INTRODUCTION

A financial plan is something that you create after considering your current income, savings,
expenses, future earnings, insurance if any, financial goals and a vision for your future life. You
then try to choose savings and investment options accordingly so that you can meet your long-
term and short-term financial goals at various stages in your lives. Financial planning is
important when it comes to saving taxes. It is imperative for an individual as it helps in
maintaining steady savings percentage even when the financial markets are constantly being
played between inflation and fluctuation. Tax planning is an essential part of financial planning.
Efficient tax planning enables us to reduce our tax liability to the minimum. This is done by
legitimately taking advantage of all tax exemptions, deductions rebates and allowances while
ensuring that your investments are in line with their long-term goals.
The researcher had conducted a survey in order to find out the financial planning as well as for
tax saving of the salaried individuals. The survey was done within the region of Pune,
Maharashtra for the period of 1 month (10th April, 2023 to 10th May, 2023). The purpose of the
study is also to find out the most suitable and popular tax saving instrument used to save tax and
also to examine the amount saved by using that instrument.
A financial plan documents an individual’s short term and long-term financial goals and includes
a strategy to achieve them. It should reflect an individual’s personal and family financial needs,
investment risk, tolerance and plan for saving and investing. Financial planning is a process that
a person goes through to find out where they are now (financially), determine where they want to
be in future and what they are going to do to get there. Financial Planning provides direction and
meaning to persons financial decisions. By viewing each financial decision as part of the whole,
one can consider its short- and long-term effects on their life goals. A tax saving is a reduction in
the amount of taxes paid by an individual, business, or other taxpayers. It will always benefit you
to have a plan that also considers and manages funds for day-to-day expenses. Tax plan will
allow you to set aside enough money in a saving account or investment that will take care of
your present and future monetary requirements. The present law of income tax is contained in the
income tax year 1961 as amended to update every year. This act contains nearly sections. The
provisions regarding computation of total income, the procedure for assessment, appeal,
penalties, prosecution, refund powers of income tax authorities, etc. are governed by this act.
Every year the parliament passes a finance act. This finance act introduces amendments to direct
tax laws. The rates of income tax for a current assessment year, rates for deduction of tax at
source and advance payment tax for the said financial year are fixed by this financial act.
Financial planning is a personal commitment by an individual to meet a goal in life. It is
necessary for the salaried class to know which components of investments are available and
taxes that are to be targeted in order to attain personal economic growth in the financial planning
process. Currently, in Ghana, people mainly see financial planning as only a means to invest
money in tax-saving instruments. The tax law requires that basic pay and bonuses are fully
taxable whilst children’s education allowance and transport allowance are partly taxable.
Fortunately, there are myriads of tax exemptions and incentives available under various sections
and subsections of the Income Tax Act, 2015 (Act 896)
Unfortunately, people do not know about the tax relief available. This has led to a condition
where people invest money without actually understanding the reason behind the investments
undertaken. It is the process of planning how to avoid paying too much tax, for example by
investing in tax-exempt bonds and other investment products (Priya P. Verlekar, 2021). The

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salaried class should be aware of the income tax laws as it relates to income and the reliefs and
deduction that are available. It is anticipated that on becoming familiar with the specifics of the
law, employees would be able to plan their affairs in a manner to maximize their take-home pay.
This study therefore compared available investment options and disaggregated various
components of direct and indirect taxes salaried employees can take advantage of to minimize
their tax burdens and realize their financial goals. Financial planning is the practice of putting
together a plan for your future, specifically around how you will manage your finances and
prepare for all of the potential costs and issues that may arise. The process involves evaluating
your current financial situation, identifying your goals and then developing and implementing
relevant recommendations. Financial planning is holistic and broad, and it can encompass a
variety of services, which we detail below. Rather than focusing on a single aspect of your
finances, it views clients as real people with a variety of goals and responsibilities. It then
addresses a number of financial realities to figure out how to best enable people to make the
most of their lives. Financial planning is not the same as asset management. Asset management
generally refers to managing investments for a client. This includes choosing the stocks,
bonds, mutual funds and other investments in which a client should invest their money.
Financial Planning includes all the activities that apply general management standards to the
financial resources of a firm such as planning, directing, organizing, procurement of funds,
investment, and return of the funds. In this article, students will learn about the meaning,
objectives, and features of financial planning.
Financial Planning is one of the major planning that is required to be conducted by the
management. Financial Planning includes all the activities which are related to the procurement
of funds, investing those funds, and the return expected from the investment done. Financial
Planning also ranges from tax planning which is an important activity. This planning is very
important for a business to function, in this regard we have initiated the discussion on this topic
‘Financial Planning’ which is to be studied in greater detail. The scope of this topic is vast hence
for a conceptualized study this is to be referred to.
Financial plan can also refer to an annual projection of income and expenses for a company,
division, or department. A financial plan can also be an estimation of cash needs and a decision
on how to raise the cash, such as through borrowing or issuing additional shares in a company.
A financial plan may contain prospective financial statements, which are similar, but different,
than a budget. Financial plans are the entire financial accounting overview of a company.
Complete financial plans contain all periods and transaction types. It's a combination of the
financial statements which independently only reflect a past, present, or future state of the
company. Financial plans are the collection of the historical, present, and future financial
statements; for example, a (historical & present) costly expense from an operational issue is
normally presented prior to the issuance of the prospective financial statements which propose a
solution to said operational issue. While the common usage of the term "financial plan" often
refers to a formal and defined series of steps or goals, there is some technical confusion about
what the term "financial plan" actually means in the industry. For example, one of the industry's
leading professional organizations, the Certified Financial Planner Board of Standards, lacks any
definition for the term "financial plan" in its Standards of Professional Conduct publication. This
publication outlines the professional financial planner's job, and explains the process of financial
planning, but the term "financial plan" never appears in the publication's text. The accounting
and finance industries have distinct responsibilities and roles. When the products of their work
are combined, it produces a complete picture, a financial plan. A financial analyst studies the

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data and facts (regulations/standards), which are processed, recorded, and presented by
accountants. Normally, finance personnel study the data results - meaning what has happened or
what might happen - and propose a solution to inefficiency. Investors and financial institutions
must see both the issue and the solution to make an informed decision. Accountants and financial
planners are both involved with presenting issues and resolving inefficiencies, so together, the
results and explanation are provided in a financial plan.

DEFINITION AND MEANING:

Financial planning is defined as a document that has records of a business owner or firm's
financial situation along with planning on the spending of money to achieve a certain goal by
working by a well-devised plan. Financial planning may be made independently or by an
experienced planner. It is basically a financial budget plan, which helps organize the business
and includes a set of goals that are supposed to be followed by the firm or business owner to save
and spend accordingly. It helps distribute various monetary expenses such as rent, while at the
same time saving some amount of money as short-term or long-term savings. 
Financial Planning is the process of estimating the capital requirement and also determining the
competitive elements required for financial planning. This is a plan which has been defined as a
document that contains a person's current money situation with the long-term monetary goals,
the strategies to achieve those goals on the basis of the current fund. A financial plan may be
devised and drafted independently or with the assistance of a financial planner. The first step in
the creation of a financial plan is to involve collecting the numbers from the web-based accounts
into a document or a spreadsheet. 
This type of planning is also known as an investment plan as it manages various types of liquid
and other assets that involve risk and uncertainty. Financial planning done by individuals is not
as risky as they do not involve huge investment or undertaking, such as funds kept separate for
college or university, estates, healthcare, or retirement.
Financial planning is a step-by-step approach in determining how you would meet your life goals
with your money. A good financial plan will help you to remain in control of your expenses and
investments at all times. It examines your goals, helps you prioritize, save and invest money in
order to achieve targets in the defined time.
Financial planning is defined as a document that has records of a business owner or firm's
financial situation along with planning on the spending of money to achieve a certain goal by
working by a well-devised plan. Financial planning may be made independently or by an
experienced planner.
It is basically a financial budget plan, which helps organize the business and includes a set of
goals that are supposed to be followed by the firm or business owner to save and spend
accordingly. It helps distribute various monetary expenses such as rent, while at the same time
saving some amount of money as short-term or long-term savings. 
Financial Planning is the process of estimating the capital requirement and also determining the
competitive elements required for financial planning. This is a plan which has been defined as a
document that contains a person's current money situation with the long-term monetary goals,
the strategies to achieve those goals on the basis of the current fund. A financial plan may be
devised and drafted independently or with the assistance of a financial planner. The first step in

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the creation of a financial plan is to involve collecting the numbers from the web-based accounts
into a document or a spreadsheet. 
This type of planning is also known as an investment plan as it manages various types of liquid
and other assets that involve risk and uncertainty. Financial planning done by individuals is not
as risky as they do not involve huge investment or undertaking, such as funds kept separate for
college or university, estates, healthcare, or retirement.

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 CONCEPT & SIGNIFICANCE OF THE STUDY

Financial Planning is an integral part of any individual life, especially in this modern world
where value of everything is expressed in terms of money. The active working span of human
life is short as compared to the life span. This means people will be spending approximately the
same number of years in after retirement what they have spent in their active working life. Thus,
it becomes important to save and invest while working so that person will continue to earn a
satisfying income and enjoy a comfortable life style.
In order to ensure that a country’s government functions smoothly and provides the resources
that its citizens need, income tax becomes an essential duty. Therefore, income taxes should not
just be considered a burden to bear but rather a responsibility to fulfill.
Every tax season, taxpayers must make sure that they file their returns and pay their fair share of
taxes. But keep in mind that the Indian government has also laid out various provisions that
allow taxpayers to make their choice of investments and shave off considerably from their
taxable incomes.

As a taxpayer, you should be just as concerned with overpaying your share of income tax as
with underpaying it. That is why your process of tax return filing should always take the
component and benefits of tax saving into account. To understand this topic better, let us explore
the importance and benefits of tax saving further.
Financial planning is a smart way to keep your financial house in order. It's a money tool for
everyone, regardless of age, earnings, net worth, or financial dreams. It offers individuals a way
to document their personal goals and corresponding financial goals. It can keep people on track
to meet ongoing financial needs and major financial goals.

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 HISTORY OF TAXATION IN THE WORLD

Taxation is going back as a long way as recorded records. But, it turned into not till the start of
the high-quality civilizations that we see tax accrued for a kingdom by using a prepared group
devoted to that sole assignment. There were taxes to help maintain a source like boats, a town
secure passage, ports palaces, production tasks and possibly the maximum famous reason, to
fund conflicts and at some point of this tax has grown and evolved as civilizations themselves
advanced.
Although views on what is appropriate in tax policy influence the choice and structure of tax
codes, patterns of taxation throughout history can be explained largely by administrative
considerations. For example, because imported products are easier to tax than domestic
output, import duties were among the earliest taxes. Similarly, the simple turnover tax (levied on
gross sales) long held sway before the invention of the economically superior but
administratively more demanding VAT (which allows credit for tax paid on purchases). It is
easier to identify, and thus tax, real property than other assets; and a head (poll) tax is even easier
to implement. It is not surprising; therefore, that the first direct levies were head and land taxes.
Although taxation has a long history, it played a relatively minor role in the ancient world. Taxes
on consumption were levied in Greece and Rome. Tariffs—taxes on imported goods—were
often of considerably more importance than internal excises so far as the production of revenue
went. As a means of raising additional funds in time of war, taxes on property would be
temporarily imposed. For a long time these taxes were confined to real property, but later they
were extended to other assets. Real estate transactions also were taxed. In Greece free citizens
had different tax obligations from slaves, and the tax laws of the Roman Empire distinguished
between nationals and residents of conquered territories.
Early Roman forms of taxation included consumption taxes, customs duties, and certain “direct”
taxes. The principal of these was the tribute, paid by citizens and usually levied as a head tax;
later, when additional revenue was required, the base of this tax was extended to real estate
holdings. In the time of Julius Caesar, a 1 percent general sales tax was. The provinces relied for
their revenues on head taxes and land taxes; the latter consisted initially of fixed liabilities
regardless of the return from the land, as in Persia and Egypt, but later the land tax was modified
to achieve a certain correspondence with the fertility of the land, or, alternatively, a 10th of the
produce was collected as a tax in kind (the tithe). It is noteworthy that at a relatively early time
Rome had an inheritance tax of 5 percent, later 10 percent; however, close relatives of
the deceased were exempted. For a long time tax collection was left to middlemen, or “tax
farmers,” who contracted to collect the taxes for a share of the proceeds; under Caesar collection
was delegated to civil servants.
In the middle Ages many of these ancient taxes, especially the direct levies, gave way to a
variety of obligatory services and a system of “aids” (most of which amounted to gifts). The
main indirect taxes were transit duties (a charge on goods that pass through a particular country)
and market fees. In the cities the concept developed of a tax obligation encompassing all
residents: the burden of taxes on certain foods and beverages was intended to be borne partly by
consumers and partly by producers and tradesmen. During the later Middle Ages
some German and Italian cities introduced several direct taxes: head taxes for the poor and net-
worth taxes or, occasionally, crude income taxes for the rich. (The income tax was administered
through self-assessment and an oath taken before a civic commission.) Taxes on land and on
houses gradually increased.

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Taxes have been a major subject of political controversy throughout history, even before
they constituted a sizable share of the national income. A famous instance is the rebellion of
the American colonies against Great Britain, when the colonists refused to pay taxes imposed by
a Parliament in which they had no voice—hence the slogan, “No taxation without
representation.” Another instance is the French Revolution of 1789, in which the inequitable
distribution of the tax burden was a major factor. Wars have influenced taxes much more than
taxes have influenced revolutions. Many taxes, notably the income tax (first introduced in
Great Britain in 1799) and the turnover or purchase tax (Germany, 1918; Great Britain, 1940),
began as “temporary” war measures. Similarly, the withholding method of income tax collection
began as a wartime innovation in France, the United States, and Britain. World War II converted
the income taxes of many countries from upper-class taxes to mass taxes. It is hardly necessary
to mention the role that tax policies play in peacetime politics, where the influence of powerful,
well-organized pressure groups is great. Arguments for tax reform, particularly in the area of
income taxes, are perennially at issue in the domestic politics of many countries.

Egypt (Pre-3000 BC to 300 BC)

In historic Egypt, the ruler 'pharaoh' who turned into considered the maximum authority of
the land, a god, informed his chief minister, the vizier, to arrange lots of scribes to acquire taxes
from all residents of the country. In historical Egypt heyday, the ones owing taxes were
compelled to hand over portions in their land, cattle and many others, to the scribes and courts.
The Ancient Egypt taxed grain, cooking oil, livestock, beer, different farm produce, personal
livelihood, Nile utilization for transportation of merchandise, and overseas trade. Neighborhood
officers have been also taxed. The rich nobles or even the tax collectors had been no longer
exempted from the gathering of taxes.

China (2100 BC to 1911 AD)

Historic Chinese taxation records are denominated by way of in particular the agrarian
financial system with listening taxes levied with the aid of Emperors that roiled during the 2000
12 months Imperial duration, from the qin (chin) dynasty in 221 BC, to the Xinhai republication
revaluation in the 1911 advert. China did not introduce income taxes until 1950.
And even then it becomes handiest levied on preceding capitalists until 1959. Due to the fact the
state controlled all production. It becomes pointless to tax earnings. Income tax changed into
sooner or later brought in 1980 after financial reforms in the Seventies. Nowadays china levies
product Tax that is levied on maximum agricultural and business merchandise; fee brought tax
(VAT) that is levied on selected commercial merchandise enterprise Tax; that's levied on
offerings and trades, and sale tax, that's levied on salt manufacturers and distributors. Other than
the VAT, those taxes were all charged on goods and services at every stage of manufacturing and
marketing. Sooner or later the Chinas tax systemic like its political machine, is continuously
undergoing reform, and destiny can only promise further tendencies in this location for China.

India (Pre 300 BC)

In India, Direct taxes have been levied in India for hundreds of years. Two terrific literary
works, the (Manusmriti and Arthasastra) consisted of unique advice given to kings by way of
sensible sage, on the problem of taxation. The Manusmriti laid down that traders and artisans
need to pay 1/5th of their earnings in silvered & gold, white the agriculturists were to pay
1/sixth, 1/8th, and 1/tenth in their produce depending upon their circumstances.

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 PROBLEM STATEMENT

A complete understanding of the opportunities available and managing one’s finance

considering tax liability and the post-tax cost is essential as far as personal finance is concerned.
The current study is an effort to evaluate tax planning measures adopted by the salaried income
tax assesses of the state in the light of tax administration measures being implemented by the
government through the Ghana Revenue Authority (GRA)
Collection of income from direct taxes in India is considerably less when compared with
collection of taxes in other country and indirect taxes within the country itself. In India number
of people paying income tax is very less. What is the reason for this? Are there any loop holes in
our laws and rules pertaining to income tax, tax payers use various methods to avoid and evade
their income taxes? Some of the provisions are being misused by tax payers
Tax evasion, particularly in developing countries is a debatable issue. Evasion is a disease and
needs to be minimized so that the black economy or hidden economy can be mitigated. This
paper attempts to reveal the determinants of tax evasion from the institutional perspectives. The
objective of this study is to identify the determinants of tax evasion a decade after the
introduction of a Self-Assessment System (SAS). Three institutional perspectives of the
determinants of tax evasion were examined, namely the probability of being detected, the role of
the tax authority and the complexity of the tax system. The results suggested that the complexity
of the system, and the probability of being detected had a significant impact on tax evasion. The
results of this study could possibly contribute to the body of knowledge in lieu of combating tax
evasion, as well as being an input to tax administrators and policymakers into which ways the
determinants can affect compliance. The findings also provide an indicator for tax administrators
of the relative importance of the tax system in assisting with the design of tax education
programs, simplifying tax systems and developing a wider understanding of taxpayers’ behavior

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 OBJECTIVE OF THE STUDY

Tax planning is a focal part of financial planning. It ensures savings on taxes while
simultaneously conforming to the legal obligations and requirements of the Income Tax Act,
1961. The primary concept of tax planning is to save money and mitigate one’s tax burden.
However, this is not its sole objective.

There are two types of objectives. They are:

PRIMARY OBJECTIVE

1. To study on financial planning for salaried employee and strategies for tax savings.
2. To understand the saving -investment behavior of the salaried employees.
3. To spread awareness about financial planning among the working-class people
4. To understand the importance of tax planning

SECONDARY OBJECTIVES

1. To study the pattern of tax planning by salaried employee

2. To study on the level of awareness of the salaried employee on various taxes planning
measures available under the Income Tax Act.
3. To study the tax saving schemes of income tax.
4. To gain knowledge about the various investment avenues keeping in mind the significance
of tax saving.

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 SCOPE OF THE STUDY
The scope of tax planning for salaried employee evaluates the extent of awareness of employees
on tax laws and tax planning measures. The savings habits, investment pattern, repayment of
liabilities, tax planning measures adopted for the period under study. The scope of study is
getting familiar with various investments avenues available in market. To study the life stages of
an individual and to identify their risk tolerance, income flow, life goals and current investment.
Study should cover all areas of the individual’s financial needs and should result in the
achievement of each of the individual’s goals.

The scope of planning will include the following:

 Risk Management and Insurance Planning:-

Risk management and insurance planning are related concepts that involve
identifying, measuring, and dealing with risks that might affect one's financial goals.
There are different methods and products for risk transfer, such as insurance contracts
and annuities. Risk management and insurance planning can be applied to individuals,
businesses, or organizations, and may require independent research or professional
guidance. There are various courses and exams that cover the topics and skills of risk
management and insurance planning
Risk management is the process of identifying, assessing and controlling financial,
legal, strategic and security risks to an organization’s capital and earnings. These threats,
or risks, could stem from a wide variety of sources, including financial uncertainty, legal
liabilities, strategic management errors, accidents and natural disasters.
If an unforeseen event catches your organization unaware, the impact could be
minor, such as a small impact on your overhead costs. In a worst-case scenario, though, it
could be catastrophic and have serious ramifications, such as a significant financial
burden or even the closure of your business.
To reduce risk, an organization needs to apply resources to minimize, monitor and
control the impact of negative events while maximizing positive events. A consistent,
systemic and integrated approach to risk management can help determine how best to
identify, manage and mitigate significant risks
Insurance planning is the process of carefully selecting insurance policies to
financially protect yourself, your family members, assets, etc., against unexpected losses.
It includes finding one or more insurance providers who can financially support you in
case of a crisis. In a nutshell, insurance planning helps to ease the financial burdens
related to unfortunate life events.
Without thorough insurance planning, you can be financially exposed to uncertain life
events. Proper planning lets you identify the key risks that may impact your life and
choose the insurance policies that cover those risks. This sort of preparation and
management of life risks is essential to monetarily safeguard yourself and your family in
the long run.

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 Investment Planning:-
Investment planning is the process of identifying financial goals and
converting them through building a plan. Investment planning is the main component of
financial planning. The investment planning begins with identification of goals and
objectives. Then we need to match those goals with our available financial resources.
Nowadays there are many investment vehicles to invest in, most common being cash,
equities, bonds and property. So according to the funds available we can invest in these
vehicles to obtain our goals and objectives.
Investment planning is the process of aligning your financial goals and
objectives with your investment resources. It is the main component of financial
planning. It involves identifying, prioritizing, and converting your goals through building
a plan. It helps in deriving the maximum benefit from the investments and reducing the
risks. It considers the service delivery, asset performance, and regulatory requirements of
the investments
Investment planning is the process of matching your financial goals and objectives with
your financial resources. Investment planning is a core component of financial planning.
It is impossible to have one without the other.
Investment planning is a process that begins when you are clear on your financial goals
and objectives. Our Financial Planning process is designed to help you get clear on how
to match your financial resources to your financial objectives.
There are thousands of different investments. The most commonly used are cash,
equities, bonds and property. Each of these have different characteristics and a good
investment plan will usually contain all of these.

 Retirement Planning:-
Retirement planning involves determining retirement income goals and what's needed to
achieve those goals. Retirement planning includes identifying income sources, sizing up
expenses, implementing a savings program, and managing assets and risk. Future cash
flows are estimated to gauge whether the retirement income goal is possible.
You can start at any time, but it works best if you factor it into your financial planning as
early as possible. That’s the best way to ensure a safe, secure—and fun—retirement. The
fun part is why it makes sense to pay attention to the serious and perhaps boring part:
planning how you’ll get there.
It is never too early or too late to start retirement planning.
Retirement planning refers to financial strategies of saving, investments, and ultimately
distributing money meant to sustain oneself during retirement.
Many popular investment vehicles, such as individual retirement accounts and 401(k) s,
allow retirement savers to grow their money with certain tax advantages.
Retirement planning takes into account not only assets and income but also future
expenses, liabilities, and life expectancy.

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 Tax Planning
Tax planning is the analysis of a client's overall financial situation and
conditions in order to craft a financial plan that can be executed in the most tax-efficient
manner. Tax planning is an essential component of a well-crafted financial plan. The
purpose of tax planning is to ensure that, while a client is planning for retirement, college
funds, investments, etc, they are also losing as little as possible to taxes. Tax planning
brings together all the different components of a comprehensive financial plan and
figures out how they will work together in the most tax efficient manner. Tax planning
itself does not involve investments or accounts, but rather it refers to the direction of said
investment and accounts in order to maximize tax savings.
Tax planning is the analysis of a financial situation or plan to ensure that all
elements work together to allow you to pay the lowest taxes possible. A plan that
minimizes how much you pay in taxes is referred to as tax efficient. Tax planning should
be an essential part of an individual investor's financial plan. Reduction of tax liability
and maximizing the ability to contribute to retirement plans are crucial for success.

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 REVIEW OF LITERATURE
A large number of salaried tax payers in India start planning their tax saving investments very
late in the year when the time limit for submission of investment evidence is coming to an end or
at the end of the financial year. While it may help you in saving taxes, it might not be the best
decision that you have made.

Given below are the 3 reasons why planning in advance will help you:

Choose the best option:

When you plan ahead, you get time to choose an investment scheme that will suit
your needs and financial condition – how much risk you can take, your cash requirements, for
how long you can invest etc. It will help you arrive at the best decision

Helps in avoiding last minute aggravations and blunders:

When you are rushing making investments, it may lead to unforeseen investment
errors. You might not have enough time to perform due diligence before making an investment
decision.

Plan the schedule for investment payments through the year:

When you begin the investment procedure early in the year, it gives you flexibility
for planning payments during the course of the year.

 A study of Tax Saving Instruments, International Journal of Management and Social

Sciences Research (IJMSSR), The paper studied the options for investments for tax savings, the
object of the study was to find the most popular form of investment for tax savings. It was
observed that investment by way of premium paid for life insurance policy, followed by
provident fund contribution and fixed deposits savings were the most popular forms of
investment. The other forms of investment followed. The paper also revealed that the savings for
tax purpose was the maximum in age group 50-60 and least in age group 20-30. It also states that
as income increase the investment for tax saving increases. If the income is between Rs.5 lakhs
to Rs.10 lakhs investment is Rs.70,000 to Rs.90,000.

According to Vasagadekar (2014), due to poor level of awareness among working women they
make poor portfolio investment decisions. The respondents in the study were financial illiterates.

Umamaheswari and Ashok kumar (2014), tried to explore the investment attitude of the
salaried class towards investments and the results presented limited awareness about the
investment avenues, hence suggests creation of awareness among the respondents.
The study conducted by Bhardwaj Sharma (2013), aimed at analyzing the investment behavior of
the employees of Bahra University, Solan District. It was found that the teaching fraternity is
mostly unaware about the investment opportunities in stock market and other financial securities
and they preferred to invest in bank deposits.

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Achar (2012), analyzed saving and investment behavior of teachers. The factors that determined
the investment behavior of teaching community were age, gender, marital status, lifestyle,
monthly family income, and family life cycle stage and upbringing status of individuals.

Geetha and Ramesh (2011), state that there are a lot of investment choices and one must select
the most appropriate one. The person dealing with the planning must know all the various
choices and how these can be chosen for attaining the overall adjectives.
Bhushan and Medury (2013), states that gender differences in investment behavior have been
reported by various studies. Women are more conservative while investing and are unwilling to
take risk.

GS Sumesh, Awareness and perceptions regarding tax planning options among salaried people
(2020). To avail of these benefits, one should have good knowledge and awareness in both the
Income Tax act and the annual finance budget of union ministry. Under this circumstance, an
attempt is made to measure the level of awareness and perception towards tax planning schemes
among salaried employees. For this study, responses are collected from salaried employees in
Kottayam taluk and their responses are analyzed and presented by using different statistical tools
to make a conclusion.

Kumar Manish, Study of tax saving instruments awareness and perception of individual
assesses in Delhi, Faridabad, 2019. The purpose of the study is to learn about the factors
effecting selection of tax saving instruments by individual assesses in Delhi. To assess the level
of awareness an individual assesses has towards tax saving instruments available as per The
Income tax laws. The study also tries to identify the most appropriate and prevalent tax saving
instruments used by individual assesses to reduce their tax liability. The research will try to
assess relation between the demographic profile of the individual and tax saving instruments
adopted by them newline.

14
 SOURCES OF DATA

Both the primary sources and secondary sources of data have been used to conduct the study.

Primary source:
The primary data for this study has been collected by approaching the salaried
employees via internet (digital survey method) and also collected for the study was through
questionnaire.

Secondary source:
The secondary data are collected from articles published on various websites (desk
research), Books, Old projects, etc.

RESEARCH DESIGN

Type of research design: Descriptive research

Research equipment: Questionnaire

Sampling technique: Random sampling method, Non-probability technique convenience

sampling method.

Sample size: 190 respondents

Sample design: Data has been presented with the help of bar graphs, pie charts, etc.

Area of research: Pune, Maharashtra.

LIMITATIONS OF THE STUDY

• The analysis of the study was carried out centered on the information collected from salaried
employees.

• Due to time and resource constraints, only 190 respondents were considered.

• The result fully depends on the information given by the respondents which may be biased.

15
 DATA ANALYSIS AND INTERPRETATIONS

1. Age of the respondents:

Age No. of respondents Percentage

20-30 126
60%

30-40 41
22%

40-50 15
8%

50-60 8
4%

Grand Total
190 100%

No. of respondents
140

120

100

80 No. of respondents

60

40

20

0
20-30 30-40 40-50 50-60

The majority of respondents were from the age groups of 20-30, i.e. 66%, and 30-40, i.e. 22%.
These are considered to be the most active age groups.
The age group of 20-30 is the most dynamic of all age groups. In this age group, an individual
has just begun to start/build a career. This age group is prone to spending lavishly and can be
targeted for investing and saving. On the other hand, the age groups of 30-40 are stable and
careful as they have bigger responsibilities like family, home loans, car loans, etc. This is the
stage when they begin to think/plan for a secure future. Hence, they take tentative steps towards
investments.

16
2. Gender distribution of the respondents:

Gender No. of respondents Percentage %

Female
74 39%

Male
116 61%

Total
190 100%

No. of Respondents

Female
Male

From the above figure, we can interpret that, from all the respondents, 61% are males whereas
39% are females. Hence, we can say that, the females have started to work shoulder to shoulder
with the males in our developing society.

17
3. Annual Income of the respondents:

Annual Income No. of respondents Percentage

Up to Rs. 2 lakh 38
20%
Rs. 2-3 lakh 24
13%
Rs. 3-4 lakh 35
18%
Rs. 4-5 lakh 28
15%
Above Rs. 5 lakh
65 34%
Grand Total
190 100%

No. of respondents
No. of respondents
70

60

50

40

30

20

10

0
Up to Rs. 2 Rs. 2-3 lakh Rs. 3-4 lakh Rs. 4-5 lakh Above Rs. 5
lakh lakh

The above figure shows that a major portion of respondents are in income slab of above Rs.5
lakh p.a., i.e. 34%, this indicates that the person may be in the mature stage of career. On the
contrary, the second major group of respondents belongs to the income slab of up to Rs.2
lakh, i.e. 20%, which indicates that he/she might be in the beginning phase of their career.
With the rest of the income slabs, the respondents show a stable phase of their career.

18
4. Occupational status of the respondents:

Occupational status No. of respondents Percentage%

Teachers/Lecturers
20 11%

Doctors /Engineers
76 40%

Officers
27 14%

Clerks /others
67 35%

Total
190 100%

No. of respondents

Teachers/Lecturers
Doctors /Engineers
Officers
Clerks /others

Most of the respondents were doctors/engineers i.e. 40%, whereas 35% of respondents were
from the category of clerks/others. Respondents belonging to the category of teachers/lecturers
and officers were 11% and 14% respectively.

19
5. Annual savings of the respondents:

Annual Savings No. of respondents Percentage

Less than Rs. 25,000

78
41%

Rs. 25,000-50,000 34
18%
Rs.50,000-75,000
19
10%

Rs.75,000-1,00,000 17
9%

More than Rs.1,00,000

42 22%

Grand Total
190 100%

Annual Savings

Less than Rs. 25,000

Rs. 25,000-50,000
Rs.50,000-75,000
Rs.75,000-1,00,000
More than Rs.1,00,000

From the figure shown above, we can indicate that majority of the salaried employees have an
annual savings of less than Rs. 25,000, i.e. 41% of the total respondents; and on the contrary
22% of the total respondents have an annual savings of more than Rs. 1,00,000. It can be said
that the reason behind low/decreasing annual savings can be increasing responsibilies of a
middle class worker, less income, more spending, debts/loans, lack of awareness regarding
savings and investment, and not to forget inflation. The respondent shave also shown a slow and
steady/increasing saving pattern after they have completed their expenses, as we can see in the
figure

20
6. The motivators of savings of the respondents:

Motivators of savings No. of respondents Percentage

To meet specific purpose

85
45%

To earn income 36
18%
To meet contingent
27
expenses 10%

To get tax benefits 3

9%
To be secured at old age
39 22%
Grand Total
190 100%

Motivators of Savings

meet specific purpose

earn income
meet contingent
get tax benefits
be secured at old age

The motivation behind saving cannot be known except for the individual himself. As shown in
the figure above, it can be said that the respondents’ main motivator is to meet specific purpose,
as 45% of respondents have selected this option. These specific purposes for saving can be
personal expenses like buying luxurious goods, family’s expenses, saving for children’s future,
health expenses, vacations, wedding, etc. Whereas, there are only 2% of respondents whose
motivator for saving is to get tax benefits, which shows that most of them are not aware about
the benefits of tax saving investments.
7. Factors considered by the respondents for increasing the size of savings

21
 Factors No. of respondents Percentage

Increase in salary
73
39%

Additional
67
income/increments 35%

Future needs 44
23%
Tax benefits 4
2%
Statutory requirements
2 1%
Grand Total
190 100%

Factors

Increase in salary
Additional income/increments
Future needs
Tax benefits
Statutory requirements

The figure shown above indicates that, in order to increase the size of savings, an increase in
salary is expected, as 39% of the salaried respondents have chosen this option. Additional
income/increments also needs to be considered in order to increase savings. Future needs of an
individual can be considered as a factor which pushes an individual towards saving more of their
income as it may benefit at the time of need. Tax benefits and statutory requirements are the least
considered factors while increasing the savings.
8. Investment preferences of the respondents:

Investment Preference No. of responses for each respondent Percentage

22
 Bank Deposits
71
37.4%

Mutual Funds 72 37.9%

Fixed deposits 66 34.7%

Insurance Policies 38 20%

Govt. Securities i.e.,PF, GPF/PPF 43.2%

82
Post Office deposits 8.9%
17
Equity Market 15.8%
30
Gold 50.5%
96
Total
100%

120
100
80
60
40
20
No. of responses for each re-
0 spondent
sit
s
nd
s
sit
s
cie
s F
sit
s et ld
o u o li / PP o ark Go
p lF p o F p
k De ua d
de ceP , GP e de
ity
M
n ut e n F c u
a x a ,P Eq
B M Fi su
r .e. Offi
In e si o st
iti P
cur
Se
v t.
Go

It is observed that half of the respondents (i.e. 50.5%) mostly prefer to invest in gold. Due to
some influencing factors such as high liquidity and inflation-beating capacity, gold is one of the
most preferred investments in India. Gold investment can be done in many forms like buying
jewelry, coins, bars, gold exchange-traded funds, Gold funds, sovereign gold bond scheme, etc.
9. Respondents’ investment trend in the recent years:

Investment trend No. of Percentage%

respondents

23
 Increasing 79
42%

Decreasing 31
16%

Remaining Constant
80 42%

Total
190 100%

No of Respondents
90
80
70
60
50 No of Respondents

40
30
20
10
0
Increasing Decreasing Remaining Constant

The figure shows that the investment trend of the respondents is either at an increasing stage or is
remaining constant through recent years of investment. We can interpret that, an increase in
investment can be influenced by the increase in income, savings, future needs, decrease in
interest rates, attractive returns on investment, proper knowledge/awareness about the benefits of
investment, etc. On the other hand, decrease in investments can be caused due to lack of
knowledge, disorganized investment, psychological behavior of the investor, decrease in
income/savings, more spending/expenses, inflating rates, etc.

10. Time horizon of investments

Horizon of investments No. of respondents Percentage

24
 Long-term (More than 10 yrs.) 44 23%

Medium-term (More than 5 yrs.) 48 25%

Short-term (More than 1 yr) 21 11%

Very short-term (Less than 1 yr) 7 4%

As per convenience 70 37%

Grand Total 190 100%

Horizon of investments
80
70
60
50
40
30 No of respondents
20
10
0
rm rm m m ce
-te -te er er ien
ng m tr -t r t-t en
Lo iu Sh
o ho nv
ed y s co
M
Ve
r
per
A s

37% of the respondents prefer to invest as per their convenience. Investment objective to a
greater extend
Determine the investment tenure and the avenue. Different investment objectives have different
investment avenues to meet them. By determining the objective we can easily determine the
investment vehicle for individuals.

11. Whose advice do the respondents take while investing:

Advisors No. of respondents Percentage

Spouse/family members 81 43%

25
 Friends/ colleagues 24
13%
Company Agents 0
0%
Financial advisors 20
10%
Self-decision
65 34%

Grand Total
190 100%

No of respondents

Spouse/family members
Friends/ colleagues
Company Agents
Financial advisors
Self-decision

Most of the investment decisions are influenced by taking the advise of spouse/family members
(43%) or can be self-made decisions (34%) as well. Investing money requires a meticulous
approach and acting on a piece of advice calls for adopting an extra layer of caution. In today’s
world, the investor, have a plethora of investment options at their disposal. However, what’s
essential is to be aware of the pitfalls and seek help from seasoned professionals to maximize
gains.

12. Where do the respondents get information for your investment?

Information Sources No. of responses for each option Percentage

T.V & Radio 44

23.2%

26
 Organization Reports 46
24.2%
Family Members & Colleagues 127
66.8%
Journals & Magazines 54
28.4%
Agents & Advisors
45 23.37%

Total
100%

Information Sources

T.V & Radio

Organization Reports
Family Members & Colleagues
Journals & Magazines
Agents & Advisors

Most of the salaried employees, (i.e. 66.8%) get information from their family members and
colleagues about the benefits investment. We get information about investment at the grass root
level, i.e. the People. Its only after the people invest their money, getting higher returns, that we
know for sure that, that particular investment will yield rich returns. Although financial
companies try their best in advertising their investment products through T.V., radio, journals,
magazines, etc

13. Initiatives recommended by the respondents to create awareness among salaried

employees about investment:

27
 Recommendations to create awareness about No. of responses for each Percentage
investment option
Training programmers 88 46.3%

Workshops & seminars 109 57.4%

Social welfare programmers 51 26.8%

Advertisements 57 30%

Investors’ meets 80 26.3%

Total 100%

Recommendations to create awareness

about investment

Training programmers
Workshops & seminars
Social welfare programmers
Advertisements
Investors’ meets

From the figure shown above, we can interpret that workshops and seminars as well as training
programmers are amongst the good initiatives for creating awareness about investments among
the salaried employees. As these options help to provide proper information and practical
knowledge to the audience. The traditional method i.e. advertisements are also commonly used
to create awareness but this option is not as much in the trend as the above two options.

14. Respondents’ awareness of tax saving instruments:

Awareness of Fully Just Not Incorrect No Total

tax saving Aware Aware Aware responses Response Respondents

28
 instruments
Life
114 60 10 4 2 190
Insurance
Health
114 59 15 1 1 190
Insurance
ULIPs 34 37 113 2 4 190

NPS 62 74 50 1 3 190

ELSS 38 58 90 0 4 190

PPF 111 48 25 5 1 190

PPF

ELSS

NPS No Response
Incorrect Responses
Not Aware
ULIPs Just aware
Fully Aware
Health
Insurance

Life
Insurance

0 20 40 60 80 100 120

Insurance policies like mostly life insurance and health insurance as well as PPF seems to be the
most popular, as most of the respondents are fully aware about these investment instruments.
Whereas, on the contrary, ULIPs ,NPS, ELSS and NSC are the least popular tax-saving
investment options as there seems to be lack of awareness about these options amongst the
salaried employees.

1. The type of investment plan does the respondents prefer in future:

Future investment No. of responses for each option Percentage

29
 plan preference
Regular return plan 92 48.4%

Pension plan 74 38.9%

Medical plan 56 29.5%

Specific purpose plan 35 20%

Multiple option plan 74 38.9%

Total 100%

No of response

Regular return plan

Pension plan
Medical plan
Specific purpose plan
Multiple option plan

From the above figure, we can conclude that most of the respondents prefer a regular return plan
for future investment, as their main motive for investing might be to get a good return on
investment as they continuously invest. Around 48% people show interest in this type of plan.
The second most investment plan preferred by the respondents are pension plan and multiple
option plan with 38.9% of the preference. Medical plan and specific purpose plan are amongst
the least preferred plans for investment, with 29.5% and 20% respectively.

IMPORTANCE OF SAVING TAXES

30
In order to ensure that a country’s government functions smoothly and provides the resources
that its citizens need, income tax becomes an essential duty. Therefore, income taxes should not
just be considered a burden to bear but rather a responsibility to fulfill.

Every tax season, taxpayers must make sure that they file their returns and pay their fair share of
taxes. But keep in mind that the Indian government has also laid out various provisions that
allow taxpayers to make their choice of investments and shave off considerably from their
taxable incomes.

As a taxpayer, you should be just as concerned with overpaying your share of income tax as with
underpaying it. That is why your process of tax return filing should always take the component
and benefits of tax saving into account. To understand this topic better, let us explore the
importance and benefits of tax saving further.

Let’s understand tax planning and its benefits with the help of an example. Consider Akash, an
IT professional living in a metro city with annual compensation of Rs 16 lakh. He is currently
repaying an education loan of Rs 22 lakh which he had availed to fund his higher education. His
monthly salary is Rs 1,33,334.

The break-up of his salary is as follows:

Basic salary: Rs 50,000

House rent allowance: Rs 25,000
Special allowances: Rs 58,334

As per the information above, Akash is falling under the 30% income tax bracket, the highest of
the current income tax slabs. If Akash doesn’t have a proper tax-planning in place, then he will
end up paying a substantial amount as taxes every year.
The tax payable by individuals earning over Rs 10 lakh a year is a whopping Rs 1,12,500 plus
30% of the income over Rs 10 lakh. Akash did not make any other investments apart from the
compulsory EPF contribution of Rs 21,600 last year. As a result, he could save only Rs 6,740 in
taxes last year.

How to Save Taxes?

31
The Income Tax Act, 1961, provides taxpayers with several options to reduce their tax payable.
Various sections offer tax deductions, out of which Section 80C is the most popular. Amongst
exemption, claiming house rent allowance (HRA) is the widely used exemption. The best way to
save taxes is to lay out a financial plan as and when there is a revision in your salary and to stick
to it. Also, it is essential that you make tax-saving investments in the first half of the financial
year, so that you don’t make hasty investment decisions at the end of the year. Furthermore, it
would help if you claimed all the exemptions and deductions you are eligible for. To do this, you
should know and understand the various exemptions and deductions available.

As the famous saying goes ‘A penny saved is a penny earned‘. Tax planning is one of the ways
which can help you save on taxes and increase your income. The income tax act provides
deductions for various investments, savings and expenditures incurred by the taxpayer in a
particular financial year. We will discuss some of the avenues which can help you save taxes.

We have a tendency to invest in various products that improve our quality of life but can also
cause considerable financial distress. To significantly alleviate this burden, the government
offers income tax exemptions on direct taxes charged on your whole pay

As a taxpayer, you may have multiple sources of income during your life. According to Income
Tax 1961, your earnings or profits in a given financial year attract taxes.
Whether you are a salaried individual or an entrepreneur or whether you make a rental income,
or earn an income from your investments, you have to pay taxes to the government.
To help you in this regard, Sections 80C, 80D and 80G of the Income Tax Act list the ways you
can save on taxes.

Section 80C

32
Section 80C is the most popular section in the Income Tax Act, 1961. It provides provisions for
taxpayers to save up to Rs 46,800 a year in taxes. Section 80C covers several tax-saving
investment options, and investors can choose to invest in any of the options under Section 80C to
avail the deduction of up to Rs 46,800 a year. The best tax-saving option under Section 80C is
equity-linked savings scheme (ELSS). It is an equity-oriented mutual fund scheme, offering the
dual benefit of tax-saving and wealth growth.

Apart from ELSS, you can invest in government savings schemes such as Public Provident Fund
(PPF), National Savings Certificate (NSC), tax-saving FDs, and so on. Cumulative investments
in these options will provide deductions of up to Rs 1.5 lakh. You can also claim deductions
towards your payments made towards children’s school tuition fee and home loan principal
repayment under Section 80C.

Section 80C is one of the most popular and favourite sections amongst taxpayers as it allows
them to reduce taxable income by making tax-saving investments or incurring eligible expenses.
It allows a maximum deduction of Rs 1.5 lakh every year from the taxpayer's total income.  
The benefit of this deduction can be availed by Individuals and HUFs. Companies, partnership
firms, and LLPs cannot avail the benefit of this deduction.  
Section 80C includes subsections, 80CCC, 80CCD (1), 80CCD (1b) and 80CCD (2).

Now, let’s see how Akash can save more tax under Section 80C. Akash is already making a
compulsory EPF contribution of Rs 21,600. That means, he still has a provision to claim a
deduction of Rs 1,28,400 by making investments under options covered under Section 80C.
Considering that he fully utilizes the Section 80C limit, his tax savings for the year would be:

33
 Income tax saved when
When 80C limit is
Particulars 80C limit is not fully
fully utilized
utilized

Total deduction under Section 80C Rs 1,50,000 Rs 1,50,000

Compulsory EPF contribution Rs 21,600 Rs 21,600

Investments in Other Section 80C

Options (ELSS, PPF, LIC Policies, and so Nil Rs 1,28,400

on)

Income tax saved Rs 6,740 Rs 46,800

Additional taxes saved after fully Rs 40,060

utilizing Section 80C limit

34
Claiming HRA Exemption:

House Rent Allowance (HRA) is an exemption in the Income Tax Act that can help lower  taxes
– partially or wholly. This allowance is for expenses related to rented accommodation. If you
don’t live in a rented accommodation, this allowance is fully taxable.

Taxpayers staying in rented accommodation can avail exemption on the rent paid by them under
HRA exemption. For this, they need to furnish the rent receipts issued by their landlord. The
amount of exemption will be the least of the following: i) Total HRA received. ii) Total rent paid
reduced by 10% of their basic salary. iii) 40% of the basic salary for taxpayers residing in non-
metro cities and 50% of the basic salary for taxpayers living in metro cities.
Now, let’s see how Akash can avail HRA exemption. If he is paying a monthly rent of Rs
25,000, then his HRA exemption calculation is as follow:

Particulars Amount

Total HRA received (Rs 25,000 x 12) Rs 3,00,000

Total rent paid reduced by 10% of basic salary Rs 2,40,000

50% of basic salary (he is living in a metro city) Rs 3,00,000

HRA exemption Rs 2,40,000

Tax benefit  Rs 74,880

35
Section 80D

Section 80D provides taxpayers with tax deductions on the premium paid towards health
insurance policies for self, parents, spouse, and children.

Medical investments are always a better option to safeguard oneself from unforeseen medical
emergencies. Adding medical insurance to the investment portfolio not only provides health
coverage but also allows an individual to avail themselves of tax benefits according to Section
80D of the Income Tax Act, 1961. Under section 80D, deduction can be claimed for medical
insurance premium for both top-up health plans and critical illness plans by any individual or
Hindu Undivided Families (HUF). The taxpayer can claim deduction for health insurance plan
not only for self but for other member of the family, as applicable under Section 80D

Deduction for medical insurance premiums for self and family and medical expenses incurred for
senior citizens is allowed to the Individual or HUF category of taxpayers only.

Individual or HUF taxpayers can avail of the insurance premium payments made for:
 Self
 Spouse
 Dependent children
 Parents

Any other entity cannot claim this deduction. For example, a company or a firm cannot claim a
deduction under this section.

The taxpayers are can claim the following amounts as deductions under Section 80D:

i) Up to Rs 25,000 on the premium for health insurance availed for self, spouse, and children

ii) If your parents are covered under the insurance policy, then a maximum deduction of Rs
50,000 is allowed.

iii) If either of your parents is a senior citizen, then the maximum deduction allowed is Rs
75,000.

Now, let’s see how Akash can utilize the provisions of Section 80D to save taxes. He buys a
health policy for himself by paying a premium of Rs 20,000. He later decides to cover his
parents as well under the policy. He spends an additional Rs 53,000 to do so. Akash’s father is
aged 61 years. Hence, he can avail an additional deduction of up to Rs 50,000 towards the
premium paid to cover his father. Thus, Akash can claim Rs 70,000 paid by him (Rs 20,000 for
covering self and Rs 50,000 for covering parents, one of whom is a senior citizen) under Section
80D this year. He saves Rs 21,840 in taxes under this Section.

36
Section 80E’

80E education loan deduction is a tax incentive given to people who avail education loan for
higher studies. This deduction is available only on the interest amount paid on the loan and not
on the principal amount. Education Loan deduction can be claimed for a maximum of eight
years, starting from the year in which interest repayment begins.

Those taxpayers having availed education loans can make use of the provisions of Section 80E to
save on taxes. Taxpayers can claim deductions of the interest paid towards education for eight
years, starting from the date of repayment. The loan should have been availed from a recognized
bank or non-banking financial institution. There is no capping on the deductible amount. The
entire amount paid as interest can be deducted from the taxable income.

Section 80E provides you with tax deduction on the “interest component” paid on loan taken for
higher education by an individual assessee or on behalf of their spouse or children.

There is no maximum or minimum deduction limit specified under section 80E. The amount of
deduction on interest payment is not impacted by the rate of interest charged by the financial or
charitable institution, the amount of the loan, or any other factor. This section provides a
deduction on the actual interest paid on education loans during the financial year.

The deduction allowed is the total interest part of the EMI paid during the financial year. There is
no limit on the maximum amount of deduction.

You, however, need to obtain a certificate from your Bank. Such certificate should segregate the
principal and the interest portion of the education loan paid by you during the financial year.
The total interest paid will be allowed as a deduction. No Tax benefit is allowed for the principal
repayment.

As Akash has availed an education loan, he is eligible to deduct the interest paid on the same. He
has paid Rs 2,50,000 this year as interest towards his education loan. The Section 80E provisions
allow him to deduct the entire Rs 2,50,000 from his taxable income. He saves Rs 78,000 in taxes.
Other Exemptions and Deductions
Apart from the deduction mentioned above and exemptions, there are several other ways to save
on taxes. Donations made towards qualified organisations and charities are eligible for tax
exemptions in the range of 50% to 100%. Donations made towards those charities covered under
Section 80G are eligible for 100% deduction. The Prime Minister’s National Relief Fund,
National Foundation for Communal Harmony, and National Defence Fund are some of the funds
that allow 100% deduction.
Tax planning is not as hard as it seems. Every taxpayer should look to optimize their tax outgo.
Tax-saving investments should be considered as they not only save taxes but also help in
accumulating a corpus which can be used to cover various life events.

37
Old Tax Regime Vs New Tax Regime

Depending on their level of income, individual taxpayers in India are subject to an income
tax. An individual is subject to a slab system of taxation if their income exceeds the minimum
threshold limit (i.e. basic exemption limit). Under a slab system, separate tax rates are
established for various income groups. It implies that a taxpayer’s tax rate will increase as his
or her income does. The government can establish progressive and equitable taxes with the
help of this kind of taxation. The way taxes were collected changed beginning with the 2020–
21 fiscal year. A new tax system was introduced, and both the tax rates and the amount that
might be saved in taxes were drastically lowered. Finance Minister Nirmala Sitharaman has
suggested a new tax system that will create seven income tax bands and lower tax rates on
income up to Rs 15 lakh, bringing about a radical change in direct tax rates.
All companies are required under a CBDT circular released on April 13, 2023, to ask
employees if they want to choose the new tax regime. At the time of submitting the return,
employees would still have the option of choosing between the tax regimes. People who
choose the new system must sacrifice some exemptions and deductions that were available
under the old system .

New Tax Regime:

Six tax bands are available under the new tax system, with rates cut on income up to Rs. 15
lakh. Multiple exemptions and deductions are not available here because of the different tax
rates and income slabs.

Pros of New Tax Regime:

 The current tax system is still in effect, and as a taxpayer, you have the option of selecting
the one that is most advantageous to you, i.e., the old tax system or the new tax system. The
new tax system is not mandatory, according to the government.
 The new tax system gives the taxpayer the freedom to invest their money anyway they see
fit. With the new plan, there is no longer a compulsion for participants to participate in
insurance and tax-saving plans that may not be in line with their financial objectives.
 Because there are many tax brackets, you, the taxpayer, will fall into the bracket that best
matches your yearly income.

Cons of New Tax Regime:

 The current exemptions will be evaluated gradually and slowly eliminated from the new tax
system.
 The total taxable amount will be larger than it was under the previous tax system if there
are no exemptions.
 Despite the six tax brackets, it might not be advantageous for all taxpayers if the income-
tax authorities decide to entirely abolish the previous system.

38
Old Tax Regime:
To put it mildly, the current tax structure is convoluted. There are several ways to reduce the
tax liability despite the high tax rates. While exemptions, like the House Rent Allowance
(HRA) and Leave Travel Allowance (LTA), are included in the pay, deductions let individuals
pay less in taxes by investing, saving, or spending money on certain things. The largest
deduction is available under Section 80 C, which allows users to reduce your taxable income
by Rs. 1.5 lakh. In addition to this, there are numerous other features that allow consumers to
write off taxes as costs. Health insurance payments and loan interest on both home and student
loans are among them.

Pros of Old Tax Regime:

 By forcing investments in specialized tax-saving mechanisms, the previous income tax
system gradually ingrained in people a culture of saving. It encourages saving for
upcoming occasions like marriage, education, property purchases, medical expenses, etc.

Cons of Old Tax Regime:

 Liquidity is harmed by the investment lock-in period.
 Current level of consumption as a result of committed investment amounts.
 Only a small number of investments can lower taxes.
 Maintaining records of claimed deductions is troublesome.
 Not favorable for taxpayers with zero or fewer tax-deductible transactions.

The Difference Between Old Vs New Tax Regime:

 The difference in slab rates is the primary distinction between the old and new tax regimes.
In India, taxpayers are required to pay income tax based on the tax slab system into which
they are classified. The average income of the individuals is taken into account while
creating the tax slab. As a result, tax obligations for taxpayers with greater earnings will be
higher.
 Another significant distinction between the old and new tax systems is the ability to cut
taxes. The old tax system had several alternatives available to a taxpayer, while the current
tax system does not allow for any deductions.
 While the old tax code provided roughly 70 deductions and exemptions to reduce taxable
income, the new tax code allows the taxpayer to claim zero deduction or exemption

39
 alternatives. Taxpayers can use deductions to lower their tax obligations by saving,
investing, or spending money on specific goods.

The Old and New Tax Slabs are contrasted in the Following Table:

According to the new system, income between Rs. 5 lakh and Rs. 7.5 lakh would be subject to
a 10% tax and income between Rs. 7.5 lakh and Rs. 10 lakh to a 15% tax. On the whole range
for the current regime, this was 20% flat. With rates of 20% for Rs. 10-12.5 lakh, 25% for Rs.
12.5 lakh–15 lakh, and 30% for Rs. 15 lakh and beyond, the former Rs. 10 lakh+ slabs where
you paid 30% has been divided into three parts.

Is it acceptable to bounce back and forth between the old and new taxation systems?

If you are a salaried person, you can choose this option each year. Every year, people with
income from salaries, houses, capital gains, and other sources can choose to pay taxes under
the old or new system. However, after choosing the new tax system, those with income from a
business or profession only have one option to go back to the previous system. Only once in
their lifetime may they choose the new tax system.
Which one is better?

According to the prescriptive, choosing the old tax system as opposed to the new one is a safer
decision if your yearly income is on the higher side. Forget about all the tax breaks and
40
exemptions the previous tax system offered if you wish to pick the new one. Due to the variety
of deductions and exemptions available under the old tax system, such as PPF, ELSS, and Med
claim, there are many investment opportunities for tax payers. The new tax system is
appropriate for new investors and individuals who have just started their jobs because their
income has only recently started. Though choosing between the old and new tax regimes could
appear challenging, if people approach the decision carefully, it is not that hard to make. What
must one can do is as follows:
 Determine the total amount of exemptions you are receiving: If you were renting, then
would be claiming HRA, the biggest wage exemption that is possible. In addition to the
previously stated goods, other tax-free expenditures include LTA, meal expenses, phone
bills, etc. All of them will now be taxable if you choose to move to the new tax regime.
 Examine the deductions you make: Two deductions that you receive automatically as a
salaried employee are the standard deduction of Rs. 50,000 and your contribution to your
Employee Provident Fund (EPF). Even while you will still make contributions to the EPF
under the new system, you won’t be able to claim these deductions. Additionally, you are
not allowed to deduct your home loan (if you have one) or insurance premiums, which up
until now helped you lower your taxable income.

Once you’ve added up all of your exemptions and deductions, subtract them from your
income to get your taxable income and what it would be if you didn’t take them into
account. This should be your decisive element when choosing a regimen.

41
How the proposed new income tax regime differs from old tax regime:-

The government has not made any changes in the old tax regime. It will continue to have three
income tax slabs in FY 2023-24 as well. The income tax slabs applicable to an individual under
the old tax regime depends on his/her age and residential status

For individuals below 60 years of age, the basic exemption limit remains at Rs 2.5 lakh under the
old tax regime. For senior citizens - aged 60 years and above but below 80 years - the basic
exemption limit under the old tax regime is Rs 3 lakh. For super senior citizens - aged 80 years
and above - the exemption limit is Rs 5 lakh

Income tax slabs for individuals below 60 years in old tax regime

42
Senior citizens have an option to opt for the new tax regime as the basic exemption limit would
be the same in both the tax regimes from FY 2023-24. Till FY 2022-23, the basic exemption
limit was higher in the old tax regime as compared with the new tax regime.

Super senior citizens (aged 80 years and above) will have a higher basic exemption limit of Rs 5
lakh in the old tax regime as compared to Rs 3 lakh in the new tax regime.

Income tax slabs for super senior citizens (80 years and above) in old new tax regime

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Surcharge on income tax
The Budget 2023 has also revised the surcharge rate under the new tax regime. The surcharge
rate that will be applicable under new tax regime from FY 2023-24 are as follows:

However, no change has been announced in the surcharge rate if an individual opts for the old
tax regime in FY 2023-24.

44
Cess on income tax amount
The cess on the income tax amount continues to remain the same in both the tax regimes. The
cess of 4% will be levied on the income tax amount.

When does a change in income tax slabs come into effect?

The changes in income tax slabs (if proposed in the Budget) usually comes into effect from April
1 of the same year. For instance, income tax slab changes in Budget 2023 will come into effect
from April 1, 2023.

Who proposes changes in the income tax slabs?

Usually, the changes in income tax slabs and rates are proposed by the Finance Minister during
the Budget speech.

45
 TAX SAVING SCHEMES IN DETAIL

How to save tax or rather how to plan your investment is a question that bothers each one of us
While tax planning is crucial, tax saving schemes is also essential. You can save tax and earn
returns with the best tax saving schemes in India. The ideal time to plan for tax saving
investments is the beginning of the financial year. This will ensure you don’t pay more taxes and
save taxes in India along with year-long returns on tax saving investment.
While we all aim to save taxes in India why only a few of us succeed. The answer could be a
lack of knowledge or struggles in fitting the best-suited choice in your investment planning. In
this article, we have listed each of the best tax saving investment options in India to help you
compare and make a well-informed investment decision. 
While planning on how to save tax in India, you must also ensure that your goal is not just tax
saving. The goal must be to invest in the best-suited investment option along with income tax
saving. We have listed the best tax saving schemes options for 2023 in this article. 

1. ULIP Life Insurance Plan

ULIP Life Insurance Plan is one of the most important investment plans in India. It ensures that
one’s family is financially balanced in the case of an event of death. By purchasing a life
insurance policy, the taxpayer can avail of the benefit under the income tax act.
Under section 80C of the income tax act 1961, the premium paid towards the purchase of a life
insurance policy qualifies for deduction up to Rs. 1.5 lakh. Furthermore, as per section 10 (10C)
incomes on the maturity of the policy is tax free. The income is tax-free if the premium is not
more than 10% of the sum assured. In the case wherein the money goes to the nominee’s of the
person insured, the same remains as a tax exception in the hands of the nominee.

In terms of the deduction under section 80C 1961, the taxpayer can claim 20% of tax deduction
on the premium paid. The following conditions also apply:

1. The taxpayer purchases a life insurance policy on or before 31st March 2012

2. The policy is in his own name or in the name of their spouse or child

If the life insurance policy is purchased after 1st April 2012, then the premium paid is eligible for
tax deduction up to 10% of the sum assured.

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2. ELSS Mutual Funds

Equity Linked Savings Schemes are mutual fund investment schemes that invest a large
percentage of their portfolio in equity. Furthermore, the fund has a mandatory lock-in period of 3
years which is the shortest amongst all the investment products.

Investment in ELSS funds qualifies for deduction under section 80C of the income tax act up to a
maximum of Rs. 1.5 lakh. Both lump sum investment and the amount invested through a
systematic investment plan (SIP) qualifies for the deduction. Since ELSS funds invest a large
amount in equity, there is always some inherent risk.

ELSS funds provide the dual benefit of capital appreciation and tax-savings. This makes it one of
the most popular tax saving schemes amongst investors.In general, taxpayers who want to claim
tax deductions of up to Rs 1.5 lakh under Section 80C provisions and are willing to take some
risk should consider investing in ELSS.

These mutual funds are equity-oriented, and they invest a minimum of 60% of their portfolio in
equity and equity-linked instruments. This makes it crucial to be invested in the funds for a long
period of time in order to reap the benefit of the returns.

ELSS funds are equity funds that invest a major portion of their corpus into equity or equity-
related instruments. ELSS funds are also called tax saving schemes since they offer tax
exemption of up to Rs. 150,000 from your annual taxable income under Section 80C of the
Income Tax Act. 

As mentioned above, Section 80C of the Income Tax Act offers tax deduction benefits on the
principal invested by you in an ELSS scheme. The is a cumulative deduction benefit which
means that you can avail a tax deduction of up to Rs. 1.5 lakh under the above-mentioned section
for investments made in all instruments specified like ELSS, NSC, PPF, etc. 

Further, these schemes have a mandatory lock-in period of 3 years. Therefore, on redeeming the
units, you receive long-term capital gains or LTCG. These gains are not taxable up to Rs. 1 lakh
in one financial year. Any LTCG above this limit is taxed at 10% of the gains exceeding Rs. 1
lakh without indexation.

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3. Public Provident Fund (PPF)

The Public Provident Fund has always been a popular tax saving schemes amongst the taxpayer.
One of the major reasons for this popularity is the fact that PPF falls under the category of
exempt–exempt–exempt tax status. You can open your PPF accounts with a bank or post office.

Taxpayers can claim a deduction under section 80C of the income tax act for the amount
invested by them during the financial year. The maximum amount eligible for deduction is Rs.
1.5 lakhs. Since PPF falls under the exempt category, the interest and maturity amount are
exempt from tax.

PPF account comes with a lock-in period of 15 years and it allows the investors the below
options at the end of the maturity period:

The Public Provident Fund (PPF) is a savings-cum-tax-saving instrument in India, introduced by

the National Savings Institute of the Ministry of Finance in 1968. The main objective of the
scheme is to mobilize small savings by offering an investment with reasonable returns combined
with income tax benefits 

The scheme is fully guaranteed by the Central Government. Balance in the PPF account is not
subject to attachment under any order or decree of court under the Government Savings Banks
Act, 1873. However Income Tax & other Government authorities can attach the account for
recovering tax dues.

The 2019 Public Provident Fund Scheme, introduced by the Government on 12 December 2019,
resulted in the rescinding of the earlier 1968 Public Provident Fund Scheme.

A Public provident fund scheme is ideal for individuals with a low risk appetite. Since this plan
is mandated by the government, it is backed up with guaranteed returns to protect the financial
needs of the masses in India. Further, invested funds in the PPF account are not market-linked
either.

Investors can also undertake the public provident fund regime to diversify their financial and
investment portfolios. At times of downswing of the business cycle, PPF accounts can provide
stable returns on investment annually.

Income tax exemptions are applicable on the principal amount invested in a PPF as an account.
The entire value of investment can be claimed for tax waiver under section 80C of the Income
Tax Act of 1961. However, it should be kept in mind that the total principal that can be invested
in one financial year cannot exceed Rs. 1.5 Lakh.

The total interest accrued on PPF investment is also exempt from any tax calculations.
Therefore, the entire amount redeemed from a PPF account upon completion of maturity is not
subject to taxation. This policy makes the public provident fund scheme attractive to many
investors in India.

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4. Sukanya Samridhi Yojana (SSY)

Sukanya Samriddhi Yojana has become one of the most important tax saving schemes. It was
launched in 2015 by the government of India as a part of the Beti Bachao Beti Padhao
campaign. It had a major impact on the general public. The scheme allows a fixed income
investment through which the taxpayer can invest regular deposits and at the same time earn
interest on it. Investing in Sukanya Samriddhi Yojana also qualifies as an eligible deduction
under section 80C of the income tax act.

The government of India determines the rate of interest on the scheme on a quarterly basis and is
payable on maturity. The scheme comes with a lock-in period of 21 years and will mature after
the expiry of 21 years. A minimum deposit of Rs. 250 is required to be made per year for 15
years. Failure to pay the minimum amount in a year will lead to disconnection of the account. To
re-activated the account, you need to pay a penalty of Rs. 50 along with the original Rs. 250
deposit.

In order to open a Sukanya Samriddhi account, below is the eligibility criteria for this tax saving
option:

Only girl children can claim the benefits of this scheme.

The girl child cannot be more than 10 years of age. A grace period of one year is provided which
allows the parent to invest with 1 year of the girl child being 10 years of age.
The investor must submit age proof of the daughter.
Recommended Read: Best Child Plan

Benefits of Sukanya Samriddhi Yojna

Affordable Payments: The minimum deposit required to maintain an SSY account is Rs.250 per
fiscal year. You can make deposits as per your convenience up to Rs.1.5 lakh per fiscal year. The
payments seem very affordable for people from all sections of society. Even if you happen to
miss out on paying for a year, a penal charge of Rs.50 will be levied on the missed minimum
payment of Rs.250 but the account will be continued.

Educational Expenses Covered: You can withdraw 50% of the account balance as of the previous
financial year’s end to meet the educational expenses of your girl child. This can be availed by
submitting proof of admission.

Attractive Interest Rates: The interest rate applicable to SSY accounts has always been high as
compared to other government-backed schemes. Currently, the rate is at 8% p.a.

Guaranteed Returns: Since SSY is a government-backed scheme, there is a guarantee of returns

upon its maturity.

Convenient Transfer: The SSY account can be transferred from any post office to a bank or vice-
versa anywhere in India.

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5. National Savings Certificate

A government of India initiative, a national savings certificate is a fixed income investment

scheme that aims at the small and middle-income investors to invest and earn handsome returns.
It is considered a low-risk investment and as secure as the Provident Fund. The investors can
invest as per their income profile and investment habits.

Investment in NSC qualifies for deduction under section 80C of the income tax act up to Rs. 1.50
lakh. Apart from providing the benefit of tax exemption, it provides the investor with complete
capital protection and guaranteed interest. Some of the features of the NSC, tax saving option are
as follows:

7% annual interest as a guaranteed return.

You can claim a tax benefit under section 80C up to Rs. 1.5L
You can invest as low as Rs. 1,000 (or multiples of Rs. 100). You can increase the investment
amount as per your convenience.
On maturity, the entire maturity value will be received by the investor and the same will be taxed
in the hands of the taxpayer.
An early exit is not available. You can use the same as collateral security in case of loans from
Bank or NBFC.

The National Savings Certificate (NSC) is a fixed-income investment scheme that you can open
with any post office branch. This is an initiative by the Government of India and encourages
subscribers – mainly small to mid-income investors – to invest while saving also saving on
income tax.

While there is no upper limit on the amount that can be invested in NSC, only investments of up
to Rs.1.5 lakh a year can earn a subscriber a tax rebate under Section 80C of the Income Tax Act
of 1961. Furthermore, the interest earned on the certificates is also added back to the initial
investment and qualify for a tax break as well.

Furthermore, for the first four years, the interest gained on NSC is assumed to be reinvested (i.e.
put back to the initial investment) and so eligible for a tax credit, subject to the overall annual
limit of 1.5 lakh. The interest earned in the fifth year, however, is not re-invested and is thus
taxed at the investor's applicable slab rate.

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6. Tax-savings fixed deposit

Fixed deposits are considered one of the safest tax savings schemes. It’s safer than equity
investments in terms of risk and returns. The banks decide the interest rates and it depends on
several factors. Below are some of the features of a tax-saving fixed deposit:

Investment in tax saver fixed deposit eligible for deduction under section 80C while calculating
the taxable income.
A minimum lock-in period of 5 years
The Senior citizens can get a higher interest rate on investment
In the case of a joint account, the primary holder can avail the benefit of tax deduction while
calculating the taxable income.

Tax saver fixed deposits do not allow any premature withdrawal. However, after the expiry of
the 5 year lock-in period, investors get access to premature withdrawal. The terms and conditions
for premature withdrawal vary from bank to bank.

A fixed deposit account comes in numerous forms to help individuals and entities to save funds
for their future. The general FD accounts allow you to choose the tenure of the account based on
your convenience. In addition to the general FD accounts, many banks offer a five-year FD
scheme that is meant for tax saving.

One can claim an income tax deduction by investing money in a five-year FD scheme under
Section 80C of the Income Tax Act, 1961. The features, benefits, and terms associated with this
type of account may not be completely the same as the normal FD accounts. There are a number
of things you need to know about such FD accounts to make use of the benefit.

Besides FD, there are many other tax-saving investment options that help you build your wealth,
such as ELSS tax-saving mutual funds, PPF, and NSC. Fixed deposits are deemed as one of the
safest savings options out there that offers capital protection and growth without falling victim to
market highs and lows. However, the returns from this scheme are taxed.

This is where ELSS stands out with its dual-benefit—its returns are generally higher and tax-
free. This, coupled with a mere lock-in period of 3 years, is all the more reason for you to invest
in ELSS now.

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7. Senior Citizen Savings Scheme

A Senior Citizen Savings Scheme is an income tax saving schemes available to senior citizens
who are residents in India. The scheme is available for investment through banks and post offices
and offers one of the highest rates amongst the various savings schemes.

Depositors can make an investment with a minimum amount of Rs. 1000 and in multiples
thereof. The scheme also provides the facility of investment through cash provided the
investment amount is less than Rs. 1 lakh. The deposits made into the scheme matures after a
period of 5 years. The depositors also have the option to further extend the maturity period by
another 3 years.

Investment in the Senior Citizen Savings Scheme qualifies as a deduction under section 80C up
to Rs. 1.5 lakhs from the taxable income. The interest on such deposits is fully taxable and liable
for a tax deduction if the interest is above Rs. 50,000. Deposits made into a Senior Citizens
Savings Scheme account are compounded and paid out annually.

Benefits:

 Hassle-Free Process: Individuals can open their accounts at any post office or authorized
bank in India.
 SCSS Tax Benefits: Under Section 80C of the Income Tax Act, the principal amount
invested in this scheme is eligible for deduction up to a limit of ₹1.5 lakhs in a year.
Furthermore, interest earned on SCSS is taxable according to an individual’s tax slab.
However, if the amount exceeds ₹50,000 for a fiscal, TDS (Tax Deducted at Source) is
applicable.
 High-Interest Rate: SCSS offers an interest rate of 7.4% per year.

Deductions are made against premature withdrawals. If closed before a period of 2 years, 1.5%
deduction will be made as a penalty. Furthermore, if closed after 2 years, 1% is deducted.
However, for extended accounts, one can withdraw funds post one year without attracting
penalties.

There is a tax deduction of up to Rs.1.5 lakh can be claimed under Section 80C of the Indian Tax
Act, 1961.

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8. School Tuition Fees:

The income tax act 1961 provides a deduction under section 80C of the income tax act for
payment for school fees of children. This tax saving option is available under section 80C in
addition to other investments like PPF, NSC, ELSS etc. Tuition fees paid to any registered
university, college, school, or educational institution qualifies for deduction up to Rs. 1.5 lakh.

Moreover, only the tuition fees qualify for deduction under the income tax act. Any other fee like
donation, development fee, etc. even if paid to such an institution does not qualify for the
deduction.

The income tax act allows both the parents to claim the deduction to the extent of the amount
paid by them. So if the total fee paid by the parents is Rs 1 lakh, of which the father has paid Rs
40,000, while the mother has paid Rs 60,000, both can claim the amount individually as per the
payment made by them.

There are several provisions under section 80 c of the Indian Income Tax of 1961 for the
deduction of tax on education or tuition fees that are paid by parents in order to educate their
children. Tax payers may avail deductions of an amount as much as 1.5 lakh INR with several
other investments also being eligible for such a rebate.

It is possible for parents to claim tuition fees that they end up paying for their children’s
education as tax deduction making sure they are able to save tax even they do not have access to
any other tax relief measure. In fact it is possible for parents to actually claim the exact amount
of money that they paid as fee within a specific financial year.

Tax payers who are interested in claiming tax deductions on education or tuition fees needs to
make sure that they meet the following criterion:

 Tax claims can be made only for Full Time Course Fees

 Tax deductions on the payment of any tuition fee can be claimed only for tuition fee that
is paid for full time courses.

 Examples in this respect include post graduation fees, school fees and fees paid for a
graduate education.

 If fees are also paid for certain part time educational programs then these may not be
availed as tax deductions

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9. National Pension Scheme ( NPS )

NPS or National Pension Scheme has become a popular income tax saving investment product. It
is a tax saving option that is available to both government and private employees. It enables the
depositor to build a corpus for their retirement along with a regular monthly income. The amount
invested by the depositor is invested in several schemes including the equity markets.

There are two types of NPS accounts, Tier-1 & Tier-2. A tier-1 account has a lock-in period until
the subscriber reaches the age of 60 years. The contributions made by the subscriber to tier-1 are
tax-deductible under section 80CCD(1) and 80CCD(1B). Tier-2 accounts are voluntary in nature
which allows the subscriber to withdraw the money when they like. However, contributions
under tier-2 accounts are not eligible for a tax deduction.

As per the provision of section 80CCD, an individual can claim a deduction up to Rs. 1.5 lakh by
investing in NPS. Additionally, a new sub-section 1B was also introduced, which offered an
additional deduction of up to Rs. 50,000/-for contributions made by individual taxpayers towards
the NPS.

National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme
designed to enable the subscribers to make optimum decisions regarding their future through
systematic savings during their working life. NPS seeks to inculcate the habit of saving for
retirement amongst the citizens. It is an attempt towards finding a sustainable solution to the
problem of providing adequate retirement income to every citizen of India.

Under NPS, individual savings are pooled in to a pension fund which are invested by PFRDA
regulated professional fund managers as per the approved investment guidelines in to the
diversified portfolios comprising of Government Bonds, Bills, Corporate Debentures and Shares.
These contributions would grow and accumulate over the years, depending on the returns earned
on the investment made.

At the time of normal exit from NPS, the subscribers may use the accumulated pension wealth
under the scheme to purchase a life annuity from a PFRDA empanelled Life Insurance Company
apart from withdrawing a part of the accumulated pension wealth as lump-sum, if they choose
so.

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10. Health Insurance premium under section 80D:

You can claim a tax benefit up to Rs. 25,000 in respect of the below contributions:

Premium paid to keep in force health insurance covering self, spouse, or dependent children.
Any contribution to Central Health Government Schemes.
Any other scheme may be notified by the central government as eligible for deduction.
In order to take care of one’s medical emergencies, medical insurance is considered as the safest
investment option. This allows the taxpayer to avail of the benefits on two fronts. Firstly, being
taken care of by the insurance policy in the case of a medical emergency. Secondly, the tax
benefit under the income tax act for investing in an investment product.

Apart from the above, an additional deduction for the insurance of the parents is available to the
extent of Rs. 25,000 if they are less than 60 years of age or Rs. 50,000 if they are more than 60
years of age. If the individual and the parent are both above 60 years of age, the maximum
deduction available under this section will be Rs. 1,00,000.

55
11. Repayment of an education loan

The income tax act provides a tax benefit on repayment of the loan as a tax deduction under
section 80E of the act. You must remember that this tax saving option is available to the person
who is repaying the loan. Once an educational loan is availed, the interest paid on the education
loan qualifies for a tax deduction for a maximum of 8 years, or the interest is repaid, whichever
is earlier.

Depending on who pays the EMI for the education loan, the parent or the child can claim the
deduction. The deduction under section 80C is available only if you take the loan from a
financial institution and not family members. You can claim the tax deduction starting from the
year in which the repayment starts.

The income tax authorities provide a moratorium period of up to one year to the borrower from
the date of completion to start repaying the loan. This allows the taxpayer sufficient time to
manage their finances and claim the deduction once they start repaying the loan.

For example, if the taxpayer repays their education loan in 5 years from the date of repayment,
the tax deduction would be available for this 5 year period only. As per section 80E, this benefit
can be claimed for a period of 8 years so the taxpayers should avail this benefit. Borrowers
should note that their repayment may exceed 8 years, but in such cases, they won’t get the tax
deduction under Section 80E beyond the 8th year.

Section 80E of the Income tax act allows you to claim a deduction for the education loan taken
from any financial institution or approved charitable institution.
Under this section, you can only take a tax deduction for the interest part of the loan.

To encourage borrowers to take an education loan, there is a tax benefit on repayment of the
education loan. Once you avail of an education loan, the interest paid (which is a component of
your EMI) on the education loan is allowed as a deduction under Section 80E of the Income Tax
Act, 1961. This deduction is available for a maximum of 8 years or till the interest is repaid,
whichever is earlier.

To claim a deduction for an education loan, you must receive a certificate from the financial
institution showing the distribution of the amount repaid as interest and principal part. 

The tax benefit can be claimed by either the parent or the child (student), depending on who
repays the education loan to start claiming this deduction. This tax deduction is available only on
taking an education loan from financial institutions, not from family members, friends, and
relatives. 

To avail of tax benefits, an education loan should be taken for the higher education of yourself,
your spouse, dependent children, or the student to whom you are the legal guardian. 

56
12. Rent paid and no HRA received:

Generally, You receive HRA as a part of your salary and treat HRA as a major tax saving
schemes while filing income tax returns. However, there can also be a case wherein it does not
form part of the salary of the employee. In such a case, standard HRA deduction cannot be
claimed and the taxpayer would not be able to claim the benefit even if they are paying the rent.
Further, in such cases, a taxpayer must claim a tax benefit under section 80GG.

In order to provide the taxpayer with benefit even in a case where HRA is not received, section
80GG was introduced. As per this section, A taxpayer can claim the deduction of rent paid even
in a case wherein they do not receive HRA. This is subject to the below conditions:

The individual is self-employed or salaried.

HRA has not been received at any time during the year for which deduction is being claimed
under section 80GG.
You, your spouse, or the HUF in which you are a member does not hold any residential
accommodation at a place where you currently reside.
To claim deduction under section 80GG, You must file form 10BA for payment of rent. The
lower of the below will be considered as a deduction under this section:

Rs. 5,000 per month.

25% of the total Income (excluding long-term capital gains, short-term capital gains under
section 111A and Income under Section 115A or 115D and deductions under 80C to 80U.
Actual rent less 10% of Income
A taxpayer must fulfill the following conditions to claim deduction under Section 80GG:

You are self-employed or a salaried individual. A Hindu Undivided Family (HUF) can also
claim the deduction. However, businesses cannot claim this deduction.

You have not received HRA from an employer at any time during the year for which you are
claiming 80GG. The HRA component should not form part of your salary to claim 80GG.

You have not received HRA from an employer at any time during the year you claim 80GG. The
HRA component should not form part of your salary to claim 80GG.

You, your spouse, minor child or HUF of which you are a member, do not own any residential
accommodation where you currently reside, perform office duties, or employment or carry on
business or profession.

In case you own any residential property at any place for which your income from house
property is calculated under applicable sections (as a self-occupied property), no deduction under
section 80GG is allowed.
You will be required to file Form 10BA with details of the payment of rent.
If your rent amount exceeds Rs.1 lakh per annum, you will have to submit the PAN card of your
property owner to claim the deduction.

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13. Interest paid on home loan

In order to claim the interest component on a housing loan as a tax deduction, you must satisfy
the following conditions:

A home loan must be taken for the purchase or construction of a house.

Construction of the house must be completed within 5 years from the end of the financial year in
which the loan was taken.

The interest component paid as a part of the loan can be claimed as a deduction under section 24
up to Rs. 2 lakh. This is applicable in the case of a self-occupied property. In the case of a let-out
property, there is no upper limit for claiming interest.

In the case of interest being paid towards a home loan taken during a pre-construction period, the
pre-construction interest paid can be claimed as a deduction. The deduction is available in five
equal installments starting from the year in which the property is acquired or construction is
completed. However, the maximum limit is Rs. 2 lakh.

A home loan must be taken for the purchase or construction of a house to claim a tax deduction.
If it is taken for the construction of a house, then it must be completed within five years from the
end of the financial year in which the loan was taken.

The interest paid on the home loan EMI for the year can be claimed as a deduction from your
total income up to a maximum of Rs 2 lakh under Section 24.

From the assessment year 2018-19 onwards, the maximum deduction for interest paid on self-
occupied house property is Rs 2 lakh.

For let out property, there is no upper limit for claiming tax exemption on interest, which means
that you can claim deduction on the entire interest paid on your home loan.

In case the construction exceeds the stipulated time, i.e. 5 years, you can claim deductions on
interest of home loan only up to Rs 30,000 for the financial year.

However, the overall loss can be claimed under the head ‘Income from House Property’ against
any other head of income up to to Rs 2 lakh only. This deduction can be claimed from the year in
which the construction of the house is completed.

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14. Savings bank account interest:

The income tax act 1961 provides deductions with respect to interest earned from savings bank
accounts.

Individuals and hindu undivided family can claim the tax deduction under section 80TTA on the
interest earned.

This deduction is applicable to taxpayers other than those who are senior citizens. In the case of
senior citizens, section 80TTB is applicable.

The maximum deduction under section 80TTA is Rs. 10,000. The limit of Rs. 10,000 applies to
the total interest earned from the savings bank account that the assessee has.

Any interest over and above Rs. 10,000 is taxable under “Income from Other Sources”. The rate
of tax will be as per the applicable tax slab rate.

For example, the total interest earned by Amit from his savings bank account was Rs. 15,000. In
this case, the total exemption allowed under section 80TTA will be Rs. 10,000 and the balance
Rs. 5,000 will be taxable as “income from other sources”

On 1st April 2018, section 80TTB came into existence for senior citizens. As per section 80TTB,
senior citizens can claim deduction up to Rs. 50,000 or an amount specified from the total gross
income.

The interest component earned on a savings account is accounted under the head ‘Income from
Other Sources’.

This interest income must be declared in your income tax return and will be taxable as per the
applicable slab rate.

According to Section 19A of the Income Tax Act, 1961, TDS shall not be applicable on a
savings account.
However, TDS is deducted at 30% for NRIs on interest received on NRO accounts.

No TDS is deducted on interest received in NRE accounts.

Interest earned on a savings account beyond Rs. 10,000 attracts taxes at your slab rate.

Interest on savings account up to Rs. 10,000 is technically treated as a deduction. For example, if
your gross total income is Rs. 10 lakh and you have savings account interest of Rs. 25,000 a
deduction of Rs. 10,000 will be made from your gross total income.

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15. Medical expenses towards disabled dependent:

As per the provisions of section 80DD, a taxpayer can claim a deduction if they are looking after
disabled dependents. This tax benefit will help in reducing the tax liability of the person who is
taking care of someone disabled in the family who is dependent on them.As per section 80DD,
disabled dependents include spouses, children, parents, or siblings (brother or sister). In the case
of HUF, a disabled dependent may be a member of the Hindu undivided family. In order to claim
tax benefits under section 80DD, a deduction should not have been taken under section 80U.

The following disabilities are covered by Section 80DD of the Income Tax Act.-

Autism- It is also called autism spectrum disorder (ASD) and is a complex neurobehavioral
condition that is seen as impairment in social interaction and development of language and
communication skills involving rigid, repetitive behaviors.

Blindness- The visual impairment where the person suffers any of the conditions like the total
absence of sight, visual acuity up to 6/60 or 20/200 (Snellen), or limitation of the field of vision
of the eyes subtending an angle of 20 degrees or worse.

Cerebral palsy- The condition involves a set of non-developmental conditions for an individual

and can be characterized by an abnormal motor control posture resulting from brain insult or
injuries occurring in the pre-natal, perinatal, or infant phases of development of an individual.
Hearing impairment- The hearing problem implies a loss of sixty decibels or more in any of the
two ears in the conversational range of frequencies such that the person can’t hear a normal
conversation.

Leprosy-cured- A person who is leprosy-cured means that the person has been cured of leprosy
but still has a set of physical setbacks. There is the loss of sensation in hands or feet or both
along with a loss of sensation and paresis in the eye and eye lid with no manifest deformity. If
not, there is manifest deformity and paresis. There is sufficient mobility in their hands and feet
which enables them to engage in normal economic activity.

Loco-motor disability- This impairment involves any disabilities in the bones, joints, or muscles
leading to substantial restriction of the movement of the limbs or any form of cerebral palsy.

Low vision- A person with low vision means someone with impairment of normal visual
functioning despite treatment or standard refractive correction. Thereby, the person has to use or
is capable of using vision for the planning or execution of a task with an appropriately designed
assistive device.

Mental illness- This would include a vast range of mental disorders but is essentially not any
form of "mental retardation".

Mental retardation- This means a condition where there is a completely blocked or incomplete

development of the mind, especially characterized by sub-normality of intelligence.

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16. Treatment of specified diseases u/s 80DDB

A deduction under section 80DDB is allowed to a taxpayer wherein a case they have contracted
diseases such as cancer, neurological diseases such as dementia, motor neuron disease,
parkinson’s disease, AIDS, etc. All such disease entails expensive treatment costs and the
expenses done can be claimed as a deduction under section 80DDB.
The deduction under section 80DDB is allowed for the medical treatment of a dependent who is
suffering from a specified disease by individuals or HUF. The deduction is up to ₹ 40,000 or the
amount actually paid (whichever is lower). This limit goes to ₹ 1 lakh in the case of senior
citizen taxpayers or dependents.
Deduction under section 80DDB is allowed for medical treatment of a dependant who is
suffering from a specified disease (listed in the table below).

 Can be claimed by an Individual or HUF

 Allowed to Resident Indians

 When taxpayer has spent money on treatment of the dependant

 Dependant shall mean spouse, children, parents and siblings

 In case the dependant is insured and some payment is also received from an insurer or
reimbursed from an employer, such insurance or reimbursement received shall be
subtracted from the deduction.

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17. Donations made to charitable institutions:

Section 80G provides a tax deduction to the taxpayer with respect to the amount paid by them to
an approved charitable organization. The donations made to such organizations should be made
via cheque or online transfer. Cash transfers, above Rs. 2,000 do not qualify for deduction under
this section. It is very important to take the stamped receipt from the organization wherein the
donation has been made in order to claim the deduction.

Depending on the type of organization where a donation has been made, the tax deduction under
section 80G can be either 50% or 100% of the donation amount. However, the same is restricted
to 10% of the adjusted gross total income of the taxpayer. An Adjusted gross total income can be
defined as:

The gross total income (sum of income under all heads) minus amount deductible under Section
80CCC to 80U (but not Section 80G), minus exemption from income, long-term capital gains,
minus income as referred under Sections 115A, 115AB, 115AC, 115AD, and 115D, relating to
non-residents and foreign companies.

There are basically four buckets in which donations can be categorized to claim the tax
deduction.

a) Donations with 100% deduction without any qualifying limit, such as the National Defence
Fund set up by the Central Government.

b) Donations with a 50% deduction without any qualifying limit such as the Jawaharlal Nehru
Memorial Fund or the Prime Minister’s Drought Relief Fund

c) Donations with 100% deduction subject to 10% of adjusted gross total income. The donation
must be towards a Government or any approved local authority, institution, or association to be
utilized for the purpose of promoting family planning

d) Donations with 50% deduction subject to 10% of adjusted gross total income such as any
institution which satisfies conditions mentioned in Section 80G(5).

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 FINDINGS

 The study reveals that majorities (66%) of the respondents were from the age group of 20-30
years and most of them were from the male category (61%).
 From the annual income, it is found the middle-class as well as the upper middle-class
working employees were the target respondents.
 The respondents were mostly doctors/ engineers.
 Most of the respondents save less than Rs. 25,000annually from their annual salaries
 The motivator for saving for most of the respondents is to meet a specific purpose.
 According to the results, an increase in salary or additional income/increments will help an
individual to increase the size of their savings
 Gold is found to be the most preferred choice for investment, whereas other investment
preferences include Govt. Securities i.e., PF, GPF/PPF, bank deposits, mutual funds and
fixed deposits.
 The investments trend amongst the respondents is either increasing or decreasing, on the
other hand a few respondents' investment is remaining constant.
 Majority of the salaried employees' do not have a specified time horizon behind their
investment decision as they prefer to invest as and when it is convenient for them.
 On the other hand, most of them invest for medium term as well as long term.
 Most of the salaried employees take the advice of their spouse/family members, as they can
be said to be the most trusted individuals
 The respondents have also taken their own decisions for making their own decisions.
 Most of the salaried employees get information about investments from their family members
and colleagues, whereas a few get information from journals and magazines, organizational
reports, T.V and radio, etc.
 From the study, it is found that conducting workshops and seminars is a good initiative to
create awareness amongst salaried individuals about the importance of investments.
 The study has also revealed that most of the salaried employees are not aware about the
benefits of tax saving investments like ULIPs, NPS and NSC. Life insurance, health
insurance as well as PPF are the popular investment options.
 Most of the respondents prefer a regular return plan as a choice for their future. Other
preferences include pension plan, multiple option plan and medical plan.
 From the annual income, it is found the middle class as well as upper middle class working
employees were the target respondents.
 Fixed deposits are found to be the most preferred choice as financial asset, whereas other
investment preferences include bonds, mutual funds, pension fund, stock/shares, and others.
 According to the results, an increase in salary or additional income/increments will help an
individual to increase the size of their savings.
 The study also revealed that most of the salaried employees are not aware about the benefits
of tax saving investments like ULIPs, NPS, and NSC. Life insurance, health insurance as
well as PPF are the popular investment options.
 Most of the respondents prefer a regular return plan as a choice for their future. Other
preferences include pension plan, multiple option plan and medical plan.

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 SUGGESTIONS

 After all this it can be stated that the fundamental cornerstones of successful investing
are:
 Save regularly
 Invest regularly
 Start Early
 Diversify
 Use tax shelter

 Keep a regular check on investment and modify plans as and when needed
 Financial planning for salaried employees is not just a compelling process; it is a basic
need for every individual and his/her family. It is a complete cycle starting from monthly
budget to retirement planning. The process comprises Budgeting, Insurance, Goal-Based
Investments, Getting out of debt, and Retirement.
 It is important to spread your financial planning to include investments such as Equity-
Linked Savings Schemes (ELSS), Long-Term Capital Gains from the Sale of Long-Term
Assets, and Agricultural Income because of the tax savings they give.
 Public Provident Funds, Educational loans, Voluntary donations, Home loans, Interest
Income on Savings Accounts, and Unit-Linked Insurance Plans are all some of the tax
savings strategies for salaried employees.
 Not all tax savers are the same in terms of asset class, so one should choose to use the
instrument that best suits their individual needs. The safety, liquidity and returns of the
tax savings instrument should be taken into consideration.
 No financial decisions should be made based on the returns to be gained. Your goal is not
only to save on taxes but also to achieve different goals you have set for yourself. Hence,
one should always have definite objectives and should link their tax instruments to the
desired goal.
 All the documentations should be complete and need to be preserved. At time of maturity
it is necessary to produce the investment documents which act as a proof. But many
times, investors do not have proper documents which dishonor the claim at maturity. It is
also recommended that all the disclosure documents also be preserved as it would help in
case of any dispute in settlement.
 In this way both the audience and the company can also be benefited. Investment through
SIP should be encouraged. A little amount regularly invested for long period can create a
greater wealth. SIP helps in Rupee cost averaging, develop habit of saving and it provides
convenience of investment.
 Mutual funds could provide better advice to their investors through the net and through
the traditional investment routes where there is an additional channel to deal with the
brokers. Direct dealing with the fund could help the investor with their financial
planning. If an investor is seeking help from advisor then he should collect enough
information of product from different sources. It will help to take proper investment
decision and choose a right advisor. It is also necessary that advisor should have enough
experience.

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 CONCLUSION

Tax-saving is only a smart part of a broad category called financial planning. There is more to a
financial plan than what meets the eye. For a financial plan to be successful, it should have a
proper investment plan that saves taxes.
Salary employees spent their whole lives working, spending the money they earn and hopefully
saving a little for the future. When you retire, everything you have ever experienced about
managing your finances gets turned upside down.
Based totally on the findings of the examination, its miles specifically concluded that statistics
generation beautifies the extent of productiveness in tax collectivity and management. Specially;
online submitting and remittance of tax returns via tax payers’ are inversely associated with tax
making plans and implementation via tax administrative companies.
The adoption of data generated inside the registration of eligible and capability tax payers
portrays performance in tax planning and implementation which in flip guarantees ease
collectivity of tax returns.
Irrespective of the plan you choose, few things remain constant. They are:
 Having well-structured short-term and long-term financial goals at every stage of your
lives
 Starting to save as early as you can, so that it gives you a long window to stay invested
and reap good returns
 Cutting down unnecessary expenses and saving for a better future
 Putting aside at least 10 to 15% of savings every month towards financial or investment
plans, to be used at a time when it is needed the most
 Talking to a professional in case of any queries or ambiguity

Based totally on the findings of the examination, it's miles specifically concluded that statistics
generation beautifies the extent of productiveness in tax collectivity and management. Specially;
online submitting and remittance of tax returns via tax payers’ are inversely associated with tax
making plans and implementation via tax administrative companies. The adoption of data
generated inside the registration of eligible and capability tax payers portrays performance in tax
planning and implementation which in flip guarantees ease collectivity of tax returns.

In admire of the research findings, the examine recommends that: submitting of tax on line have
to be monitored and controlled because of its unfavorable effect on making plans and
implementation of tax collectivity; respective businesses (federal, state and local government)
responsible for tax series have to sensitize eligible and ability taxpayers on the system and
suitability of online tax registration by way of taxpayers in other to decorate its impact on tax
administration within the united states; online tax remittance should be inspired.

There is more to a financial plan than what meets the eye. For a financial plan to be successful, it
should have a proper investment plan that save taxes.
 There is differentiation in income tax act of 1961 among male and female both, residents
of different geographic demographics are treated as equal.
 There are lot of individual income earners through form of salary but they are not are not
large amount of income earners.

65
 People working in a organized sector pay would file income tax who`s income is being
tacked as there salary or other income have been monitored through bank transaction and
pan cards.
 But the mainly problem is with people working in unorganized sectors who earn income
through form of cash ,there earning be small or big in numbers but its been hard to track
their income.
 About 60% of survey responded as earning income below rupees five lakh so its not fair
to draw conclusion that, very smaller number of people file taxes, less the income of
individuals less the number of people filing taxes.

66
 BIBLIOGRAPHY

Websites:
 https://www.policybazaar.com/income-tax/taxsaving-instruments/
 https://www.coverfox.com/lifeinsurance/articles/life-insurance-tax-benefits/
 https://groww.in/blog/tax-savingoptions/#1_Life_Insurance_Plans
 https://cleartax.in/s/medical-insurance
 https://www.apollomunichinsurance.com/blog/howmuch-tax-do-you-save-through-
healthinsurance.aspx
 https://cleartax.in/s/unit-link-insurance-plan-ulip
 https://cleartax.in/s/nps-national-pension-scheme
 https://www.moneycontrol.com/news/business/mutual-funds/-1808067.html
 https://www.bankbazaar.com/saving-schemes/ppftax-benefits-and-features.html
 https://cleartax.in/s/nsc-national-savings-certificate
 https://www.icicipruamc.com/InvestCorrectly/Basics-of-Mutual-Funds/Save-tax-with-
ELSS.aspx
 https://www.icicibank.com/knowledge-base/tax/taxsaving-schemes.page
 https://www.hdfclife.com/insurance-knowledgecentre/tax-saving-insurance/tax-planning-
tips-forsalaried-employees
 https://www.entrepreneurshiplife.com/6-financialplanning-tips-for-salaried-professionals/
 https://www.cleartax.in
 https://www.icai.org
 https://www.hdfclife.com

Books:

 John D. Martin. Basic Financial management, New Delhi 1979.

 Income Tax Law & Accounts by Dr. H.C Mehrotra.
 Sampath Iyengar’s law of Income Tax
 The law and practice of Income Tax by Aravind P Datar

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 QUESTIONAAIRE

Name of the Assesses:

Occupation:
Gender:
Qualification:
Age:

1. Are you regular tax payer?

Yes No

2. What is your annual income?

Up to Rs. 2 lakh
Rs 2-3 lakh
Rs 3-4 lakh
Rs 4-5 lakh
Above Rs 5 lakh

3. What is your Annual Savings?

Less than Rs 25000

Rs 25000- Rs 50000
Rs 50000- Rs 75000
Rs 75000- Rs 100000
More than 100000

4. What is your motive for savings?

To meet specific purpose
To earn income
To meet contingent expenses
To get tax benefit
To be secured at old age

5. What factors do you consider for increasing your savings?

Increase in salary
Additional income/increment
Future needs
Tax benefits
Statutory requirements

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 6. What are your investment preferences?
Bank Deposits
Mutual Funds
Fixed Deposits
Insurance policies
Govt. Securities i. e PF, GPF, PPF
Post office deposits
Equity market
Gold

7. How long do you like to invest?

Long term( more than 10 years)

Medium term (more than 5 years)
Short term ( more than 1 year)
Very short term( less than 1 year)
As per convenience

8. Whose advice do you take while investing?

Spouse/family members
Friends/collegues
Company agents
Financial advisors
Self decision

9. From where do you get information for your investment?

T.V and Radio
Organisation Report
Family members and collegues
Journals and magazines
Agents and Advisors

10. What recommendation would you like to give to create awareness among
salaried employees about investment?

Training Programmes
Workshops & seminars
Social Welfare programmes
Advertisements
Investors meet

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11. How much are you aware on the below instruments?

Instruments Fully Aware Just Aware Not Aware

Life Insurance
Health Insurance
ULIPs
NPS
ELSS
PPF

12. What type of investment plan do you prefer in future?

Regular return plan
Pension plan
Medical plan
Specific purpose plan
Multiple Option Plan

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