The Government scrapped 500 and 1000 rupee notes on November 8th 2016. The aim of this move? Destroy corruption and terrorism in India, fueled by black money in the economy. The Prime Minister then asked all citizens to deposit these old 500 and 1000 rupee notes at banks. He said….You have earned money the honest way? You have absolutely no problem….Just deposit these old notes at the bank by December 30th 2016. This deadline has now expired.
On November 8th 2016, the 500 and 1000 rupee notes, were about 86% of currency by value, in circulation in the economy. The value of these notes….A whopping INR 15.5 Lakh Crores. After demonetization, citizens lined up at banks and deposited old notes till December 30th 2016. Today, Banks are filled with cash. More than 14 Lakh crores of old 500 and 1000 rupee notes have been deposited with them. With almost all the old 500 and 1000 rupee notes deposited with banks, the Government wants to reward honest citizens, who have patiently waited in long queues to withdraw money, after the Government had imposed cash withdrawal restrictions at banks and ATM’s. The best reward honest citizens want….A very good Union Budget 2017, with a lot of tax concessions.
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Take a look at the income tax slabs for a citizen under 60 years for the Financial Year 2016 - 2017.
If you are under 60 years, you are eligible for a basic tax exemption of INR 2.5 Lakhs. You don’t have to pay any income tax, if your salary/income is less than INR 2.5 Lakhs a year.
You could see these income tax slabs after Union Budget 2017.
Yes, after the Union Budget 2017, you could see NEW income tax slabs. The income tax slabs were last changed in the Financial Year 2014-15. The basic tax exemption could be raised to INR 4 Lakhs. Yes…. No income tax, unless you earn more than INR 4 Lakhs a year. Licking your lips?
SEE ALSO: How To Withdraw EPF Online
You get deductions under Section 80C, up to INR 1.5 Lakhs a year, if you invest in certain tax saving investments. Public Provident Fund popularly called PPF, Employee provident fund called EPF, 5 year tax saver fixed deposits, NSC, Postal saving schemes are some of the tax saving investments for conservative investors. A conservative investor does not like any risk in his investments. An investment in these tax saving instruments is very safe. You don’t lose the money you invest and also earn interest on it.
If you are willing to bear risk for a higher return, then invest in equity linked saving scheme, popularly called ELSS. Most of your money is invested in equity, up to around 80% or more. ELSS also enjoys deductions under Section 80C.
You could also avail life insurance plans like term life insurance plans, endowment life insurance plans and even unit linked insurance plans. You get a tax deduction up to INR 1.5 Lakhs under Section 80C, for the premium paid on these life insurance plans.
SEE ALSO: How To Get A Loan From EPF Account?
You get a tax deduction under Section 80C up to INR 1.5 Lakhs a year.
You could get a tax deduction under Section 80C up to INR 2.5 Lakhs a year.
A tax deduction up to INR 2.5 Lakhs a year under Section 80C + maybe a higher tax exemption up to INR 4 Lakhs after Union Budget 2017, could mean a very high tax saving.
A Tax deduction of INR 2.5 Lakhs a year under Section 80C, would mean more money flowing into household savings, insurance and the mutual fund industry. This would boost the India growth story and help India become an economic super power.
The Union Budget is on February 1st 2017. There’s not much time left. Keep your wish list ready.
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Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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