This is a perfect section for you if you are interested in enhancing your knowledge about Financial Matters. A few tips and tricks about Investing, Shares, Mutual Funds and Money Saving Schemes.

Tax planning for a nuclear family

The concept of joint family is cracking down. Nuclear family concept is on a rise. Under the present scenario for a nuclear family there is imperative need of tax planning so as to cut down taxes.

The simple methodology of tax planning for a nuclear family is to have separate income tax file for self, spouse and all children as well as the Hindu Undivided Family.

For major children the tax planning is easy and simple, namely to resort to the concept of gifts and loans. As far as the minor child is concerned the best answer could be achieved by having a separate income tax file of the minor child through his 100 per cent specific beneficiary trust as mentioned in the preceding paragraph.

The Hindu Undivided Family file can also be opened. In case the nuclear family adopts tax planning by having income tax files for different family members and thereafter takes liberal advantage of the provisions relating to tax deduction, then it would be possible to achieve best tax planning for a nuclear family.

Tax planning by DINKs

Working couples who have no children are known as DINKs (Double Income No Kids). Substantial tax planning is needed for them even in the initial years of their married life. The best tax planning which DINKs should adopt is that each one of them should take full advantage of income tax exemptions and deductions.

The present exemption limit for the financial year 2008-09 is Rs 150,000 for every individual male tax payer. In addition, for a woman tax payer the exemption limit would be Rs 180,000. Thus, for the financial year 2008-09, DINKS would be able to enjoy a combined exemption limit of Rs. 330,000.

Never in the past the tax exemption slabs were so very attractive. They should also make investments in a residential house by taking a loan and thus save income tax up to the maximum extent (each of them). They should also plan a separate income tax file of HUF.
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