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The March 31 deadline for making investments to get tax benefits is at hand. Have we made the right investments this year? Is our tax planning for financial year 2007-08 correct? What are the best investment options to minimise your tax burden? These questions throng our mind this time of the year.
Personal finance expert Harsh Vardhan Roongta answered many such queries in an-hour long chat on Thursday. CEO of apnaloan.com, a site that helps people get the most competitive loans.
Here is the chat transcript:
Harsh Roongta says, Hello Everybody. Its a real pleasure to converse with all of you today. Will try and answer as many queries as my typing skills allow me to. So let's get cracking
Vishwakarma asked, How i will calculate the tax and will i get tax benefit on personal loan also.If i club it with home loan to buy a house. Sudhir Sharma(Vishwakarma)
Harsh Roongta answers, the ineterest payable on the personal loan as well as the princiapl repaid will be eligible for a deduction just like the ineterst payable on the home loan as well as the principal paid on the home loan.
Note: The Income Tax Act does not give the tax benefits based on what the loan is called (home loan or personal loan) or whether the property bought or constructed by using the loan is provided as a security or not. The only requirement is that the assessee will have to prove that the loan was used to acquire/construct a residential house property.
Nirmal asked, Hi Mr. Roongta , i want to ask u one thing if i am getting 6 months salary in india and six months salary abroad how can i treat the tax paid outside india where assessment year is january to december. what should i do for the remaining three months january to march for income tax purpose in india
Harsh Roongta answers, Its not very clear from your query whether you are a non resident or a resident indian for tax purposes. If you have spent 182 days in India in this financial year than i am afraid you will need to pay tax on your foreign slary also in India. Off course any tax paid by you to the foreign government can be allowed as a credit agaisnt your tax payable in India or as per the Double taxation avoidance treaty with that country (if any)
Pramanik asked, Dear Mr Roongta, thank you for your time. Can I still make investments this year to save tax for the 2006-07 assessment year?
Harsh Roongta answers, Off course you can. Though if you are salaried your employer may not take cognizance of such investment while calculating the tax deducted at source from your salary. In such a case you will need to claim refund while filing your tax return. Incidentally it is always better to plan your tax saving investment throughout the year rather than bunching them at the end of the year
Saradhi asked, Since I live in an ownerd house, I dont claim HRA and claim the interest paid for housing loan. I am trying to buy a new house and Can I claim the tax exemption for the newly planned house loan?
Harsh Roongta answers, It is a myth that deduction for tax purposes is available only for loan tajken for one property or that there is an overall limit on the amount of deduction that you can claim in respect of interest payable on loan taken against all properties put togather. See this link for a more detailed explanation on this issue. http://www.apnaloan.com/index.php?option=com_content&task=view&id=185&Itemid=2
Subrata asked, What are the best Mutual Funds to invest in where in i am looking for no depriciation of my Capital but returns greater than a fixed deposit and savings account. I am looking for a SIP spread over 1 year and will withdraw only after 1 year of 1st SIP..!!
Harsh Roongta answers, What you seem to be looking for is a capital guranteed fixed maturity mutual fund. However whether this will give you better returns than a fixed deposit is not certain and is also dependent on your tax situation. Are you already fully utilising your section 80C limits and what is the marginal rate of tax you are paying, etc.
Krishna asked, What is the minimum term for bank deposits to be eligble for deductions under Section 80c?
Harsh Roongta answers, 5 years
dd asked, Hi Mr Roongta, my annual salary is Rs 5,50,000. what are the best investment options for me?
Harsh Roongta answers, i presume you are looking to invest in tax savings instruments. Firstly check out whether your protection covers are suffivient - term insurance cover, critical illness policy as well as health insurance. Once these covers are sufficeint you should go for a SIP investment in any tax savings mutual fund scheme whose invetsment profile matches your requirements.
binod asked, Hi Mr Roongta, I have got substantial pf amount after leaving the company. Where can I invest the amount effectively. I don't have any major financial liability other than meeting the expenses of me & my wife.
Harsh Roongta answers, It is difficult to give answers like these without asking many more questions about your life stage nd ascertaining your financial goals and requirements. However as a thumb rule your PF money should not be used for short term investments but only for retirement planning and also you need to be slighly conservative while investing these funds. If you are young you can put in the money in a income fund/long term fixed deposit - depending on yoru tax situation - and transfer the ineterst by a SIP scheme into a equity fund. There can be many more options depending on your age and risk profile .
Aditya asked, Hello Mr Roongta Please tell me about tax benefits avaiable to me for educational loans taken by me
Harsh Roongta answers, You can get deduction of the entire interest paid by you during the year for any loan taken from a bank or charitable institution for pursuing your higher education. Higher eductaion has been specifically defined and also the deduction is available for 8 years.
ajit kurup asked, dear sir, i am 27 yr old married man. i earn 5 lakh p.a. This year i invested 97 k in elss and 3 k i paid for term insurance for 10 lak. is this strategy of insurance and investment ok for my profile. i do not have kids now
Harsh Roongta answers, The startegy appears fine except that your insurance cover appears to be too low. However if you ahve no dependents and your wife is earning sufficently than the increase curently required may not be very high. But your risk profile may change dranmatically once you have children and it may be advisable to have better term insurance cover while you can still get it as reasonable cost. Please also ensure that you ahve crtiticsal illness cover as well as reasonable health insurance cover. So get your risk covers thorughly examined.
Mayank gupta asked, Hello sir? How are you. These days some private insurance agents like Max New york;Bajaj Allianz tries very hard to convince us for investing in their company. Is that safe to invest in these firm.Do they have any Goverment back Up?
Harsh Roongta answers, None of the Insurance companies except LIC have government backup. That does not mean that they are unsafe or that LIC is compeltely safe. The government backup for LIC is also only to the extent of any guarnateed returns. In ULIP plans (either from LIC or by any other insurance company) there is no guarantee of any returns and they are exactly like a mutual fund investment. So as far as ULIPs are concerned there really is no difference betwween them and regular mutual funds as far as safety is concerned. This applies to all mutual funds and all insurance companies.
rlk asked, What will u suggest in case am looking for a fixed sum of 10,000/- per month 6 yrs down the line with minimum risks. Am open to invest in Mutual funds. Also,if i invest Rs.2000/- in a good mutual fund via SIP how can this work for me ahead?
Harsh Roongta answers, an off the cuff response would be to invest in cumulative Income mutual fund with systematic withdrawal plan after 6 years.
zxc asked, Mr Roongta is there any limits for investment under 80C
Harsh Roongta answers, Rs. 1 lac per year
Vinayak asked, Sir, I have jointly applied for Home Loan with my sister. Can we both take tax benefits??
Harsh Roongta answers, only if both of you are co-owners in the property as well as being co-borrowers.
Sidd asked, Hello Sir, I want to know whether the amount given to RESEARCH ASSOCIATES by Govt. agencies Taxable or not.
Harsh Roongta answers, unless there is a specific exemption that i am not aware of i dont see any reason why such payment should be non -taxable. So it should be taxable.
nikhildeva asked, Hello Mr. Roongta could you inform the Policies which are falling under sec 80 D. I invested in Pension Policy and Insurance Policies.
Harsh Roongta answers, health insurance policies issued by non life companies and the premium paid ofr health riders (critical illness, etc.) to life companies is eligible for dedcuction under section 80D
Rajesh asked, Hi Harsh, I am looking ahead to do investments for tax planning. I have to invest one lakh but i want my money back as early as possible. one tax advisor told me that i can invest for three years and can get my money back after 3 years in a ULIP. shall i invest in ulip or ELSS.
Harsh Roongta answers, strictly from a point of view of liquidity both are equal. However if you are risk averse and wish to invest in debt funds ULIP might be better. If you are want to invest in equity ELSS will give you better returns as upfront costs are far lower in ELSS as compared to a ULIP.
agnia123 asked, MY CA says that money given under section 80D for medical insurance is valid only with cheque. Does it not cover credit card payments?
Harsh Roongta answers, Your CA is correct. However this providion is sought to be amended by the current finance bill and next year onwards you will be able to pay yopur health insurance premium by credit card and still get beenfit under section 80D.
ag_raghavan asked, If I hold stocks purchased in the secondary market for more than an year, will I get an tax exemptions?
Harsh Roongta answers, not chargeable to capital gains tax. Your broker will deduct a small securities transaction tax at the time of sale.
navin asked, dear sir , i am 23 years old and i am planning for the investment for the tax saving , what would be the best option for investment for me
Harsh Roongta answers, again difficult to answer without understanding a lot of background information but as a rule of the thumb for somebody at your age a SIP into a equity or an index fund is a good investemnt.
rgs asked, sir, what amount of income tax rebate get in child education?
Harsh Roongta answers, under section 80C upto 1,00,000 per year alonwith all other avenues mentioned in that section.
jhakaas asked, Hi Mr. Roongta. My company (in the U.S.) plans to start operations in India and I will be responsible for establishing operations. Once I move here, I will be a resident of India and should pay taxes in India. Correct? Then that would mean that I will not pay any tax in the U.S. and will basically get my salary through a wire (or whatever means) and I will have to pay taxes separately by a cheque to the IT department in India. Right? Also, will any incidental expenses to run the operations in India (rent, electricity, etc.) be taxable in India? Finally, would you be aware if any of this is taxable at the point of origin (i.e. the U.S.)?
Harsh Roongta answers, Indian tax will be clearly payable on the salary you get paid after you become an Indian resident. On the rest of your query you should seek the advise of tax counsel before taking any steps in the matter.
MAYANK asked, I AM A BUSINESS MAN. HOW MUCH DEPRICIATION I CAN GET IF I BUY A COMPUTER/LAPTOP NOW?
Harsh Roongta answers, 30% for this year.
nitin.jaggi asked, Hi Mr Roongta, I've already made investments of 1 lac with ULIPs & LIC policies. Are there some other options to save some more tax?
Harsh Roongta answers, health insurance polciies snd health riders on your life insuarnce policies upto 10,000 (increasing to 15000 next year)per year
subhendu asked, HI Sir...Can u help me in finding the best 3 investment options for my daughter who is 1.5 years now?
Harsh Roongta answers, make investments in your name after taking sufficient risk cover on your life and for crtitcal illness.
czaar asked, Hello Mr Harsh, I have purchased a flat in the joint name of me and my wife and as we have got the possession i have claimed for principal repayment and loss from house. I am salaried one and my wife is a self employed professional. Can she also claim for the same and get a tax rebate?
Harsh Roongta answers, yes she can. follow this link for a more detailed answer. http://www.apnaloan.com/index.php?option=com_content&task=view&id=208&Itemid=2
nikhildeva@redimail.com asked, Hello sir, I am a salaried person. My wife is not working anywhere. If I take Insuranece and Health Policies for my wife, I will be eligible for tax benefit under 80 C & 80 D
Harsh Roongta answers, yes you will be. But why do you want to take an insurance policy on your wife if she is not earning.
khushil asked, Dear Sir, To avail deduction under section 80DDB for Parkinson's disease which authority can issue relevant certificate ?
Harsh Roongta answers, Government hospital as defined in that section.
Giri asked, I am earning earning 700000 PA please give me proper advice for investment for the next year 2007-2008 . I have also Home loan of 18lakh . I want to do proper planning fron first day of the next year.
Harsh Roongta answers, First - Tajke sufficent risk cover - term insurance and criticalk illness policy Then depending on your risk profile and other erquirements you acn invest in either ELSS or PPF or Bank FD preferably regularly during the year rather than one shot in March.
LoanShark asked, Can you pls explain the difference between ULIP and a regular MF. I understand that ULIP may invest highly in Debt while MF in equity which means risk is more in MF. But i am given to understand that ULIP have a bigger admin charge. If I hold a MF as long as i hold a ULIP wouldnt i get bigger returns in MF?
Harsh Roongta answers, yes if you compare a equity ULIP with a ELSS. So if you want to invest in equity it is better to go for MF (rather than pay the heavy upfroint charges in an ULIP) and in an ULIP (if you wish to invest in debt products).
Harsh Roongta says, Ok Folks. It was great talking to all of you. you can read the transcript of the chat for your answers if i have not specifically answerd the,m.For any quesries related to tax benefits on loans you can also logon to www.apnaloan.com. Thanks and bye
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