Mukesh Patel.in
practical tax & investment planning online
international tax expert / columnist / author / speaker

BUILDING TAX FREE CAPITAL FOR CHILDREN!

Investment In Your Minors’ PPF Accounts
Can Weave The Amazing Magic!

 

Investment In Your Minors’ PPF Accounts

Can Weave The Amazing Magic!

Every parent would naturally be concerned about building capital for his or her children, which would go to ensure meeting their financial requirements for higher education, marriage, settlement in life, etc. One of the major stumbling blocks in doing so are the clubbing provisions under Section 64(1A) of the Income-tax Act, which provide that any income arising to a minor child is required to be clubbed with the income of either the father or the mother, whosever’s total income is greater. Imaginative planning through investment in PPF (Public Provident Fund), can be resorted to achieve the objective of building up ‘tax free capital’ for children and in particular minors, successfully overcoming the hurdles of the clubbing provisions. (more…)

ENJOY FREEDOM FROM TAX BURDEN!

Income-tax of Rs.2,87,370 on Family Income of Rs.27,60,000

Average tax rate of just 10.4% – Myth or Reality?

INCOME TAX IS NO LONGER AS TAXING!

Just consider some tax facts of the past six years as highlighted hereunder:

  • In FY 2004-05, taxable income exceeding Rs.1,50,000 attracted the maximum tax rate of 30%.
  • Today in FY 2010-11, the basic Income-tax exemption limit is Rs.1,60,000 and the maximum tax rate of 30% is attracted only if the taxable income exceeds Rs.8,00,000.
  • In FY 2004-05, the Income-tax payable on taxable income of Rs.8,00,000 was  Rs.2,18,280, on the basis of which the average rate of tax worked out to 27.29%.
  • Today in FY 2010-11, the Income-tax payable on the same taxable income of Rs.8,00,000 is Rs.96,820, resulting in an average tax rate of 12.10%. 

Thus, during the past six years, taxpayers earning taxable income of Rs.8,00,000 or more, have effectively enjoyed a tax relief of Rs.1,23,600. 

(more…)

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