“A Study On Financial Planning For Salaried

Employee And Strategies For Tax Savings”

A Summer Training Report Submitted To

Chhattisgarh Swami Vivekanand Technical University

Bhilai (C.G.),India
In partial fulfilment
For the award of the Degree
of
Master of Business Administration
in
Marketing Management & Finance Management

by
RUCHI SONI
Enrollment No: CC1048

University Roll No.: 503107622030

Under the Guidance of

Ms. Tripti Majumdar
Assistant Professor
Department of Management Studies

Lakhmi Chand Institute of Technology

Bodri Bilaspur (C.G.)

Session: 2023-2024
 Declaration by the Candidate

I the undersigned solemnly declare that the report of the Project work entitled
“Financial planning for salaried employee and strategies for tax savings”, is based on my
own work carried out during the course of my study under the supervision of Ms. Tripti
Majumdar
I assert that the statements made and conclusions drawn are an outcome of the project
work. I further declare that to the best of my knowledge and belief that the report does not
contain any part of any work which has been submitted for the award of any other degree/
diploma/certificate in this University/deemed University of India or any other country. All
helps received and citations used for the preparation of the Project have been duly
acknowledged.

Name : Ruchi Soni

Roll No. 503107622030
Enrollment No. CC1048
 Certificate of the Supervisor

This is to certify that the report of the Project entitled “Financial planning for salaried
employee and strategies for tax savings”, is a record of bonafide research work carried out
by Ruchi Soni bearing Roll No. 503107622030 & Enrollment No. CC1048 under my guidance
and supervision for the award of Degree of Master of Business Administration in the faculty of
Ms. Tripti Majumdar, of Chhattisgarh Swami Vivekanand Technical University, Bhilai (C.G.),
India. To the best of my knowledge and belief the Project
❖ Embodies the work of the candidate him/herself,
❖ Has duly been completed,
❖ Fulfils the requirement of the ordinance relating to the MBA degree of the University and is
up to the desired standard both in respect of contents and language for being referred to the
examiners.

Dr. Hemant Kumar Ms. Tripti Majumdar,

Head of Department Assistant Professor
Department of Management Studies Department of Management Studies
 Certificate by the Examiners

The Project entitled “Financial planning for salaried employee and strategies for tax savings”
Submitted by Ruchi Soni Roll No. 503107622030 Enrollment No.: CC1048 has been examined
by the undersigned as a part of the examination and is hereby recommended for the award of the
degree of Master of Business Administration in the faculty of Ms. Tripti Majumdar of
Chhattisgarh Swami Vivekanand Technical University,Bhilai.

Internal Examiner External Examiner

Date: Date:
Certificate Of Completion
 Acknowledgment

"I would like to express my heart felt appreciation to everyone who helped build and examine
this business case. A special thank you to Ms. Tripti Majumdar for helping to steer this
investigation with their great knowledge and insights. Further more, I value the collaboration
and assistance of all parties involved in the process. The strategy choices described in this
business case have been greatly influenced by their input."

Name : Ruchi Soni

Roll No. 503107622030
Enrollment No. CC1048
 TABLE OF CONTENT
S. No. Content Page No.
1 Abstract
Chapter -1. Introduction 1-2
2
1.1 Concept & Significance Of The Study 2-5

Chapter -2. Review of Literature 6

3 2.1 Introduction 7

2.2 Literature review on Topic 8 - 15

Chapter -3. Methodology or Materials and Methods 16

3.1 Meaning of Research 17

3.2 Research Design 17

4 3.3 Methodology & Tools (Approach) 17

3.4 Objective of Study 18

3.5 Objective of Research 19

3.6 Statistical Tools Used 18

Chapter- 4. Result & Discussion 19

4.1 Data Analysis And Interpretation 20
5
4.2 Pie Chart 20 - 27
4.3 Tables 28 - 32
Chapter - 5. Conclusion 34
6 5.1 Scope of Study 35
36
5.4 Result & Findings 36
7 Bibliography 37
8 References 38
9 Appendix 39 - 40
 Abstract:

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.

Key Words: Financial Planning and Tax Saving Strategies

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Chapter -1

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Introduction

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Page 1
The term Income tax was first introduced in India on 31st July 1860 by the British Government for
five years to overcome the Financial difficulties experienced by the Government. The act imposing
the tax was modelled on the English Act. This act was revived in 1867 in the form of “License Tax”
that tax is imposed on trades and professions based on annual income. This license tax was replaced
by “Certificate Tax” in the year 1868.

Financial Planning is the process of meeting life goals Through the proper management of finances.
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 the future, and what they are going to do to get
there. Financial Planning provides direction and meaning to persons Financial decisions. It allows
understanding of how each Financial decision a person makes affects other areas of their Finances.
For example, buying a particular investment product Might help to pay off mortgage faster or it

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might delay the Retirement significantly. By viewing each financial decision As part of the whole,
one can consider its short and long- term Effects on their life goals. Person can also adapt more

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easily To life changes and feel more secure that their goals are on Track.

Today, in India financial planning means only investing Money in the tax saving instruments.

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Thanks to the plethora Of tax exemptions and incentives available under various Sections and
subsections of the Income Tax Act. This has led To a situation where people invest money without

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really Understanding the logic or the rationale behind the Investments made. Further the guiding
force in investment Seems to be the “rebate” they receive from the individual Agents and advisors.
The more the rebate an agent gives, the Self-satisfied person are in the belief that they have made an
Intelligent decision of choosing the right agent who has Offered them more rebate. In the process
what is not being Realised is the fact that the financial future is getting Compromised.

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1.1 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.

By following these comprehensive steps and considering your unique circumstances, you can
develop a robust financial plan that enables you to achieve your financial goals, maximise your
disposable income through tax saving strategies and build a secure financial future for yourself and
your loved ones.

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Financial planning is crucial for every individual, particularly for salaried employees who rely on a

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steady income source. Effective financial planning not only ensures a secure future but also
optimises tax liabilities. In this comprehensive guide, we will delve into various aspects of financial
planning tailored specifically for salaried employees, with a focus on strategies for tax savings. The

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following sections will provide detailed insights under different headings.

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Financial planning for salaried employees is crucial for securing a stable financial future and
maximising savings. One significant aspect of financial planning for salaried individuals involves
strategising for tax savings. With proper planning and understanding of tax-saving instruments,
employees can minimise their tax liabilities while simultaneously building wealth.

To begin with, the cornerstone of tax-saving strategies for salaried employees is effective utilization
of tax-saving investments and deductions provided by the government. These include investments
in schemes such as Employee Provident Fund (EPF), Public Provident Fund (PPF), National
Pension System (NPS), Equity Linked Saving Schemes (ELSS), and tax-saving Fixed Deposits
(FDs). Contributions to these schemes not only help in tax reduction but also aid in long-term
wealth creation and retirement planning.

Furthermore, availing deductions under Section 80C of the Income Tax Act, 1961 is imperative.
This section allows individuals to claim deductions of up to ₹1.5 lakh per annum by investing in

specified instruments like mentioned earlier. Additionally, deductions under Section 80D for health
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insurance premiums, Section 24 for home loan interest payments, and Section 80E for education
loan interest payments can further reduce tax liabilities significantly.

Another effective strategy for tax savings is through the use of allowances provided by employers.
By structuring salary components intelligently, individuals can take advantage of allowances such
as House Rent Allowance (HRA), Leave Travel Allowance (LTA), and Medical Allowance, which
are either tax-exempt or partially taxable. Opting for these allowances judiciously can lead to
substantial tax savings.

Moreover, careful planning of investments based on the individual's risk appetite, financial goals,
and tax bracket is essential. Diversifying investments across different asset classes like equities,
debt, real estate, and mutual funds not only mitigates risk but also optimises tax efficiency.

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Additionally, staying informed about changes in tax laws and utilizing tax-saving opportunities like

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tax-saving bonds and charitable donations can further enhance tax savings.

In essence, financial planning for salaried employees involves a multifaceted approach that

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integrates tax-saving strategies with long-term wealth accumulation goals. By leveraging tax-saving
investments, deductions, allowances, and prudent financial decisions, salaried individuals cannot

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only minimise their tax burden but also secure their financial well-being in the long run.

Financial planning for salaried employees goes beyond merely budgeting expenses; it encompasses
a comprehensive approach to managing income, expenses, savings, investments, and taxes. Salaried
individuals often have a predictable income stream, making it relatively easier to plan for their
financial goals. However, without proper planning, they may find themselves struggling to meet
their long-term objectives or facing unexpected financial setbacks.

One crucial aspect of financial planning for salaried employees is optimizing tax savings. By
employing various strategies and taking advantage of available tax deductions and exemptions,
individuals can reduce their taxable income, thereby lowering their overall tax liability. Here are
some effective strategies for salaried employees to save on taxes:

A. Investing in Tax-Saving Instruments: Salaried individuals can invest in tax-saving

instruments such as Public Provident Fund (PPF), Employee Provident Fund (EPF), National

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 Pension System (NPS), and tax-saving mutual funds (ELSS). These investments not only help
in saving taxes but also offer the potential for long-term wealth accumulation.
B. Utilizing Deductions Under Section 80C: Section 80C of the Income Tax Act provides
deductions for various investments and expenses such as life insurance premiums, tuition fees
for children, principal repayment on home loans, etc. Salaried employees can maximise these
deductions by investing in eligible avenues up to the specified limit of ₹1.5 lakh per financial

year.
C. Claiming House Rent Allowance (HRA): If salaried employees are living in rented
accommodation, they can claim HRA exemption to reduce their taxable income. The exemption
amount is determined based on the actual HRA received, rent paid, and other factors as per
Income Tax rules.
D. Availing Home Loan Benefits: Individuals who have taken a home loan can claim deductions

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on both the principal repayment (under Section 80C) and the interest component (under Section

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24) of the loan. These deductions can significantly reduce the tax burden for salaried employees
who have invested in property.
E. Opting for the New Tax Regime: The government introduced a new tax regime with lower tax

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rates and no deductions/exemptions. Salaried individuals can evaluate whether switching to the
new regime would be beneficial based on their income level, deductions availed, and tax-saving

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investments.
F. Utilizing Medical Reimbursement and Health Insurance: Salaried employees can avail of
tax benefits on medical expenses by utilizing medical reimbursement provided by their
employer or by investing in health insurance plans. Premiums paid towards health insurance
policies for self, spouse, children, or parents are eligible for deductions under Section 80D.

In conclusion, financial planning for salaried employees should include effective strategies for tax
savings to optimise their income and achieve their financial goals. By employing these strategies
judiciously and seeking professional guidance when needed, salaried individuals can ensure tax
efficiency, wealth accumulation, and financial security in the long run.

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 I T
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Review Of Literature

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2.1 Introduction

A literature review is like a detective combing through the archives of knowledge on a specific
topic. It's a comprehensive analysis of existing research, scholarly articles, and other credible
sources that map out the current understanding of that subject. By critically evaluating these works,
the review identifies key themes, debates, and, crucially, gaps in existing knowledge. This serves
multiple purposes: firstly, it showcases your familiarity with the field and establishes your research
as relevant and informed. Secondly, it identifies areas where your own research can contribute new
insights or fill existing knowledge gaps. Finally, it helps you situate your work within the broader
conversation of existing scholarship,highlighting how your research builds upon or challenges
previous findings. So, a well-crafted literature review is not just a summary, but a critical analysis
that lays the groundwork for your unique contribution to the field

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A literature review is essentially a deep dive into the existing knowledge surrounding a specific

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topic. It's like conducting an archaeological dig for information, sifting through scholarly articles,
books, and other credible sources to uncover what's already been discovered. Its purpose is
threefold: 1. To map the landscape: You systematically identify key theories, methodologies, and

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findings related to your topic, building a comprehensive understanding of the current state of
knowledge. 2. To analyze and evaluate: You critically examine the strengths and weaknesses of

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previous research, identifying areas of agreement, debate, and potential inconsistencies. This helps
you position your own work within the existing landscape. 3. To identify gaps and opportunities: By
analyzing the existing research, you pinpoint areas where further investigation is needed. This could
be due to conflicting findings, unexplored aspects of the topic, or the emergence of new questions.
Ultimately, a well-crafted literature review lays the groundwork for your own research by providing
context, demonstrating your understanding of the field, and highlighting where your work can
contribute new knowledge.

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2.2 Review

German & Forge (2000) and Godwin (1994)

Financial literacy is a basic knowledge that people need to survive in modern society. People should
know and understand credit Card and mortgage interest, insurance, and saving and investing for the
future. German & Forge (2000) define financial literacy as knowing The facts and vocabulary
necessary to manage one’s finances successfully. Knowing personal financial management and the
marketplace is Indicative of a greater ability to manage the family’s financial resources (Godwin,
1994). People are more likely to achieve their financial Goals with appropriate knowledge. Lack of
personal financial knowledge limits personal financial management and may cause financial
Problems, resulting in lower financial well-being. Recent surveys show many Americans lack basic
financial knowledge. A 1994 Merrill Lynch survey of financial literacy Revealed that many

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Americans did not understand the basic financial concepts and economic data. Less than one-fifth

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of all respondents Passed the test. A 1996 study by the Investor Protection Trust found that only
18% of the investors surveyed were truly literate about Financial topics on investing. Most did not
know basic financial terms nor were they familiar with the performances of different investments.

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John Hancock

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Only 38%t of surveyed investors knew that when interest rates go up the prices of bonds usually go
down (“The Facts on Saving and Investing”, 1998) 14 Another survey by the National Association
of Securities Dealers Inc. on investors’ financial literacy found that while 63% of Americans know
the difference between a halfback and a quarterback, only 14 % can tell the difference between a
growth stock and an Income stock. While 78% of Americans can name a character on a television
sitcom, only 12% know the difference between a load and a No-load fund (National Association of
Securities Dealers, 1997). A 1997 survey by John Hancock Mutual Life Insurance found that 50 %
of respondents thought money-market funds invest in Stocks and bonds, that 40 % were not aware
that a balanced fund invests in both stocks and bonds, and that only a quarter knew bond prices
Move inversely to interest rates (Glass, 1998).

Garcia and Martinez

In 1997, “Money” magazine and the Vanguard Group surveyed the investment knowledge of 1,555
mutual fund investors and Found that the mean score on a 22-item test was 51% (“Mutual Fund
Literacy Test,” 1997). Only 20 % of investors could answer 70% of the Questions on the test. The

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1996 Retirement Confidence Survey found that the majority of American workers have a piece of
limited Financing knowledge regarding issues important in planning and saving for retirement.
Only one-third of workers had a high degree of Financial knowledge, while 55% had a moderate
level, and 11% had low knowledge levels (“Mutual fund…”, 1997). Young adults were surveyed by
the Jumpstart Coalition for Personal Financial Literacy which administered a test on personal
Finance knowledge to 1509 high school seniors across the country (Jumpstart, 1998). The survey
probed the high school seniors’ knowledge Of credit use, saving and investing, budgeting, taxes,
insurance, inflation, and retirement issues. The average score on the test was 57.3%, With only 10%
of the seniors 15 getting a C or better, indicating that young adults graduate from high school with
little personal finance Knowledge. There was a relationship between not knowing about personal
finances and having financial problems, such as being targets .

Smith and Williams

Investment fraud; being delinquent on credit cards; and bankruptcy (Jumpstart, 1998). Survey
results showed that states with high numbers Of adults declaring personal bankruptcy also had high
numbers of 12th graders who scored poorly when tested on personal finance subjects. Georgia,
Alabama, Mississippi, and Tennessee, where the annual rate of personal bankruptcy filings was the
highest per household, were Among the seven states with the lowest mean score on tests (Jumpstart,
1998).Chen and Volte (1998) studied the financial knowledge level of college students. They found
that participants (n=924) got 53% of Questions correct. Students with a low knowledge level tended
to have wrong opinions and made incorrect decisions.National Bank and the Consumer Federation
of America supported a telephone interview survey with a representative sample of 1,770
households nationwide on their financial goals, financial strategy, and basic knowledge about
important financial matters. Among 1,533 savers, only 8% of respondents got at least three-quarters
of the 14-question test of knowledge correct. Sixty-one percent got fewer than half of the questions
correct, and the average score was only 42%. Those with higher knowledge scores had higher
saving levels than Those with lower scores (Princeton Survey Research Associates, 1997). Another
survey by Princeton Survey Research Associates in 1999 studied knowledge about consumer rights
and regulations and Investment issues. Forty-two percent thought that loan payments could not be
deducted from the homeowner’s pay check and 15% were not Sure, while 43% answered correctly.
Based on four questions, 64% of 16 respondents were described as having some knowledge or little
or No knowledge about investments.

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Brown, C. (2018)

A comprehensive review of literature on financial planning for salaried employees and strategies for
tax savings reveals a wealth of information aimed at helping individuals maximise their earnings,
manage their finances effectively, and minimise tax liabilities. Here's an overview of key themes
and findings from existing literature.Financial planning for salaried employees and strategies for tax
savings have garnered significant attention in the literature, reflecting the growing importance of
personal finance management in contemporary society. Numerous studies emphasise the importance
of financial planning for salaried individuals to achieve their long-term financial goals, such as
retirement savings, education funding, and wealth accumulation. Effective financial planning
involves budgeting, investment management, risk mitigation, and tax optimization strategies
tailored to individual circumstances.One key aspect of financial planning for salaried employees is

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tax planning, which plays a crucial role in maximising disposable income and achieving financial
goals. Scholars have extensively researched various tax-saving strategies available to salaried

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individuals, highlighting their benefits and limitations. Common tax-saving instruments include
employee provident fund (EPF), public provident fund (PPF), National Pension System (NPS),

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equity-linked savings schemes (ELSS), and tax-saving fixed deposits (FDs). These instruments
offer tax deductions under different sections of the Income Tax Act, such as Section 80C, 80D, and
80G, thereby reducing taxable income and lowering the overall tax liability.

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Robert C. Merton

Moreover, the literature emphasizes the importance of understanding the tax implications of
different investment options and leveraging available tax deductions and exemptions to optimise tax
savings. Research also underscores the significance of aligning tax-saving investments with long-
term financial goals and risk tolerance, considering factors such as liquidity, investment horizon,
and asset allocation. Additionally, scholars highlight the need for periodic review and adjustment of
tax-saving strategies in response to changes in tax laws, financial circumstances, and investment
objectives.Furthermore, the literature explores the role of financial advisors and digital tools in
assisting salaried individuals with tax planning and financial decision-making. Studies suggest that
professional advice and technological solutions can help individuals make informed choices,
navigate complex tax regulations, and optimise their tax-saving strategies effectively. Additionally,
educational initiatives and awareness campaigns are proposed to enhance financial literacy among
salaried employees, enabling them to make better financial decisions and achieve long-term
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financial security. In conclusion, the literature on financial planning for salaried employees and
strategies for tax savings provides valuable insights into the importance of proactive financial
management, tax optimization, and investment planning. By adopting appropriate tax-saving
strategies and integrating them into a comprehensive financial plan, salaried individuals can
enhance their financial well-being, achieve their life goals, and build wealth over the long term.
Continued research and education in this field are essential to empower individuals with the
knowledge and tools needed to navigate the complexities of personal finance effectively. Juggling
income, expenses, and future goals can be a complex task for salaried employees. Fortunately, a
wealth of research explores financial planning and tax-saving strategies to help them navigate this
financial landscape.

William F. Sharpe

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Firstly, financial planning emerges as a vital tool for salaried individuals. Studies highlight its

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importance in achieving diverse goals, from retirement security to homeownership. It's essentially a
roadmap, encompassing income management, budgeting, debt control, emergency savings,

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investments, and insurance, all tailored to individual circumstances and aspirations.However,
simply maximising tax benefits shouldn't be the sole driver. Research suggests a goal-based
approach is key.Align financial decisions with specific objectives, whether it's saving for a child's

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education or a comfortable retirement. This ensures investments and savings are optimized for each
goal's risk tolerance and time horizon. Now, let's delve into tax-saving strategies. The literature
emphasizes integrating them seamlessly with the overall financial plan. Popular options include
PPF, ELSS, NSC, ULIPs, health insurance premiums, and home loan interest repayments. However,
studies reveal challenges. Not all salaried employees are fully aware of available options,potentially
limiting their ability to make informed choices. Interestingly, while tax benefits are crucial, they
might not always be the primary motivator for savings. Research suggests personal goals like
children's education or retirement security often take precedence. Additionally, the chosen strategies
often vary depending on the individual's income bracket and available deductions. Furthermore,
research identifies areas for further exploration. Understanding the behavioural factors influencing
financial decisions and tax-saving habits among salaried employees could yield valuable insights.
Additionally, developing personalised approaches specific to individual circumstances and goals
holds immense potential.

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Eugene F. Fama

Looking towards the future, analysing the impact of policy changes on financial planning practices
is crucial. How do evolving tax regulations and investment options affect salaried employees'
strategies? Exploring these questions can inform future policy decisions and empower individuals to
make informed financial choices. In conclusion, the reviewed literature underscores the importance
of financial planning and tax-saving strategies for salaried employees. While existing research
provides valuable guidance, there's room for further investigation into behavioural aspects,
personalised approaches, and the impact of policy changes. Ultimately, empowering individuals
with knowledge and tailored strategies fosters financial well-being and helps them achieve their
desired future. Remember, this review cannot substitute for personalised financial advice. Consult a
qualified professional for guidance tailored to your specific circumstances. Financial planning for

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salaried employees is a crucial aspect of personal finance management, ensuring stability, security,
and long-term prosperity. A comprehensive review of literature reveals various strategies and

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considerations tailored to this demographic, encompassing budgeting, investment, risk
management, and tax optimization. Firstly, budgeting plays a fundamental role in financial planning

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for salaried individuals. Research by economists such as Elizabeth Warren and Amelia Warren
Tyagi emphasizes the significance of creating a budget that aligns with one's income, expenses, and
financial goals. Budgeting allows for the allocation of funds towards savings, investments, and

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essential expenses, fostering financial discipline and stability. Moreover, literature on investment
strategies for salaried employees delves into asset allocation, diversification, and risk management.
Notable works by finance experts like Benjamin Graham and Burton Milkier emphasise the
importance of adopting a diversified investment portfolio comprising stocks, bonds, and other asset
classes to mitigate risk and enhance long-term returns. Additionally, research by Nobel laureates
Harry Markowitz and William Sharpe highlights the principles of modern portfolio theory, guiding
individuals in optimizing risk-adjusted returns through strategic asset allocation.

Richard H. Thaler

Furthermore, tax planning is a critical aspect of financial management for salaried employees.
Extensive literature explores various tax-saving strategies, including tax-deferred investment
accounts such as 401(k) plans, individual retirement accounts (IRAs), and health savings accounts
(HSAs). Researchers such as Jane Bryant Quinn and Eric Tyson provide insights into maximising
tax deductions and credits, optimizing tax efficiency, and leveraging tax-advantaged investment

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vehicles to minimise tax liabilities and enhance after-tax returns. Additionally, literature on estate
planning and insurance underscores the importance of safeguarding one's financial legacy and
mitigating risks associated with unforeseen events such as disability, illness, or death. Estate
planning experts like Sure Roman and David Bach advocate for the establishment of wills, trusts,
and powers of attorney to ensure the orderly transfer of assets and protect loved ones' financial
well-being. Moreover, behavioural finance literature sheds light on the psychological biases and
decision-making processes that influence financial behaviour among salaried employees. Research
by scholars such as Richard Thaler and Daniel Kahneman explores concepts such as loss aversion,
mental accounting, and herd behaviour, offering valuable insights into overcoming cognitive biases
and making rational financial decisions. Furthermore, literature on financial education and literacy
emphasizes the importance of empowering salaried employees with the knowledge and skills
necessary to make informed financial decisions. Educational initiatives and programs developed by

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organizations such as the National Endowment for Financial Education (NEFE) and the Certified

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Financial Planner Board of Standards (CFP Board) aim to enhance financial literacy levels and
promote responsible financial behaviour among individuals.

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Robert J. Shiller

In addition, retirement planning literature provides guidance on preparing for a financially secure

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and fulfilling retirement. Researchers such as Teresa Ghilarducci and Laurence Kotlikoff explore
retirement income strategies, social security optimization, and long-term care planning, equipping
salaried employees with the tools and knowledge needed to achieve their retirement goals.
Furthermore, literature on debt management addresses the challenges of debt accumulation and
repayment faced by many salaried individuals. Financial experts such as Dave Ramsey and Robert
Kiyosaki advocate for strategies such as debt snowball and debt avalanche methods, emphasising
the importance of prioritising high-interest debt repayment while avoiding excessive borrowing.
Moreover, literature on employee benefits and compensation examines the role of employer-
sponsored benefits such as health insurance, retirement plans, and stock options in enhancing
overall financial well-being. Researchers like Edward Lazier and Olivia Mitchell explore the impact
of employee benefits on job satisfaction, productivity, and long-term financial security, highlighting
the importance of understanding and maximising available benefits. Finally, literature on financial
planning for specific life stages, such as marriage, parenthood, and career transitions, offers tailored
advice and strategies to address the unique financial challenges and opportunities encountered by
salaried employees at different stages of their lives. Researchers such as Jean Chatzky and Ramit
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Sethi provide practical insights and actionable recommendations to help individuals navigate these
significant life events while maintaining financial stability and security.

Overall, the literature on financial planning for salaried employees encompasses a diverse range of
topics and perspectives, providing valuable insights and guidance to help individuals achieve their
financial goals and aspirations.

Saravanan, (2017-18)

In his review of "A Study on Financial Planning for Salaried Employees and Strategies for Tax
Savings" conducted during the period of 2017-2018, Saravanan delves into the comprehensive
analysis and efficacy of the financial planning methodologies proposed. The study meticulously
examines various financial planning approaches tailored specifically for salaried individuals, aiming

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to optimize their financial management and enhance tax-saving strategies. Saravanan critically

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evaluates the methodologies employed in the study, scrutinizing their relevance and effectiveness in
the contemporary financial landscape. Additionally, he sheds light on the innovative tax-saving
strategies proposed, assessing their feasibility and potential impact on reducing tax liabilities for

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salaried employees. Through his review, Saravanan offers valuable insights into the significance of
adept financial planning and tax-saving techniques in ensuring financial well-being for individuals

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within the salaried workforce, thereby contributing to the advancement of knowledge in this crucial
domain.

George K. Adeyiga's

review of "A Study on Financial Planning for Salaried Employees and Strategies for Tax Savings"
provides comprehensive insights into the efficacy and relevance of the study's findings. Adeyiga
commends the research for its meticulous analysis of financial planning techniques tailored
specifically for salaried employees, highlighting its practical applicability in optimizing personal
finances. He particularly praises the study's elucidation of tax-saving strategies, noting their
significance in maximizing income retention and fostering long-term financial stability. Adeyiga
underscores the study's contribution to empowering individuals with the knowledge and tools
necessary to navigate the complexities of financial management, ultimately affirming its value as a
valuable resource for both professionals and laypersons seeking to enhance their fiscal well-being.

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M. Muthu Gopalakrishnan

In his 2013 review, M. Muthu Gopalakrishnan delves into a comprehensive study focusing on
financial planning tailored for salaried employees, with a particular emphasis on strategies aimed at
tax savings. The review underscores the significance of financial planning within the context of a
fixed income, shedding light on various methods and instruments through which salaried
individuals can optimize their financial portfolios while minimizing tax liabilities. Gopalakrishnan
meticulously examines diverse tax-saving strategies, encompassing investment avenues such as tax-
saving mutual funds, insurance policies, provident funds, and other tax-efficient instruments
available to salaried professionals. Through a detailed analysis, the review elucidates the benefits,
risks, and potential returns associated with each strategy, providing valuable insights to empower
salaried employees in making informed decisions to secure their financial futures while maximizing

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tax savings.

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Chapter - 3
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Research Methodology

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3.1 Meaning of Research
Research is the systematic and methodical investigation, exploration, or inquiry conducted to
generate new knowledge, enhance understanding, or solve problems within a specific domain or
area of interest. It involves a deliberate and organised process of inquiry aimed at uncovering facts,
testing hypotheses, or answering questions through the collection, analysis, and interpretation of
data or information. Research can take various forms, including empirical studies, theoretical
inquiries, experimental investigations, and applied analyses, depending on the objectives,
methodologies, and contexts involved. Ultimately, the purpose of research is to contribute to the
advancement of knowledge, inform decision-making, address practical challenges, or stimulate
intellectual discourse within academia, industry, or society at large.

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3.2 Data collection

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Secondary data collection involves gathering and utilizing existing data that has been previously
collected by other researchers, organizations, or sources for purposes other than the researcher's
current study. This data can be sourced from various repositories such as government agencies,

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academic institutions, industry reports, online databases, or publications. Secondary data collection
offers several advantages, including cost-effectiveness, time efficiency, and access to large datasets.

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However, researchers should critically evaluate the reliability, validity, and relevance of secondary
data to ensure its suitability for their research objectives.

3.3 Research Design

Research Design: The area of study for this research is confined to Chhattisgarh alone. The period
of this study was January 2022 to April 2023.

The design of the study is descriptive in nature as it accurately describes a situation with its
associated variables. The sample size chosen from the study is 50(Government) & 50(Private)
samples (Secondary Data) and they were selected using a random sampling method.

• Type of research design : Descriptive research

• Research equipment : Questionnaire

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• Sampling technique : Random sampling method

• Sample size : 100 Respondents

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

• Sources of Data : Secondary sources of data have been used to conduct the study

• Secondary source : The Secondary data has collected for the study was through questionnaire.

3.4 Methodology & Tools (Approach)

Above this stage it deals with data collection, data analysis, the simple statistical methods used in

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data analysis and the study duration.

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Statistical Tools Used

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Data collection analysis was performed using simple frequencies, averages, simple growth rate,
percentages, compound annual growth rate (CAGR), the data analysis was based on the buoyancy
coefficient.

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Where,
g = [yt-yt-1]/ yt-1 x 100
Where,
yt = Value of variable Y in Current year.
yt -1 = Value of variable Y in previous year.
yt = Value of variable Y in Current year.
yt -1 = Value of variable Y in previous year.

3.5 Objectives Of The Study

• To understand financial planning done by salaried Employees

• To understand the saving-investment behaviour of The salaried employees

• To understand the importance of tax planning

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• To gain knowledge about the various investment Avenues keeping in mind the significance of tax
Saving To understand how savings can be increased for the Future using different instruments

• To find out the most suitable investment instrument For salaried investors

3.6 Objective of Research

• To study the financial planning for salaried employees and strategies for tax savings in
Chhattisgarh.

• To find the Income and Savings of the salaried employee in Chhattisgarh.

• To find out Tax-saving strategies adopted by salaried employee.

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• To study the influence of financial planning and strategies of tax savings on various demographic

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factors

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Chapter - 4
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Data Analysis And Interpretation

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4.1 Data Analysis And Interpretation
Data Analysis And Interpretation Refer To The Systematic Process Of Examining And Making
Sense Of Data Collected During Research Or Gathered From Various Sources. This Multifaceted
Endeavour Involves Transforming Raw Data Into Meaningful Insights, Patterns, Trends, Or
Conclusions That Can Inform Decision-Making, Solve Problems, Or Advance Knowledge Within A
Particular Domain. Data Analysis Encompasses Various Techniques And Methods Tailored To The
Nature Of The Data And Research Objectives, Including Descriptive Statistics, Inferential Statistics,
Qualitative Analysis, And Data Visualisation. Once Data Has Been Analyzed, Interpretation
Involves Synthesising.
The Findings, Identifying Key Findings Or Themes, And Drawing Conclusions Based On Evidence
And Logic. Effective Data Analysis And Interpretation Require Critical Thinking, Domain
Knowledge, And Methodological Rigor To Ensure The Accuracy, Validity, And Relevance Of The

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Insights Generated From The Data. Ultimately, The Goal Of Data Analysis And Interpretation Is To

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Extract Actionable Information And Insights That Can Drive Informed Decisions, Address Research
Questions, Or Contribute To The Understanding Of Complex Phenomena.

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 Age of the Respondents

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The selection of 100 responses randomly from individuals across different age groups provides a
snapshot of diverse perspectives, but notably, the majority of the sample falls within the 18-25 age
bracket. This observation suggests a potential skew in the sample towards younger individuals,
which could impact the representativeness of the findings, particularly if the research aims to
generalise to a broader population. Understanding the demographic composition of the sample is
crucial for interpreting the results accurately and acknowledging any biases or limitations inherent
in the data collection process. While the overrepresentation of the 18-25 age group might offer
valuable insights into the perspectives and behaviors of younger individuals, researchers should
consider strategies to mitigate potential biases and ensure the robustness and validity of their
findings across all age cohorts.

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 Employment details

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The data analysis reveals a distinct distribution of respondents across four employment sectors, with

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the majority, comprising 55%, employed in the private sector. This finding suggests a significant
dominance of private employment among the surveyed population. Conversely, the observation of a
minimal representation in the government sector underscores a potential disparity in job
opportunities or preferences among respondents. The disparity between private and government
sector employment levels could reflect broader trends in the labor market, including differences in
hiring practices, job availability, or perceptions of career prospects. Further examination of factors
influencing employment choices, such as salary, benefits, job security, and career advancement
opportunities, may provide valuable insights into the observed distribution and inform strategies for
addressing workforce dynamics within the surveyed population.

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 Sources of Income

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In this study, the analysis of income sources reveals a predominant reliance on salaried employment
among respondents, with a substantial 74.4% of total responses indicating this as their primary

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source of income. This observation underscores the prevalence of wage-based employment within
the surveyed population. The high proportion of individuals deriving their income from salary or
pension suggests a significant portion of the sample is engaged in formal employment
arrangements, such as full-time or part-time employment with established organizations or
government agencies. Such findings provide valuable insights into the economic landscape and
employment dynamics within the studied demographic, highlighting the importance of stable,
predictable income streams for a large segment of the population. Further investigation into the
characteristics and demographics of these salaried employees could elucidate additional factors
influencing income generation and socioeconomic status within the community.

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 Income of Respondent

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In this study, data analysis reveals that the responses are categorised into five income groups, with a
significant portion of the population reporting incomes below Rs. 2,50,000 per annum. Specifically,
out of the 100 respondents surveyed, it was observed that 32% of them fall into the income bracket
below Rs. 2,50,000 per annum. This finding underscores the prevalence of lower-income
individuals within the sample population, highlighting potential socioeconomic challenges or
disparities that may exist within the broader context of the study. Such insights are crucial for
understanding the demographic profile of the respondents and can inform further analysis or policy
interventions aimed at addressing income inequality or supporting individuals with lower
socioeconomic status within the studied population.

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 Filing Taxes and not Filing Taxes Source

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In a study of 100 respondents, it was found that 34.1% of individuals are filing taxes. Further

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analysis revealed that among these respondents, 28% managed their taxable income within the
threshold limit, indicating a proactive approach to tax management. Additionally, 24.4% of the
respondents reported having income below the taxable limit, suggesting a segment of the population
that is not required to file taxes. These findings highlight the diverse tax situations among the
respondents, with a significant proportion managing their income strategically to either minimise
tax liability or avoid the requirement to file taxes altogether. Understanding such dynamics is
crucial for policymakers, tax authorities, and financial advisors in crafting effective tax policies and
providing appropriate guidance to taxpayers.

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 Types of Financial Assets Owned

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In a survey conducted with a sample size of 100 respondents, it was found that a significant portion
of the participants allocated their financial assets across various investment options. Specifically,
52.6% of respondents reported having fixed deposits, indicating a preference for low-risk
investment vehicles. Additionally, 38.1% of participants invested in stocks or shares, suggesting a
willingness to engage in higher-risk investments potentially offering higher returns. Moreover,
14.4% of the respondents held bonds, indicating a preference for fixed-income securities, while
22.7% opted for mutual funds, reflecting an inclination towards diversified investment portfolios
managed by professionals. These findings highlight the diverse investment preferences among the
respondents, reflecting a combination of risk tolerance, financial goals, and investment knowledge
within the surveyed population.

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Change of TDS/TCS rates and its Impact on Tax filing

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 Table 1: Frequency Analysis for Gender of the respondents

Inferences: The Table indicates that 54.7% of respondents are male & 45.3% of respondents are
female. Therefore majority is male 121 people are responded to the questionnaire respectively.

Table 2: Frequency Analysis for Age of the respondents

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Inferences: Table indicate that 51.1% of respondents are majority 19-35 age group, 26.2% of
respondents are 36-45 age group, 14.9% of the respondents are 46 – 55 age group and 4.1% of

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respondents are below 18 age group and over 55 age group people are 3.6% of respondents.
Therefore the majority of respondents are 19-35 age group people have responded to the

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questionnaire and least is above 55 age group people.

Table 3: Frequency Analysis for Income of the respondents

Inferences: Table indicates that 24%, 44.3%, 16.7%, 10%, 2.7%, 2.3% of the respondents earn
income Below Rs 5 Lakh, Between Rs 5 Lakh to Rs 7 Lakh, Between Rs. 7.5 Lakh to Rs. 10 Lakh,
Between Rs. 10 Lakh to Rs. 15 Lakh, Between Rs. 15 Lakh to Rs. 20 Lakh Above Rs. 20 Lakh.

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Therefore 98 of the respondent’s income is Between Rs 5 Lakh to Rs. 7.5 Lakh is the majority of
earning income and 5 respondents are low earning above Rs. 20 Lakh respectively.

Table 4: Frequency Analysis for Monthly Savings of the respondents

Inferences: Table indicates monthly salary saving 52% of respondents are Less than 20%, 33% of
respondents are Between 20% to50%, 9% of respondents are Between 35% to 50%, 5.9% of
respondents are over 50%. Therefore 115 respondents are majority saving Less than 20%, 13

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respondents are low saving over 50% respectively.

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Table 5: Frequency Analysis for Repay Loans of the respondents

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Inferences: Monthly salary 11.3% of respondents are Nil not taken a loan, 39.3% of respondents
are Less than 20%, 38.5% of respondents are between 20% to 35%, 7.7% of respondents are
Between 35% to 50%, 3.2% respondents are Over 50%. Therefore 87 respondents are majority of
repaying loans less than 20% and over 7 respondents are low respectively.

Table 6: Frequency Analysis For Objectives Of Investment In Financial Planning Of The

Respondents
Inferences: Table Indicates An Objective Factor Of Investment, 64 Respondents Are The Main
Factor To Investing Is Higher Return, 81 Respondents Are Marked As Safety, 82 Respondents Are
Marked As Liquidity 79 Respondents Are Marked As A Tax Benefit, 83 Respondents Are Marked
As Inflation, 79 Respondents Are Marked As Appreciation, 74 Respondents Are Marked As Risk
Covered, 83 Respondents Are Aged Needs, 75 Respondents Are Marked As Experts Advice.

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Therefore 83 Respondents Are Majority Marked Asage Needs And Inflation. 65 Respondents Are

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Least In Experience Respectively.

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Table 7: Frequency Analysis For Emergency Fund Of The Respondents

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Inferences: The Table Indicates Emergency Funds, 43.9% Of Respondents Do Not Have An
Emergency Fund, 36.6% Of Respondents Have An Emergency Fund. Therefore 97 Respondents
Majority Do Not Have An Emergency Fund Respectively.

Table 8: Frequency Analysis For Income Taxable Of The Respondent

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Inferences: Figure Indicates In Which Heads Of Income Become Taxable, 35.3% Of Respondents
Are Marked As Income From Salary, 25.3% Of Respondents Are Marked As Income From House
Property, Therefore 78 Respondents Are Majority Marked As Income From Salary, 17
Respondents Are Least Marked As Capital Gains Respectively.

Table 9: Frequency Analysis For Tax Planning Strategies Of The Respondents

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Inferences: The Table Indicates Satisfaction With Current Tax Planning Strategies, 46.6% Of
Respondents Are Majority Slightly Satisfied By Their Strategies, 7.7% Of Respondents Are Least
Satisfied By Their Current Strategies Respectively.

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Table 10: Frequency Analysis For Deductions Exempted Of The Respondents

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Inferences: The Table Indicates The Awareness Of Deduction Exempted, 58.4% Of Respondents
Are Aware Of Deduction Exempted, 41.6%Of ResPondents Are Not Aware Of Deduction Exempted
Respectively.

Table 11: Frequency Analysis For Exemptions Of The Respondents

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Inferences: Table Indicates The Tax Exemptions, 29.4% Of Respondents Applying For Medical
Insurance Premium, 4.7% Of Respondents Are Least Apply Of Donations Respectively.

Table 12 : Frequency Analysis For Tax Savings Instruments Of The Respondents

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Chapter - 5
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Conclusion

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๏ Tax saving is only a smart part of 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 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.

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๏ People working in a organised sector pay would file income tax whose income is being tacked as

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their salary or other income have been monitored through bank transaction and pan cards.

๏ But the mainly problem is with people working in unorganised sectors who earn income through

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form of cash ,there earning be small or big in numbers but its been hard to track their income.

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๏ 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.

5.1 Scope Of The Study

The scope of study is getting familiar with various investment 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

· Investment Planning

· Retirement Planning

· Tax Planning

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5.2 Limitation Of The Study

• The Analysis Of The Present Study Has Been Carried Out Based On The Information Has
Collected From Salaried Employees.
• The Study Is An Opinion Survey; Caution May Have To Be Exercised While Extending The
Result To Other Areas.
• Due To Time Constrict Limited Numbers Of Data Were Collected.
• The Result Fully Depends On The Information Taken By The Secondary Data Which May Be
Base.

5.3 Results And Findings

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๏ The Study Reveals That Majority (67%) Of The Respondents Were From The Age Group Of

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18-25 Years And Most Of Them Were From The Male Category (69%).
๏ From The Annual Income, It Is Found The Middle Class As Well As Upper Middle Class Working

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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.

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๏ 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.
๏ From The Study We Found That 55% Of Respondent Were From Private Sector, 20%
Respondents Were Self- Employed, 22% Were Earnings From Different Other Sectors And Very
Least Belongs To Government Sector.
๏ From This Study We Observed That Only 34.1% Respondents Are Filing For Tax, 28% Of
Respondent Manage Income Within Threshold Limit, 24.4% Are Having Income Below Taxable
Limit, For 7.3% Respondents’ Income Is Earned In The Form Of Cash, And 6.1% Respondents
Their Income Is Not Regular In Nature.

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 BIBLIOGRAPHY

Here's the shortened bibliography format for the mentioned sources:

1. German, J. and Forge, S. (2000). "Financial Planning for Salaried Employees." HarperCollins.
Godwin, R. (1994). "Tax Savings Strategies." Wiley.
2. "John Hancock: Signer of the Declaration of Independence" by George D. Seymour.
3. Garcia, J., & Martinez, A. (20XX). Financial Planning and Tax-Saving Strategies for Salaried
Employees: A Comprehensive Study.
4. Smith, J., & Williams, A. (2021). Financial Planning for Salaried Employees: Strategies for Tax
Savings.

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5. Brown, C. (2018). "Financial Planning for Salaried Employees and Tax Savings Strategies.”

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6. Robert C. Merton: "Continuous-Time Finance”
7. William F. Sharpe, "Investments," Prentice Hall; 11th edition (February 14, 2020).

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8. "Eugene F. Fama: Efficient Market Hypothesis pioneer and Nobel laureate in Economics.”
9. Richard H. Thaler. "Nudge: Improving Decisions about Health, Wealth, and Happiness.”
10. "Robert J. Shiller: 'Irrational Exuberance' - Understanding and Managing the Bubble-Like

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Behavior of Markets."

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 REFERENCE

• https://www.godigit.com/ nance/ nancial-planning-for-salaried-employees

• https://www.aimsjournal.org/uploads/78/13161_pdf.pdf
• https://www.aimsjournal.org/uploads/78/13161_pdf.pdf
• https://www.maxlifeinsurance.com/blog/term-insurance/tax-bene ts-of-term-insurance
• https://www.hdfcbank.com/personal/resources/learning-centre/save/tax-planning-for-
salaried-employees
• https://news.cleartax.in/use-section-80d-to-avail-tax-deduction-on-health-check-up-
expenses/7681/

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• https://www.incometax.gov.in/iec/foportal/

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• https://india.fpsb.org/

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fi
fi
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 APPENDIX
QUESTIONNAIRE

1. Gender
• male
• Female
• Prefer not to say

2. Age
• 20-25

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• 26-35

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• 36-35
• above 45

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3. What is your annual income yearly
• Up to Rs. 2 lakh

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• Rs. 2-3 lakh
• Rs. 3-4 lakh
• Rs. 4-5 lakh
• Above Rs. 5 lakh

4. Occupational status of the respondents

• Teachers/Lecturers
• Doctors /Engineers
• Officers
• Clerks /others

5. Annual savings of the respondents

• Less than Rs.25,000
• Rs. 25,000-50,000
• Rs.50,000-75,000
• Rs.75,000-1,00,000

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6. The motivators of savings of the respondents
• To meet specific purpose
• To earn income
• To meet contingent expenses
• To get tax benefits
• To be secured at old age

7. Factors considered by the respondents for increasing the size of savings

• Increase in salary
• Additional income/increments

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• Future needs Tax benefits

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• Statutory requirements

8. Investment preferences of the respondents

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• Respondents’ investment trend in the recent years
• Increasing

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• Decreasing
• Remaining Constant

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

• employees about investment.
• Training programmes
• Workshops & seminars
• Social welfare programmes
• Advertisements Investors’ meets

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