New Income Tax Rates for the FY 2011-12

New tax slabs: for Male individual taxpayer

Slabs (Rs)	Rate
1,80,000	Nil
1,80,000-5,00,000	10
5,00,000-8,00,000	20
8,00,001	30

New tax slabs: for female individual taxpayer

Slabs (Rs)	Rate
upto 1,90,000	0
1,90,000-500000	10
500001-800000	20
800001 and above	30

LIC may not issue Infrastructure Bonds in this financial year

"We are working on a plan to come out with infrastructure bonds... It is unlikely to happen in the current fiscal," LIC Chairman T S Vijayan said today.


To know more about Infrastructure bonds:
http://makemyinvestments.blogspot.com/2011/01/infrastructure-bonds-new-avenue-to-save.html

IIFCL launches Tax Saving Infra Bonds

The State-owned  India Infrastructure Finance Company (IIFCL) has launched today the sale of  Infrastructure Bonds  having benefits under section 80CCF of the Income Tax Act.     The issue closes on March 4, 2011.
  
These bonds, which carry a tax deduction of up to Rs 20,000, will be issued at a face value of Rs 1,000 and carry interest of 8.15% for the 10-year series and 8.3% for the 15-year series.


The Bonds have been assigned a credit rating of “AAA/Stable” by CRISIL and “CARE AAA” by CARE indicating ‘Highest Safety’ with regard to timely payment of interest and repayment of principal amount of the bonds.

The Lead Managers to the Issue are ICICI Securities Limited, SBI Capital Markets Limited, A.K. Capital Services Limited, Bajaj Capital Limited, Enam Securities Private Limited, Karvy Investor Services Limited, RR Investors Capital Services (Private) Limited and YES Bank Limited

http://www.iifcl.org/

To know more about infrastructure bonds :
http://makemyinvestments.blogspot.com/2011/01/infrastructure-bonds-new-avenue-to-save.html

Infrastructure Bonds: A new avenue to save tax

If you have exhausted the Rs.100000 limit under section 80C, don't worry; there is another avenue to save tax.  A new section 80CCF was introduced in the 2010-11 budget. Under this section an investment upto a maximum of Rs. 20000 in infrastructure bonds would be deductible from your taxable  income. This deduction of  Rs.20000 will be over and above the Rs.100000 limit of deduction available under section 80c,80ccc and 80ccd. 

       

                Long term infrastructure bonds will be issued by

IFCI- Industrial Finance Corporation of india
LIC - Life Insurance Corporation of India
IDFC - Infrastructure Development Finance Company 
NBFCs classified as Infrastructure Finance Company by RBI .
                                     
These  bonds will mature after a period of  10 years. But the investors can exit from the bonds after the 5 year lock-in period.IFCI bond is now closed for subscription.  Only IDFC infrastructure bond and REC infrastructure bond are currently open for subscription.  The IDFC bond  issue closes on  February 04, 2011.  The REC infrastructure bond isssue will close on March 28, 2011.  

                                                   These bonds offer  a yield of 8% compounded annually.

For details about REC infrastructure bonds  click on http://www.recindia.nic.in/infra.html

                     For  IDFC infrastructure bonds click on http://www.idfc.com/infrastructure_bonds.htm

TAX PLANNING in INDIA

  "The only things certain in life are death and taxes.”  is  a famous quote by Benjamin Franklin.  There are innumerable quotes like this about tax. Here is another one from Albert Einstein, “The hardest thing in the world to understand is the income tax."
 "Death and taxes may be certain, but we don't have to die every year." -- Unknown.

Even though the income tax rates and allowable  deductions  are published in the Finance Act   well  before the beginning of the Financial Year, there will be a mad rush by the taxpayers/tax assesses  at the fag end of the financial year to buy  tax saving instruments.   These hasty decisions may force them to park their hard earned money  into schemes which are illiquid or with low return.  It can be avoided  by early  tax planning.  

     Let us take a look at the Income Tax slabs  and   Income Tax exemptions under various sections of Income Tax Act and Finance Act 2010.

Income Tax Rates for male resident individual   below the age of 65

           Assessment Year 2011-12 (FY 2010-11) 

                       Income                           Tax Rate

                Upto Rs. 1,60,000                  Nil.

Rs. 1,60,001 to Rs. 5,00,000                10 %

Rs. 5,00,001 to Rs. 8,00,000                20 %

              Above Rs. 8,00,000               30 % 

            for female resident individual   below the age of 65
                             Income                      Tax Rate

                 Upto Rs. 1,90,000                  Nil.

Rs. 1,90,001 to Rs. 5,00,000                10 %

Rs. 5,00,001 to Rs. 8,00,000                20 %

              Above Rs. 8,00,000                30%

                 For Senior Citizens
                       Income                      Tax Rate

               Upto 2,40,000                       Nil
              2,40,001 to 5,00,000             10%
              5,00,001 to 8,00,000             20%
              Above 8,00,000                    30%

Deductions are allowed from income  under the  following Sections.

Section 80C

  We can claim a maximum deduction of up to Rs. 1, 00,000 under section 80C.  The various investment  options available under this section are :

          Life Insurance Premium.
          Employees Provident Fund

          Public Provident Fund.          (Maximum.70000)

          National Savings Certificate.

          5 Year Fixed Deposits with banks and post offices. 

          Tuition Fees paid for children's education.
          ELSS- Equity Linked Savings Schemes (Tax Saving Mutual Funds)


SECTION 80CCF
                    Additional investment of 20000 in infrastructure  bonds over and above Rs 1 lakh in 80C

Section 80D
         Health Insurance premiums.   max. 15000.  for senior citizens - 20000.
            Another 15000 is allowed for buying health insurance for parents. (20000 if any of them is senior citizen).
Section 80DD
          for medical treatment of handicapped dependents.  50000 or actual expenses whichever is lesser.


Section 80DDB
                for treatment of specified diseases:    max. 40000, for senior citizens  - 65000
                           neurological diseases.
                           Parkinson's disease.
                           malignant cancers.
                           AIDS
                           Thalasaemia
                           chronic renal failure
                           haemophilia


                        
                        
Section 80E
             Interest paid on educational loan.  No maximum limits.

SECTION 80GG
                      HRA exemption

SECTION 24
                 Interest repayment on housing loan. max.150000.