Thursday, April 16, 2009


The last quarter of the financial year is devoted to an activity, which perhaps is an important as any annual ritual. Yes am talking about the tax planning - an activity on which most investors spend little time. But this year things are going to be different. A lot more time we will have to be dedicated to the tax-planning exercise. And rightly so, because there is a lot more to stake! To put it another way, there is lot more for you to gain this year! In the budget 2008, the finance minister has scrapped section 88 and introduced a new section 80c. In this section, you are free to invest $10000 in any proportion in the approved instruments. Only in public provident fund, the upper limit is capped at $7000. Also this section offers a deduction benefit as against a rebate. What this means is that the$10000 that you saved in the specified instruments is deducted from your income. Therefore the tax benefit that you are eligible for is equivalent to the tax rate that you pay. For example, if you are in 30 % tax bracket, then your savings will be $3000 ($10000* 30%). furthermore, section80c covers all tax payers.

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