Comment posted on Direct Tax Code (DTC): Highlights and Impact by BhanuMurty.
Let’s see the reverse engineering approach. the FM wants to live on:
1. Exempted Income of Rs.200000
2. HRA of say Rs.120000(After exemption)
3. Tax saving of Rs.150000
4. Exemption of Rs.10000 on Bank Interests
5. Professional tax of Rs.2400
6. EPF of Rs.9360
7. All other allowances of Rs.35000 approximately
8. Balance salary account after expnses; Say Rs.100000, as surplus
9. Other Annual Expenses, without a home loan: Rs. 23000
In Total, You should have at least Rs.500000.
Come on, he is reasonable in his calculations. You need not pay a single paisa on tax upto 5 Lakhs!
BhanuMurty also commented
- So, what is the secret?
I should live on Rs.360000 approximately! That means Rs.30000 per month. That means 1000 rupees a day!By the way, for a family of 4, it means Rs250/- per day, which in MSAhluwalia’s calculations is far above the Rs.23 per day mark.
Because, you need not worry about your future, as the government will take care of you with a PENSION SCHEME
- Hi Pankaj,
In the name of simplification , DTC is still quite ambiguous.No doubt, they are making the implementation in a phased manner, but it is becoming very tricky while taking some decisions.Instead of answering queries in bits and pieces, can you give a comprehensive article on the state of affairs:like
1. What an individual need to plan as far as tax from salary point of view:
2. How the investment in home loan will effect during the next 5 years
3. Alternative measures to utilize the limits of the DTC from 2011-12 onwards
4. A comprehensive 5 year/10 year investment policy to be taken for salaried individuals,…..
Hope I am not demanding much.
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I need some clarification:
Say A working couple do not wish to BUY a house and stay on rent for the rest of the life!
1. Can both of them claim the HRA Exemption separately?
2. Since there is no “Home Loan”, and they are cash rich, and wanted to deposit all their life time savings in PPF, Bank FDs, Post Office Schemes…..All Debt instruments.
3. The bank deposits accrue interest, which has to be shown under “Income from other sources”, which shall add to the existing income(s).
4. What is the loss of opportunity for the couple for NOT INVESTING in a house? Take the case for a period of 25 years, out of which another 15 years of service is left.
5. The two of them are getting Rs.5L and Rs.10L as on today, and the 25 year average income would be Rs. 10L and 15L respectively.
6.Remember, both of them will have respective Form 16s each year, hence paying enough tax!