Retirement planning: How to be tax-efficient in retirement Find out how to get past these changes
TAX CHANGE: Interest earned on contributions to the Provident Fund beyond Rs.2.5 lakh in a year are now taxableHOW TO GET AROUND IT: Restrict contributions to Rs.2.5 lakh a year. If you need to invest more, open a PPF account, if you don’t already have one, or else, go for debt funds to defer tax.
TAX CHANGE: LTCG beyond Rs.1 lakh from stocks and equity-oriented mutual funds are taxed at 10%.
HOW TO GET AROUND IT: Harvest gains of up to Rs.1 lakh every year by booking profits, and then buying back the same stocks or mutual funds.
TAX CHANGE: Maturity proceeds of Ulips are taxable if the combined premium of policies bought after 1 Feb 2021 exceeds Rs.2.5 lakh. .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:10px;font-weight:500;line-height:18px;} #sr_widget .sr_desc{margin:0 auto 0;} #sr_widget .sr_desc{color: #024d99;}
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HOW TO GET AROUND IT: Restrict investments in Ulips to Rs.2.5 lakh in a year. If you need to invest more, go for the NPS, which can help you save more tax.
TAX CHANGE:Maturity proceeds of life insurance plans are taxable if the total premium of policies bought after 31 March 2023 is over Rs.5 lakh.
HOW TO GET AROUND IT:Don’t put more than Rs.5 lakh in traditional insurance plans. Use debt funds and the NPS if you need to invest more.
TAX CHANGE:LTCG from debt funds is no longer eligible for indexation or lower tax rate. It’s added to income and taxed at slab rates.
HOW TO GET AROUND IT: If investing for less than five years, go for recurring deposits that give assured returns. You can also use arbitrage funds that get the same tax treatment as equity funds.
This story originally appeared on: India Times - Author:Faqs of Insurances
