All of us love money right? Nothing wrong with that. We dream, we sweat, we toil and work our…well, let’s just say everything off, to have enough.
Then why the CARELESS treatment of it, once we get it? Most of us out there have no clue about how to make money work for us. And it pains me to say that this kind comprises mainly of women.
CASE IN POINT: My 26 year old friend works as a TV producer in one of India’s top 3 GEC channel. Her monthly in-hand is a comfortable Rs25,000 and her only liability is an education loan.
So imagine my horror when I find out that her entire salary is taxable, as she doesn’t apply for a deduction on the interest being paid by her. SHOCK NO. 2: She has no idea what this is all about. This is her second year as a tax paying citizen of this country & all she has to show for it is a FORM 16 from the previous year.
So, what is wrong with the picture here? 2 things.
- If the government of this country has so considerately allowed you to get a rebate on your loan interest, then why don’t you use it!!!
Let the math do the talking.
Annual Gross Income – Rs 3,50,000
Investments under 80C = Nil
Deduction under 80E (education loan) = Rs 72,000 (Rs 6,000 per month)
| TAX CALCULATION | ||
|
|
||
| Particulars | Deduction | |
| Claimed | Not claimed | |
| Total Income (Salary & other sources) | 350,000 | 350,000 |
| Gross Total Income before deduction under Section 80C | 350,000 | 350,000 |
| Deduction under 80E | 0 | 72,000 |
| Net taxable income | 350,000 | 278,000 |
| Income Tax | 16,000 | 8,800 |
| Education Cess @ 3% | 480 | 264 |
| Total tax, surcharge and education cess | 16,480 | 9,064 |
Can you see the difference between the 2 figures? That’s a huge amount for anyone.
- The only document to prove that she paid some amount of tax in FY2010 is her FORM 16. Please Note: Income tax filing does not end with you getting your FORM 16. You need to contact a tax consultant or a chartered accountant to file your income tax returns. FORM 16 only accounts for your salary/pension – not income from other sources.
If you receive rental income, interest from investments or income from any other source, you need to show it. Your IT returns are important documents, especially if you are applying for a loan or a self-sponsored visa.
I believe both these points demand their own post & I shall do that. Till then keep watching this space for more!!!
i don’t think that CA is necessary. Given this kind of simple statement, even she could have filed her return online. Issue here was ignorance. Most of the time we dont think about the money we have already earned. We work for money, but quite often forget that money too can work for you-Provided You want to…
Very nice post. You should continue writing on such subjects.
There is a statement from Ascent of Money by Niall Ferguson, ‘in a democratic society, we are given financial freedom, but it is rather appalling as to how much we understand and exercise this freedom. People in a supermarket are rarely aware as to what is better; 20% discount or 20% extra…’
Most of us have a very convenient excuse saying ‘I hate Maths’, but Money is ultimately a number and managing this money has to be a number game. If you wanna make money, make sure you know how to save it as well.
IGNORANCE and APATHY are the two main reasons in the above case:
Ignorance of all the instruments which facilitate tax saving as well as interest on capital.
Apathy towards the fact that Money Matters are best left to parents and the accounts department. I made my money, spent it and am happy for today- what if the government too some to keep myself away from numbers and policy papers.
’tis much like that. We bemoan the fact that “shady” intermediaries mislead investors and “somebody” (read government, sebi, and other big shots) should do “something” about it.
The problem begins at home… our kids brains are filled with so much mugging, and no practical knowledge. The only way out is to make financial literacy compulsory in schools or colleges.
Forget about investing – at least they will then be able to file the “Saral” income tax!
A CA/ Tax consultant is not necessary.. one can do it on her own through the Saral – 2B form
PS: I don’t.. do either
, hence thanks for the wake up call !!
nice information!
Resources like the one you mentioned here will be very useful to me! I will post a link to this page on my blog. I am sure my visitors will find that very useful.
This blog has been very helpful. Interesting and inspirational. I agree with the viewpoints you have discussed in your blog. Thanks for posting. Will read your blog more often.
most companies will have testimonials on their websites. read them. if they leave you in doubt ask if there is a way to communicate with a prior client.
Thank you for the details presented in this article, it is very useful to everybody and I am going to save this site and come back. Keep up the good work!
he can open equity line of credit ratings only in his name and this way your consumer credit record will not affect his switch to obtain the loan or which you have to put together this bank loan fast- in advance of your personal debt consolidation application will show for your statement. most creditors handle debts consolidation plan like chapter 13 chapter 13, so it can be mean- they don’t like see this especially substantially.