Professionals should invest properly to avail tax benefits

GP Baroowa
During my visit to Assam last month a group of readers asked me how to plan their investment. I was in fact happy to tell them that they should invest with a vision. They should plan their investments meticulously.

I was surprised to find that most of the members of the group have already built their own houses. This is the best thing any professional can do. This group consists of doctors, advocates and filmmakers. But they have not been able to plan their investments. A few of them have not even taken the benefit of income tax, which they are officially entitled for paying home loan to the bank.

During the course of discussion I did advise them, if all the tax benefits are availed by them, then their finance would further improve .The amount then could be saved for the education for their children. The members (both doctors) took a huge amount of home loan. As they have to pay a heavy amount it is difficult to save money for the education of their son.

They took a housing loan a few years back at the interest of 12%. So, my suggestion to them was to close the loan and go for fresh apply at the interest rate of 8%, which is now available on the market.

Needless to mention that if someone takes Rs 20 lakh as home loan for twenty years at 12% interest then they would end up paying around Rs 60 lakh in due course. But, if they can take home loan at 9 %( as is available now) they would end up paying only Rs 31 lakh or less.

It was a revelation to me that around 60% of the professionals did not know the benefit of having PPF account. I advised them to open an account and start saving minimum Rs 500- or maximum Rs 70,000 per annum.

One of my readers (doctor) asked that he does not know how to handle the cash, getting from the patients. After availing all IT benefits if the taxable income stands at Rs 3 lakh then they have to pay only 10% tax, at Rs. 3 lakh only 20% and 30% tax only after crossing Rs. 5 lakh. income.

The most important thing is to plan ahead of time. This is the time to invest in equity under SIP. If the investor age is around 45 years, fifty-five percent of their investment should be in equity, rest in fixed income, like bank FD, Post office FD, PPF and deferred annuity scheme etc.

Readers can send their feedback at gpbarua@yahoo.co.in ASSAM TRIBUNE