Sunday, April 10, 2011

Disclose the investments for this FY

And its April and yet another start of the new financial year. If you are a salaried employee of a company, you all would have come across this every year and this is nothing very new. Even if you are not salaried, it is better to have your investments planned before hand for this Financial year before hand and plan accordingly.

Why is disclosing the investments important in the month of April?
Its nothing to do with the month of April. But its better to disclose in the month of April itself to get the full advantage. For the salaried class of people, who worry about the tax, this marks an important event. This is because TDS (Tax deduction at Source) is based on the investments disclosed and better to disclose the right figure to get the proper cash flow right from the beginning.

How I can make this disclosure to my benefit?
Understand each and every section that has to be disclosed and the advantages and dis-advantages in detail.

Section 80C:
Identify how much is already covered by your PF. Your contribution towards your PF, comes under this section.

12% of your basic. - Already accounted in.
Max. that you can account in is Rs. 1,00,000.
If you want good returns, invest in ELSS and for secure returns, I would recommend PPF. Don't ever invest solely for the purpose of saving tax.

Infrastructure Bonds(Section 80CCF)
Max. of Rs.20,000/- applicable for FY2011-2012.

Medical Re-imbursement - Rs.15,000/-
Section 80D - Medical Insurance Premium -
Rs. 35,000/- (only if, one of your parent is above 60years.) or
Rs.30,000/-(should cover your parents as well)

Leave Travel Allowance
Within India, two times in the block of 2011-2014.

And perks and loans according to the company's terms and conditions.
Pick the best that suits you and feel free to leave the other things behind.
Most of the companies don't support 80G bills (Donations to charity). The best that can be done here is to increase the disclosure in some of the other investments to match the 80G investment, so that the cash flow for each month will remain constant.

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