VFN Tax and Tax Saving Session 2015

8/9/2019 VFN Tax and Tax Saving Session 2015

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A Boutique Tax & Wealth Advisory Company


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VFN has over a decade experience in tax planning and wealth

advisory, portfolio and risk management services, real estate advisory,

retail chain development and financial markets

The Group manages more than 6000 clients over 0 !N" across the

glo#e offering them #espoke investment solutions

$e serve clients in all %ndian metro cities providing online and onsiteservices on taxation, financial planning and wealth management

solutions

$e have over &0' client retention for over () years

$e have a team of full time tax experts*"+ and professionals*!+

who provide end to end solutions

INTRODUCTION


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Partner with our clients with a long term vision for their financialprotection and wealth creation opportunities

Work with clients to develop innovative investment and financial planswhich are tailor-made to their needs whilst having a thorough

knowledge of the market, proficiency in risk management and researchbased solutions

VFN believes in Trust over Gain, Quality over Quantity

VFN is a firm believer in the tenets of Value Investing, moneymanagement is a Profession and not a Business

OBJECTIVES ANDBELIEFS


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+c-uire a deeper understanding of client.s financial needs to customi/e

solutions

olution centric approach, not 1ust to promote few company specific

products

work with a long term investment hori/on after considering all potential

risks

elect first2rate investment solutions aligned with individual*family profile

giving our client the #est possi#le choice

"ontinuously monitor portfolio performance, new market trends and

#enchmark comparisons and, regular review with clients to assess the

goal alignment and investment o#1ectives

uild the portfolio to always protect the long term interest and family

income

APPROACH


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OUR MAJOR CLIENTS


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Applicable Tax Rates

A tax rebate of Rs 2,000 from tax calculated will be available for people having an annual income up to Rs 5 Lac.

This benefit of Rs2,000 tax credit will not be available if you cross the income range of Rs 5 lakh.

Thus we can say that tax payable in 10% slab will be maximum Rs28,000 (taking into account Rs 2000 tax credit), but for

people who fall in income range of Rs5 lakh and above, the tax will be Rs25,000 + 20% tax on income above Rs 5 lakh;

** Surcharge of 12% will be payable, if income is above Rs 1 crore

Income Range Individual (non-senior citizens)

Category

Senior Citizens (Men andWomen above 60 years ofage) but belo! "0 years

Su#er Senior Citizens(Men and Women above

"0 years of age)

%#to Rs&'0000

il il il

'000*-+00000

*0, il il

+0000*-00000

*0, *0, il

0000*-*000000

'0, '0, '0,

.boveRs&*000000

+0, +0, +0,

TAX EDUCATION AND AARENESS ! A" #$%&'%(


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/eave ravel Concession economy class airfare or *st .C train fare by t1e s1ortest route to t1e #lace of

destination is e2em#t for self, spouse and two children, dependent parents, applica#le only fordomestic travel3

claima#le for ) 1ourneys in a #lock of calendar yrs, The current #lock is (24an2( to 5(2ec2(7

3ouse Rent .llo!ance - the least of the following is exempt from tax

actual 89+, rent paid 2 (0' of asic, :0' of asic in metro city ;0' for non metro city<

If annual rent paid exceeds 1 Lac, it is mandatory to report PAN of landlord. In case the landlord does not have aPAN, a declaration to this effect from the landlord along with name and address of the landlord should be furnished.

rans#ort .llo!ance *600*2 =er !onth3

Medical Expense 2 reim#ursements up to (:,000*2 for doctor consultancy*tests*medicine is exempt3

Interest on 3ome /oan 2 possession or registration of the property is must

Self Occupied 2 exempted up to a max of ) >ac

Let Out - exempted up to a maximum of actual %nterest paid after ad1usting the 70' rent income

Any preconstruction interest is also allowed for deduction only if your pro!ect gets completed within " years ofstarting of the construction. #ou can claim the deduction within $ years from possession in e%ual installments withinthe limit of & Lac.

Exe)pti*+s a+, Rebate


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4inance 5ill '0*+ inclusionSec "077 8 for first time #uyers additional #enefit on home loan interest

property value within 0 >ac, loan sanctioned during (2+pr2( to 5(2!ar2( and is ?@ ): >ac !ax interest deduction is ( >ac, can #e claimed in ) assessment yrs, +A(2(: and +A(:2(63

This deduction is in addition to the deduction of (3:*) >ac for self occupied property B*s );#ife %nsurance =remium, Bnit >inked insurance =lan ;B>%=< for self, spouse D children3

N, N" ;along with accrued interest which is deemed as reinvested< for self only3

(: year ==F with anks*=ost Effice for self, spouse D any child3

"ontri#ution to notified pension fund set up #y !utual Funds for self Er deduction u*s C0""" and C0""G in

respect of contri#ution to specified =ension Funds

Tuition fees to any Bniversity * educational institution in %ndia for full time education of any ) child

F of not less than : years with a =ost office* scheduled #ank

The payment for purchase or construction of residential property under any self2financing of development

authority * co2operative society 9epayment of loan stamp duty, registration fees D other expenses for the

transfer of house property3

If the house for which deduction has been allowed in earlier year's( is transferred before the expiry of $ years from the

year of possession, the aggregate amount of the deductions of incometax so allowed in earlier years shall be deemed

to be tax payable by the assessee and added to the tax on the total income of year of transfer.


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Renting and home loan in to different locations 2 person living in a rented place in the city he is working whilerepaying the loan for a home #ought in any other city3 %n such a scenario, the rent paid is eligi#le for 89+ exemption3

Further, a deduction can #e claimed on the home loan interest paid to purchase the property at the other city3

!a"ing rent to "our parents 2 This is possi#le only if the property is registered in the name of your parent3 The ownerwill #e taxed for the rental income after a 50' deduction3 o, if you pay your father a rent of 5 >ac a year, he will #etaxed for only )3( >ac3

#oint home loan 2 $here the property is 1ointly owned, with the share of each owner #eing definite, the net taxa#le annualvalue of the property is apportioned to each of the 1oint owners in the ratio of their share in the property3 +nd, as theshares are definite, each holder is eligi#le to claim a separate deduction3

Repairs and maintenance of house propert" 2 any interest paid on home loan for reconstruction or repair of thehouse propertyH -ualifies for deduction of up to 50,000, su#1ect to the overall limit of ) >ac3

$ealth insurance %&'() 2 + deduction up to ):,000 can #e claimed for the health insurance premium for covering selfand or the wife and dependent children3 +ddition exemption of ):,000 can #e claimed on premium made for parents;50,000 if one of your parents is a senior citi/en


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Charit" to no*le causes count %&'+) 2 "harita#le contri#utions are deducti#le up to (0' of your income3 %t can #eeither (00' or :0' of the amount donated3 Aou must o#tain a receipt specifying =+N and exemption limit3

Contri*utions to a political part" %&'++C) 2 %f you have contri#uted any amount to a recogni/ed political party, youare eligi#le to claim a tax deduction ranging from :0 ' 2 (00 ' of the amount

Interest ,rom saing *an. %&'//A) 2 %nterest is exempted up to (0000 including overall interest of all a*cs3

,oreign taxes 2 %ncome earned #oth in %ndia and a#road3 %n the event they face taxation in #oth countries, they may availcredit of taxes paid overseas while filing their tax returns in %ndia3

Exemption from capital gains 2 any capital gains on the sale of residential property is exempt from tax, provided youpurchase a new house ( year #efore or within ) years after or incur expenditure on construction of house within 5 years

from the transfer date3 +lternatively, you may also invest the gains in 9I" * N8+% #onds, su#1ect to specified conditions3

Set off of Capital Loss Against Capital +ain 2 if you have made a >T"G of (: >ac #y selling off your property and>T capital loss of 5 >ac #y selling stocks, the total taxa#le amount would () >ac3

)apital *ain on +ale of +hares sold through +toc -xchange can not be set off against other capital gain

+hort term losses can be balanced off against both + as well as L)*. /owever, L capital losses can only be balanced

off against L)*.


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9eduction for medical e2#enses incurred on disability of S#ecial de#endants ("099) in case any of your dependants suffer from a physical or mental disa#ility, a deduction of :0,000 or ( >ac ;if the

disa#ility is C0' or more< is claima#le3 dependants can include spouse, children, parents, #rothers and sisters, or any of them3 deductions are permissi#le for the costs incurred on medical treatment, training or reha#ilitation including amount

spent for nursing or insurance paid for the maintenance of the disa#le dependent in case of your untimely

death3 disa#ility means a person suffering from 0' or more or a severe disa#ility condition is C0' or more due to a<

lindness and Vision pro#lems #< >eprosy2cured c< 8earing impairment d< >ocomotor disa#ility e< !ental

retardation or illness

(eduction for medical expenses incurred on disa*ilit" of Special dependants %&'((0) a deduction of 0,000 ;60,000, C0,000 if the dependent is a senior citi/en or super senior citi/en< is claima#le this is availa#le for specific diseases, which include many neurological diseases like =arkinson.s disease, motor

neuron disease, hematological disorders, Thalassaemia, chronic kidney failure, +%, cancer, etc3

Indiidual disa*ilit" %&'1) J deduction of :0,000 to an individual who suffers from not less than 0' of any disa#ility3$ith severe disa#ility, deduction of ( >ac shall #e availa#le3

Please Note -

a< the patient should #e dependant on the taxpayer, and should not have filed for such a deduction separately

#< %ndividuals would need to produce a copy of the disa#ility certificate as issued #y the central or state government medical

#oard to claim deduction3

c< %nsurance policy o#tained must #e in your name and should #e a policy for life3 %t could pay either an annuity or a lump

sum amount for the #enefit of the dependent on your death3

d< %f the disa#led dependent predeceases you, the policy amount is returned to you,and treated as income for the year inwhich you receive it, thus fully taxa#le in your hands3

Me,ical ,isabilit2 ,e,3cti*+s


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TAX RATE ON E4UIT" AND PROPERT"

/isted:ain-y#e S1ort erm Ca#ital :ain(/ess t1an * yr)

/ong erm Ca#ital :ain (Moret1an * yr)

tocks >isted on %ndiantock Ixchange

(:' Tax on gain No Tax if ecurity TransactionTax ;TT< is paid on the sale3

TT is currently #etween 30(7'to 3():' of total amount

received on sales33

tocks NET >isted on%ndian tock Ixchange

Gain will #e treated as your%ncome and taxed as per

applica#le %ncome tax sla#

)0' Tax on gain

S1ort erm Ca#ital :ain(/ess t1an + yr)

/ong erm Ca#ital :ain (Moret1an + yr)

=roperty Gain will #e treated as your%ncome and taxed as per

applica#le %ncome tax sla#

)0' Tax on gain afterconsidering the indexation


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2"orporate Tax 9ate reduced to ):' for over next four years

2Ixemptions For %ndividual Tax =layers To "ontinue

2Aoga to #e included as "harita#le =urpose

2"oncealment of income will attract (0 yrs of rigorous imprisonment

2enami property transaction #ill to tackle #lack money transaction in real estate soon

2To 8ave enami Transaction =rohi#ition ill For omestic lack !oney

2Kuoting =+N a must for all purchases a#ove Ene >akh

2(00' deduction allowed for all contri#utions in wachh harat +#hiyan Lexcept contri#ution in"9M

2=roposes to rationalise capital gains tax regime for real estate investment trusts

2=ropose To 9ationalise "apital Gains 9egime For 9I%Ts*%nv%Ts

2%ncome Tax En 9oyalty Fees For Technical 9educed To (0'

FINANCIAL BUD5ET #$%6


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)' +ddl3 urcharge on uper 9ich3

29educed taxes on Technical ervices to (0' from ):'

2Tax reduce for foot wear a#ove (k per pair

2ervice Tax increased to ('

2C0 8ealth insurance (:000 to ):000 For senior citi/ens 50000

2C0 increased to C0000

2$ealth Tax a#olished

2Tax on royalty income decrease from ):' to (0'

2Transport +llowance exemption increased to (600 pm

2omestic Transfer =ricing limit increased from :crores to )0 crores

FINANCIAL BUD5ET #$%6 ! 7e/ )*-ep*i+ts88


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+n important step to create a relia#le experience for our clients is to periodically reflect and collectfeed#ack

%nstitutionali/ation of VFN +nnual "ustomer atisfaction urvey is one such step in this direction

urvey focus was #roadly into 5 areas vi/3

9esponsiveness,

"ompetence with "onduct

=ro#lem olving3

"onducted across all VFN served company clients working at various locations in Ect2Nov )0(

urvey findings are appended, all num#ers may not add up to (00' due to few #lank responses

VFN C3st*)e- Satis7acti*+ S3-0e2#$%9

C7' responded positive on overall experience

9esponsiveness is the ma1or area of improvement making

)7' responded incredulous a#out our services

Feed#ack on responsiveness was mainly collected around

customer care and email contacts

$hile we need to work on our response time, C&' responded

are positive with VFN team competence*conduct and response on

our a#ility to resolve issues is at C('


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S3-0e2 #$%9 ! T*p %$ c*)pa+2 -esp*+ses


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S3-0e2 #$%9 ! -esp*+ses ac-*ss l*cati*+s


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Never had this ind of experience in past. he team is really professional with good experience.

his was the first time I too the services of 0N and it turned out to be a really good experience in terms of %uality andtimeliness 2 +ervice is good, so I will suggest others for 0N in future

3uic response, efficiently solved the errors.2 0ery prompt service and conversation is always meaningful and satisfactory20ery responsive 4 responsible behaviour and a pleasure to engage with2 3uite energetic group 2 It5s an excellent service.+taff is really great. *ood !ob guys. 6eep it up. 7eally satisfied with the service.

)ustomer relationship management is very strong, Appreciate your service.

I am a longtime client of 0N and have seen it grow into a bigger organi8ation. 0N5s strength lies in giving personali8edand rapid service to it5s clients. +o far, the 0N group have always been active and helpful. hans for all the help9

*ood and prompt service. :ould lie to avail more such professional services from your group. ;unch of highly motivatedand enthusiastic group. eep up the good wor.

I am very much satisfied with a %uic turnaround time and timely addressing the issue.

I would lie to than you for answering all my %ueries in the most amicable way. hans.

suggestions to improve…

#ou have to improve your services to meet your +LA2


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likelihood of one meeting all his goals in life

8ow efficiently the cash flows are #eing tracked 8ow well the investments are #eing planned 8ow comforta#le the retirement phase is going to #e 8ow efficiently one can handle any unforeseen*unfortunate events in life

rends 2 + survey conducted #y"redit uisse on monthly spending

#y %ndia corporate employees undervarious categories indicates 7027:'

of their income goes in fulfilling

various household needs3

uring the career span one has to

look after different financial goals

including #uying a car, #uild a dreamhome, children education* marriage,

plan vacation and plan for

retirement3

Trend reflects that all these have to

#e managed with less than 50' of

the income earned3

PERSONAL FINANCE READINESS ;%


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Irony 2 everyone wants to retire early

and en1oy a peaceful retirement life whileregular income and retirement like plans

have even lesser pie of (:2(7' of

savings month on month3

C1allenge 2 how to maintain a parity#etween our expenses and savings to

ensure investments grow at a level

wherein our current standard of living is

maintained even after retirement

Reality - with average rate of inflationour expenses would #e )3: times of

current level after (: years

;ause and 1in< =8ow well are the taxes #eing planned +re you choosing the right tax saving investmento you have enough savings to counter any emergencies +re you preparing yourself for retirement8ow fre-uently do you keep a track of your expenses$ho is advising you in making your financial decisions

in>ation gra#1 #ro?ected for ne2t +0years

PERSONAL FINANCE READINESS ;#


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+ study was conducted amongst )000 salaried professionals across various work experiences at entry level

;? :yrs+,i+1s;?


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/he practice of .eeping aa" mone" dedicated onl" for emergencies does not exist for the ma:orit"

+n emergency fund should account for 526 months of expenses3 :C' at entry level, )' mid and 5C' at senior level

do not have a fund for emergencies where as significant sample si/e holds savings for (2) months3

This state would force them to li-uidate their existing investments or assets in order to fund their emergencies

Man" "oung people are not a*le to sae enough *ecause the" don;t hae an"thing left after their

expenses

Their financial e-uation isQ %ncome 2 Ixpenses @ avings3

>egendary investment guru $arren uffett has a simple solution to this pro#lem

4ust change the e-uation to Income - Saings < Expenses and see the difference it makes to your finances3

PERSONAL FINANCE READINESS ' -esea-c: >+,i+1s;9


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/he financial decisions made *" the people can *e attri*uted to the .ind of financial adice the" get&6' receive financial advice from family or friends3 Friends and colleagues act as financial advisors for 5:', family

mem#ers advisory contri#utes 5(', (5' make financial decisions #ased on their self research and our friendlyneigh#orhood agents advise (6' of the professionals3

Ixamples

A manager based in =elhi pays almost 7s 1 Lac a year for seven life insurance policies that give him a combined life cover of

1> Lac. wo of these policies were bought for him by his father. +uch traditional insurance plans neither offered good returns nor

ade%uate life cover. /e realised this a few years ago and bought a pure protection term plan of $? Lac for himself. ;ut he still

feels shacled by the premium that flows into the other seven policies. @Parents might thin they are giving their child a great gift.

:hat they don5t realise is that they are saddling him with a suboptimal investment for the next 1$&? years

A young man wish to do a +IP in an e%uity fund, while the father insists that the Public Provident und is a better and safer

option. @Parents often tae upon themselves the investment decisions of the earning children even though the ris profiles of the

modern youth and that of the parents could be vastly different

/o *e fair2 one can;t *lame the older generation for forcing poor inestment choices=They have lived in an era which was very different from the present3 ack in the (&70s and C0s, the stock market was an

opa-ue esta#lishment, mutual funds were unknown, insurance companies were trusted entities and real estate prices

were at rock #ottom levels3 Traditional >ife insurance policies, #ank deposits and small savings schemes were the #estway to save money3 The older generation is not -uite aware of the intricacies of the tax rules3 For them, de#t funds, non2

converti#le de#entures and F!=s are too complicated3 o, parents canPt #e faulted for advising their children to invest in

instruments that helped them create wealth in the past3

PERSONAL FINANCE READINESS ' -esea-c: >+,i+1s;6


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The #elow chart indicates clients. C0" over utili/ation as per the %ncome Tax 9ule, over and a#ovethe permissi#le limit of 9s3(:0000*23

As salary increases over utili8ation is mainly due to increased P amount, which is normal. /owever, worrisome part

is when we looed into & nd chart 'above( showing where this additional money is allocated. A significant B of cash

flow is going into instruments lie PP and = while there are better financial instrument available for similar needs.

his reflects that there is a definite scope to improve portfolio.

9istribution of "0C on ;;449 !it1inover utilization sam#le"0C overutilization

C3--e+t @$C t-e+,s

FE COMPARISONS


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FE COMPARISONS! c*+0e+ti*+al 0is'a'0is -esea-c: base,

i+0est)e+ts

RRecurring 9e#osit !it1 Mutual 4unds

The #elow graph shows the final sum you would have earned #y investing 9s3:000*2 a month for 56 months in a9ecurring eposit ;9< vis2a2vis five 9s3(000*2 %= in : different !utual Funds ;!F<

+#ove num#ers are arrived after ad1usting income tax at various sla#s3 !utual fund num#ers are computed on #oth de#t and

e-uity #ased funds in a tax efficient manner3 9 is considered at &' while !F is on ()' 2(:' annuali/ed return3


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4eature /ife Insurance ;;4

Tax enefit ;entry and exit #oth< Aes Aes

!inimum >ock in =eriod : Ars (: Ars

!inimum =ay Term : years (: years

>ife 9isk "overage Aes No

eath #enefit +ll future premium waiver with fullpolicy #enefits

$ithdraw without any future #enefit

>oan against instrument Aes Aes

=ayment Flexi#ility No Aes

=artial $ithdraw Few options Aes

>i-uidity Aes No

==F and %nsurance #oth are important financial instruments and as investments grow one should

diverse portfolio comprising various such solutions for near and long term financial goals3 8owever,saving and investment decisions should #e driven #y your own financial needs and responsi#ilities and

not as per the trends of the market or advices #ased on other @s needs and wants

LIFE INSURANCE AND PPF


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for furt1er assistance reac1 us at !!!&vfn&inCustomer Care A "0*0"00"00
http://www.vfn.in/http://www.vfn.in/

VFN Tax and Tax Saving Session 2015

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