IIPM - Admission Procedure
Noted chartered accountant G. D. Singla explains, “Early tax planning provides ample time to analyse the options, assess the risk and returns and above all, it allows greater bargaining power to the tax payers to an extent that in many cases, one need not even pay advance taxes!” If that sounded Hebrew, perish the painful thought, as this cover story is made with an atypical contrarian objective of putting penny to the foolish and pound to the wise. Revisiting the books, and at the cost of sounding back to the basics, we put forth the well respected S. Kumar of the leading chartered accounting firm Simon & Cailand, who explains, “In simple terms, tax planning means availing of the benefits of deductions, rebates, exemptions in taxation law to reduce the total tax burden of an assessee.” He further explains that tax planning does not merely imply putting money in some designated options; if envisaged properly it can be a great source of prudent wealth planning that could help to focus primarily on post tax yield taking into consideration the basic parameters of safety and liquidity. Ergo, if the philosophical Zeusian change has been implemented by thyself, you could test new waters with your second move.
And that is to make tax planning a monthly feature rather than an end of the year quarter feature beginning in January and calling it quits by March. The ‘instead’ approach sprains and strains one’s cash flow many a time; some even are forced to borrow to make these investments, certainly a double whack. Add to this the fact that the individuals suffer losses on account of compounding benefits (in case the investment avenue happens to be public provident Fund) and the rupee cost averaging (in case of investment in ELSS, Equity Linked Service Scheme). Change in government’s economic policies, closing of several attractive investment schemes, et al may further add on to the loss. Tax planning early on in the year can actually take care of all such losses. As the tax payer in such a case tends to spread his tax saving investments over 12 months rather than concentrating in three months.
And then we come to the third move. Apart from ‘when’, a tax payer also needs to know ‘where’ to invest. It is of prime importance that he is aware of the investment avenues so that he does not lose out on any opportunity. A host of investment avenues exist in the market: Mutual Funds, National Saving Certificates (NSC), Public Provident Fund (PPF), Monthly Income Scheme (MIS), Employee Provident Fund (EPF), Life Insurance, Systematic Investment Plan (SIP), Unit Linked Insurance Plan (ULIP), et al. The choice of these instruments rests on the individuals need for liquidity. The stock market benders could favour Equity Linked Saving Schemes, or ELSS, as the dividend income earned from units invested in ELSS are exempted from IT Act; and moreover, on redemption of the units the capital gain income is also tax exempted. And the otherwise bent could favour PPF, as the interest paid on it is on a compounded basis and tax free on withdrawal. Also, any amount lying in the PPF a/c cannot be attached by a court of law, thus providing maximum social security.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
1500-plus IIPM students placed across the country with 44 bagging international offers
IIPM set to beat economic slowdown
IIPM Admission Detail
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION
No comments:
Post a Comment