Tax planning is an integral piece of a proper financial plan. Understanding the impact taxes will have on your financial well-being is essential. We guide you to take legitimately in the full benefits of all deductions, exemptions and rebates your tax liability reduces to minimum. By employing effective tax planning strategies, you can have more money to save and invest or more money to spend. Or both. Your choice.
Deduction under this section is available only to an individual or an HUF.
Section 80C of the Income Tax Act allows certain investments and expenditure to be deducted from total income up to the maximum of Rs. 150,000 from the Financial Year 2014-2015. This section has been introduced by the Finance Act 2005. Broadly speaking, this section provides deduction from total income in respect of various investments/ expenditures/payments in respect of which tax rebate u/s 88 was earlier available. The total deduction under this section (along with section 80CCC and 80CCD) is limited to Rs. 1.50 lacs only.
Several options are available to claim the 80C deduction. Luckily, since there are no sub limits for these options, you can do all of Rs. 1,50,000 in one of them or allocate to many. You may also end up investing more than Rs. 1,50,000 in these; however your deduction in total will be limited to Rs. 1,50,000.
Section 80C of the Income Tax Act allows certain investments and expenditure to be deducted from total income up to the maximum of Rs. 150,000 from the Financial Year 2014-2015
Our Tax Savings Solutions help to reduce your tax burden and at the same time, aim to grow your money through equity investments.
Benefits from Tax Savings Investments:
- Reduce Tax Liability
- Create wealth over a period of time
Tax saving is important, if you are in the highest tax bracket 30%, you save a tax of Rs. 46800/-. Section 80C of the Income Tax Act, 1961 provides options to save tax by reducing the taxable income by up to 1.5 lakh. But, wealth creation is also important. Isn’t it? That’s why these solutions are ideal for investors who would like to create wealth along with tax saving.
The best Tax Saving Investment is ELSS Funds, followed by EPF/ PPF. As per the past track record ELSS Funds have outperformed all other Tax Saving Investments by a huge amount.
ELSS (Equity linked savings scheme) FUNDS
There are some mutual fund schemes specially created for offering you tax savings, and these are called Equity Linked Savings Scheme, or ELSS. Whatever investments that you make in ELSS are eligible for deduction under Sec 80C. Equity Linked Saving Schemes of mutual funds are nothing but diversified equity funds that have a lock-in period of three years and provide tax benefit and at the same has the potential to create wealth over a period of time.
Since a major portion of the amount is invested in equities or equity stock markets, the earning potential is higher as compared to other tax saving investments. Investors can invest up to rupees 1,50,000 in an ELSS fund and deduct the investment from their taxable income u/s 80C of Income Tax Act, thereby effectively reducing their tax liability.
Benefits of ELSS Funds
Provide double benefit of tax saving, Tax efficient returns and tax free dividends in the hands of the investor.
Income tax benefit – Investments made in ELSS schemes are eligible for deduction from taxable income under Section 80C of the Income Tax Act.
Lower lock-in period – In comparison to traditional investment avenues like PPF, NSC under section 80C of the Income tax Act, ELSS funds have the shortest lock in period of 3 years.
Tax-efficient returns – Dividends declared under the ELSS scheme during the investment period are tax-free in the hands of the investor after deduction of dividend distribution tax. The profits on the sale of ELSS units are treated as long-term capital gains, and are subject to Income tax of 10% only if the gain is more than 1 lakh.
Higher return potential – ELSS funds invest a large part of the fund in equity, which despite short-term volatility has the potential to build wealth over the long term.
Who should invest in ELSS Funds?
- Investors looking for wealth creation over the long term.
- Investors looking for tax deductions under Section 80C.
- Investors having a time horizon of 3 years or more.
There are two ways to invest in ELSS Funds:
- Invest a fixed amount every month through a Systematic Investment Plan (SIP) in ELSS and ease the burden of large investments towards the end of the financial year.
- Invest a lump sum amount at any point of time.
Why SIP is the best method for ELSS?
One of the best ways to invest is to save and invest on a regular basis. SIP is an investment method in which an investor invests small amounts in mutual funds at regular intervals.
In addition, SIP helps an investor take benefit of the volatility in the stock markets by rupee cost averaging and helps garner the advantage of compounding. Investment in an ELSS through SIP provides an investor the best combination of tax savings and capital appreciation. The minimum investment in an ELSS through the SIP route can be as low as rupees 500.
The lower lock-in period of 3 years in comparison to other tax savings instruments and the potential to take full advantage of growth through equities make ELSS funds a preferred investment option.
Retirement / Pension Funds
A Pension Plan is a retirement tool. A Pension Plan from Mutual Funds allows you to invest either lump sum or regular SIP, helps you in creating a retirement corpus, while also giving you a tax deduction upto Rs. 1,50,000/-. It also ensures a financially secure retirement and guarantees your peace of mind. So that you can make your dreams a reality and have financial freedom in the post retirement life. Retirement funds normally have a lock in / Exit Load till 60 years of age, which brings discipline and long term approach towards investing.
Advantages of the Retirement / pension Funds from Mutual Funds:
- No allocation charges / Upfront charges typically charges by Unit Linked Insurance Plan (ULIPs) with Units allotted for 100% of the invested amount.
- Has the potential to grow the corpus over time.
- Scope for better returns, beating inflation.
- Offers Liquidity.
As being a responsible parent, everyone has a dream of providing a better education and a secure life to their children. This is considered to be the worrisome exercise for the parents, but it is very much possible in the most uncompromising way if you plan it right.
Here is the 5 step guide for your child’s future planning:
- Set a target date
- Set a target amount in today’s term
- Find out the amount you need on target date
- Estimate the return which you can generate over your investments
- Calculate per month contribution
We help you identify and evaluate the best possible way in which you meet this goal. Always remember to consider the inflation when you plan for these goals. For instance, the cost of graduation today is 8 Lakhs for an engineering graduation today would cost Rs.20 Lakhs after 10 years!
Children’s future planning services offerings with us overcome almost all of your worries as we take whole responsibilities on our shoulders. We keep you enlightened with those investment techniques, which can cover your financial blanket at the deepest level.
Child Education Calculator
For a parent, seeing their child happily married is an occasion of joy. Whether it is the happiness of seeing your son bring home a bride, or the bittersweet joy of seeing your daughter start a new life with her husband. But giving your children the wedding of their dreams requires a lot of careful financial planning. We are here to help you make that job easier.
Choosing the right investment options for Children’s Marriage Planning is dependent upon the current age of the child. When the child is quite young, one can build wealth by investing in high growth investment products over longer term. For grown up children, it is advisable to invest in safer and short duration investment products.
Some part of investible money should be allocated to Gold/Gold Funds to meet the Gold/ Jewelry needs at the time of marriage.
Why not make sure that this precious time is spent in happiness and celebration rather than in wondering how to foot the bills?
Following these steps will ensure you enjoy your child’s wedding day–without financial stress:
- Current Cost and Time Horizon
- Calculate the Future Cost of the Marriage taking into account inflation
- Make an Plan: Roadmap for achieving the goal
- Implement the Plan
- Review the Plan regularly
As one leaves past his young, energetic years, the stress of old age and coming of retirement years start looming large. The major stress that is associated with retirement is the cessation of monthly income, but why let this inevitable fact impact your life? With careful retirement planning, you can continue living your life as you are living today, with no change in your lifestyle.
If you want to enjoy your later years as happily as today, avail best retirement investment options for retirement planning and start planning for the time that is going to come. Fulfill your financial responsibilities and live a peaceful life with careful savings. Avail retirement planning services from us at Hexagon Wealth Advisors and we will help you plan a better tomorrow. While guiding you, we will take into consideration your changing needs like medical expenses, traveling expenses, your monthly expenses and more so that you are able to live a comfortable life without worrying about finances.
The sole purpose of retirement planning is to be capable of maintaining one’s present lifestyle post their retirement and to attain fiscal independence. In order to satisfy their requisites post retirement, the average investors in India usually plough money into LIC policies, MIS, Employee Provident Fund (EPF), and Public Provident Fund (PPF). However, as a result of the burgeoning healthcare costs, higher inflation rates, and increased life expectancy, such schemes possess the likelihood of failing to meet the retirement requirements. You now must be pondering as to what can be the apt investment alternative for retirement planning. Well, it’s mutual funds. Mutual funds, with their tax-efficient returns and low cost features are the ideal investment option for retirement planning.
Advantages of Mutual Funds:
- Tax efficient – Compared to a fair deal of the saving schemes, the Equity Mutual Funds are considered quite tax efficient. The dividends of such mutual funds are also tax exempt.
- Systematic Investment Plan – For retirement planning, SIPs are the best investment option. Unlike pension plans or PPF, SIPs don’t come with penalties and limitations on steady SIP withdrawals and payments. SIPs permit an investor to commence chalking out plans for their retirement early in their employment tenure. An early planning would render the investors with an increased scope for accumulating wealth through the Power of Compounding. To know the nitty-gritty details of how SIPs work, you can also seek the help of a mutual fund advisor.
- Systematic Withdrawal Plan – The investors can also go for Systematic Withdrawal Plan to fulfill their monthly income requirements post retirement. SWPs sanction the investors to withdraw particular number of units on a consistent basis, such as monthly, quarterly, etc. It furnishes them with a steady income without evoking income tax.
Your retirement will be more enjoyable if your income is structured to fit your lifestyle choices and if you have developed a retirement plan. Following are the steps:
- Identify and compare your income and expenses to determine any shortfalls or surpluses
- Review and analyze the various retirement income strategies
- Review and compare those retirement income options available
- Develop an action plan with us