Tax is a word or must say a phenomenon which at one time or other has given shock wave to all.
However, a proper planning of the same can land you in a rich soup of esteemed self financial satisfaction.
As we all know, we have to give tax to government on various things, one such being income tax. In the coming columns we will let you know what are they and how to plan the tax for a concurrent year and be clean. To take a sneak peak, Read on!
What is meant by tax?
The word tax has been derived from the Latin word, tax which means to impose a financial charge in the physical form of money or other levy upon a tax payer by a state or the functional equivalent of a state such that the failure to pay the same is punishable as per the prescribed law.
What kinds of taxes are there in India?
• Income Tax
• Sales Tax
• Income tax – An income tax is a charge levied on the income of individual or institutions. Different kind of income taxes exists, and can be progressive, proportional and regressive.
• Sales Tax- A sales tax is a tax charged at the point of purchase for definite goods and services.
• VAT- VAT is a similar tax like sales tax, the only difference being it's a tax on the estimated market value added to a material or product at each of its manufacture or logistics, ultimately passed on to the customers. A 12% VAT is presently calculated in India.
Tax Planning of the year
Its been seen that numerous people end up reacting to tax at the end of a financial year rather than looking at as an investment which must be considered throughout the year around. We will see how concentrating on the below mentioned topics can see you not see the red at the end of a financial year.
Insurance – Have you considered insurance as they are covered under section 80C? Taking insurance would profit you at the end of a year as they are exempted from tax clutches.
Mutual funds and equity – Mutual funds and equity plans are very popular way to plan up your tax mode nowadays as they are offered by insurance companies and the same offers a tax benefit under the preferred section of 80C. To be specific, investing in the equity shall automatically double up as mutual funds and life insurance.
Look-at the post tax returns – one must list out the goals one is saving for. Doing this frequently would mean giving you an insight of better perception of how much you need and when and how much risk is up your sleeve to be taken. Once you are done with doing this crucial step, you can easily plan your tax planning for the year.
The trick to investing sharply and smartly and boosting returns lies in a combination of debt, equity and real estate to make the most of post-tax income.
Investment in global market – The way the stocks are moving internationally and investors making hay at the perspective shining markets of China, Brazil & India, the term, emerging market looks understated.
Thus, buying mutual funds from these countries saw inflows of USD 4.9 billion during 2009 & 2010, so invest in these and avail higher yielding results at the end of a financial year.
Here is a three step for your guide to the fruitful forest of investment in global market-;
• Determine the right amount of foreign exposure
• Spread your money around the globe
• Boost potential gains by spicing up the mix of investments
Last but not the least, one must also keep a track record of stock exchange every now and then and not to forget the very investment in the all above mentioned financial weapons one such being investment in global market, which will help you reap returns and plan your tax benefits, for longer terms.