Retirement planning: How to be tax-efficient in retirement
TAX CHANGE: Interest earned on contributions to the Provident Fund beyond Rs.2.5 lakh in a year are now taxable
HOW 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.
Investors looking for twin engines of quality and growth.
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.
