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Change in the tax rules - are you ready?

How confident are you about your knowledge of the new tax rules? Are you sure you are doing the right things so that you don't end up paying too much in tax? Will it hurt your finances if extra tax is being deducted from your salary every month because you have not shared the right documents with your employer?

With rapidly changing tax laws, the abolition of fringe benefit tax (FBT), new perquisite valuation rules and with new Direct Tax Code bill in the pipe line, we need to be on top of our game so we can plan our taxes the smart way.

Watch the video

To increase awareness and promote tax planning, we will run a series of weekly tax planning articles between the start of the New Year through the end of the tax year in March. We plan on covering the following key topics:

• Different types of Section 80C deductions you can avail
• Other tax deductions that save money - 80D, 80E, 80G, 80DD and EET regime
• Precautions and advice on submitting proofs to your employer
• Home loan related tax savings - changes proposed by New Tax Code
• Valentine's Day Special: Tax tips for Lovers.
• House Rent Allowance (HRA) and tax savings
• Changed jobs during the tax year - how it affects your tax status
• Interest income, stock market gains and your tax liability
• Tax check list for the month of March
• Tax liability on Gifts to your relatives; Clubbing of income
• Leave Travel Allowance (LTA) and tax savings
• Key take aways for tax the season

The Basics - Understand Your Income Tax Slab

Under the budget announced in early June 2009, the following are the new rates of personal income tax:

An Education Cess of 3% on the tax payable will be added to the total tax liability. Don't forget one new rule in your favour - previously there was a Surcharge of 10% where taxable income exceeded Rs. 10 lakhs. This has now been done away with.

Okay, I get it, but show me an example

The following is an illustration we have done for a male employee. To keep things easy, we have assumed a monthly income of Rs. 1 lakh for a gross annual income of Rs 12 lakhs. This taxpayer's 80C deduction is Rs. 1 lakh.

Comments

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Satish Babu said : 21/07/2010	I am getting a remuneration of Rs.40000/- per month, I would like to know how to reduce my burden of paying tax. Please let me know Satish
m k agarwal said : 20/01/2010	A really educative series. In view of the new Tax code in the offing you may run a series to guide the handling of the current savings and investments to avoid paying tax ,especially Long Term Capital gains Tax.
Kumar said : 07/01/2010	what is the new Home loan related tax savings - changes proposed by I Tax Code Regards N.Kumar
Arun Prabhakar said : 06/01/2010	Real educative. it is simple to understand.rdgs
s.shekhar said : 05/01/2010	thank you i have benefitted a lot with it.
moshah said : 05/01/2010	Kindly let me know Tax Relief / calculation on Retirement Amount e.g. various leave like CL, OL( earn leave), sick leave etc., Graduity, PF, etc .. etc. Kidly send details
ssridharan said : 05/01/2010	Just give some good investment avenues to save money at the earliest.
R Vaidyanathan said : 05/01/2010	I would like to know more about sec 80E , G
Chetram saini said : 05/01/2010	I want to withdrawal my PF fond which has been deducted from my salary of previous employer, now I asked to withdrawal this fond, then they are saying the 30% TDS will be deducted from your PF fond which you are going to withdrawal. Is it true that TDS is applicable on the withdrawal of PF fond of an employee?