurance policy so that at the time of retirement sufficient money is available to help the person to have the funds for the marriage of daughter or for investment in jewellery or for higher education of children, etc. As far as possible, an endowment policy without profit would be an ideal investment of savings which would enable the person to save income tax within the overall limit of ` 1,00,000 under the different provisions of Section 80C of the I.T. Act. |