Personal Finance

TIPS FOR MANAGING YOUR FINANCES

1. Track your monthly spending :
Many people do not know how much they spend each month on food, clothing, housing, or entertainment. Whether you are paying with cash, a debit card or credit card, total your expenditures at the end of the month to gain a better picture of how you’re spending your income.

2. Develop a household budget you can follow :
Using the data you have compiled by tracking your monthly expenses, develop a realistic budget so that it’s easier to live with. Track how well you follow it each month which means continuing to track your monthly expenses.

3. Be sure to budget for savings :
Your savings are a Rainy Day Fund, which is important when unforeseen expenses or emergencies arise. Be sure to budget part of your monthly paycheque for deposit into a savings account – ideally at least 10% of each cheque. If you find or earn extra money-put that away in a savings account, too or invest in PPF!

4. Pay your monthly bills on time and avoid late charges :
Take inventory of your regular monthly bills and make reminders for yourself on when each bill is due. That way you can avoid costly late fees, which can also damage your credit score. The best approach is to pay bills as soon as they arrive.

5. Review your credit report :
The details of your credit report can have an enormous impact on your financial future. Obtain a free report once a year at www.cibil.com, and check it for accuracy. Be sure to dispute any errors.

6. Obtain your credit score :
Your three-digit credit score tells lenders and businesses how well you manage your credit and your finances

7. Eliminate credit card debt :
Credit cards can make it easy to pile on debt. If your debt adds up faster than you can pay it off, you’re likely living beyond your means. Stop using the credit cards and pay off existing balances – the sooner you do, the less you’ll pay in interest. Remember: not all debt is bad; taking on loans for higher education or to buy a home is really an investment in your future.

8. Take advantage of free money: 
If your employer offers a contribution match for retirement savings or health savings accounts, be sure that you’re contributing enough to obtain the maximum match amount. Otherwise, you’re missing an opportunity for free money. Maximizing your contributions can lower your taxable income.

9. Assess your insurance policies: 
Insurance is an important tool for protecting against financial hardships, and the premiums you pay can be one of your top household expenses. Talk with your provider to be sure you have the appropriate level of protection – that way, you’re not paying too much for coverage.

10. Track your investments: 
If possible on a daily basis otherwise on a weekly basis you should track your investments.

How to Save Tax for FY 2018-19?

• How much tax do I need to pay this year?
• What is the maximum amount I can save on tax?
• How should I learn about my investments and taxes?
• Where and how much should I invest to save income tax?
• What is 80C, 80CCC, 80D, 80E, 80G, Maths behind 80’s
• Is SIP tax-free?
• How can I avoid/reduce paying taxes legally?
• How can I reduce my taxable income?

11. No. Of Important Changes in Tax Rules from FY 2018-19 :

1. Standard Deduction

Budget 2018 has introduced a standard deduction of Rs 40,000 for salaried taxpayers. The good thing is this would be applicable for pensioners too. This deduction can be availed without submission of any proofs.

2. Transport Allowance & Medical Reimbursement no more Tax-free

With the introduction of the standard deduction, the Transport Allowance & Medical Reimbursement would no longer be tax-free. Currently, the transport allowance was tax-free up to Rs 19,200 and medical reimbursement up to Rs 15,000. Net of these allowances and introduction of standard deduction salaried taxpayers have additional tax exemption of only Rs 5,800.

3. Cess on Taxes hiked to 4% (Health and Education Cess)

There has been NO change in the income tax slabs in Budget 2018. However, from FY 2018-19 the existing cess of 3% (Education, Secondary and Higher Education Cess) has been increased to 4% and named as Health and Education Cess.

4. Reintroduction of Long term capital gains tax on stocks and equity-based mutual funds

Budget 2018 has reintroduced long term capital gains tax of 10%+cess (i.e. 10.4%) on gains made of the sale of equity or equity oriented mutual funds. To qualify for long term capital gains the stocks/mutual fund should have been held for at least 1 year. The good news is capital gains up to Rs 1 lakh is tax-free.

5. Dividend distribution tax on Equity mutual funds

Starting FY 2018-19 the dividends from equity mutual funds would attract a dividend distribution tax of 10%. However, the dividend received would be tax-free in the hands of the investor. This is mainly to equate dividend and growth plans of equity mutual funds.

6. Increased tax exemption on interest income for senior citizens (80TTB)

Budget 2018 has introduced a new section 80TTB according to which senior citizens would be able to claim interest income up to Rs 50,000 as tax-exempted income. However, if you take benefit u/s 80TTB then you cannot claim tax benefit on interest received on savings bank account u/s 80TTA.

7. TDS limit on interest income increased for senior citizens u/s 194A

There is TDS (tax deduction at source) for almost all kind of income. However, as a relief to senior citizens, Budget 2018 has raised the limit for TDS on interest income from Rs 10,000 to Rs 50,000. So TDS would only be applicable for senior citizens if the annual interest income from a bank

8. Tax deduction for Single Premium Health Insurance Premium

In case assesses buy single premium health/medical insurance policy covering multiple years, the tax exemption u/s 80D would be available proportionately for all the years. For e.g., if you pay Rs 1,00,000 premium for a health policy covering for 5 years, you can claim Rs 20,000 tax exemption every year for 5 years subject to limits.

9. Increased deduction for medical treatment u/s 80DDB for senior citizens

The Medical Insurance premium and the preventive health check-up limit for senior citizens under section 80D has been increased from Rs 30,000 to Rs 50,000. This is good news in keeping with the ever increasing health care and related insurance costs.

10. Increased deduction for medical treatment u/s 80DDB for senior citizens

The Medical Insurance premium and the preventive health check-up limit for senior citizens under section 80D has been increased from Rs 30,000 to Rs 50,000. This is good news in keeping with the ever increasing health care and related insurance costs.

• Neurological Diseases
• Parkinson’s Disease
• Malignant Cancers
• AIDS
• Chronic Renal failure
• Hemophilia
• Thalassemia

11. Long Term Capital Gains Bond only eligible for capital gains from property

From FY 2018-19, the long term capital gains tax exemption by investing in long term capital gains bond from specified companies (NHAI, REC or PFC) u/s 54EC would only be available for capital gains from sale of property including the land, residential or commercial building. Until this year these bonds could be used for capital gains arising from the sale of any asset.

12. Long Term Capital Gains Bond maturity increased to 5 Years

The maturity period for Long Term Capital Gains Bond has been increased from 3 years to 5 years. This would make these bonds less attractive. Remember the interest rate is just 5.75% and the interest received is fully taxable.

13. Extension of Partial Tax-exemption on NPS withdrawal to self-employed

Until now 40% of NPS corpus on withdrawal was tax exempted for employees. However, from FY 2018-19 this benefit has been extended to all NPS accounts. The above changes would be applicable for the FY 2018-19. So make a note of the above and plan your investments and taxes accordingly.

Income Tax Slabs for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2018-19 � Part I

Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.

Surcharge: 15% of the income tax, where the total income exceeds Rs.1 crore.

*Income tax exemption limit for FY 2018-19 is up to Rs. 2,50,000 for individual & HUF other than those covered in Part(II) or (III)

Income Tax Slabs for Senior Citizens (60 Years Old Or More but Less than 80 Years Old) for FY 2018-19 – Part II

Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.

Surcharge: 15% of the income tax, where the total income exceeds Rs.1 crore.

*Income tax exemption limit for FY 2018-19 is up to Rs. 2,50,000 for individual & HUF other than those covered in Part(II) or (III)

Income Tax Slabs for Senior Citizens (60 Years Old Or More but Less than 80 Years Old) for FY 2018-19 – Part II

Surcharge: 10% of income tax, where the total income exceeds Rs.50 lakh up to Rs.1 crore.

Surcharge: 15% of the income tax, where the total income exceeds Rs.1 crore.

*Income tax exemption limit for FY 2018-19 is up to Rs. 3,00,000 other than those covered in Part(I) or (III)

Income Tax Slabs for Super Senior Citizens(80 Years Old Or More) for FY 2018-19 – Part III

Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.

Surcharge: 15% of the income tax, where the total income exceeds Rs.1 crore.

*Income tax exemption limit for FY 2018-19 is up to Rs. 5,00,000 other than those covered in Part(I) or (II)

Disclaimer: Please consult your tax consultant before taking any decision based on the above information. We will not be responsible for any act done or decision taken by you based on the above.