This document provides information about savings, investment, and taxation. It defines savings as income not spent on consumption. Factors affecting savings like income level and interest rates are discussed. Investment is defined as acquiring an asset to generate income or appreciation over time. Objectives of investment like maximizing returns and minimizing risk are outlined. Different types of investments like fixed deposits, stocks, mutual funds, bonds, and real estate are explained. Taxation is defined as compulsory levies imposed by governments to generate revenue. Objectives of taxation like raising revenue and promoting economic development are highlighted. Different tax classifications like direct and indirect taxes are summarized along with tax rates in India. Principles of a sound taxation system like transparency, simplicity, and stability

1. GOVIND BALLABH PANT UNIVERSITY OF
AGRICULTURE & TECHNOLOGY, Pantnagar
COLLEGE OF COMMUNITY SCIENCE
ASSIGNMENT (GROUP NUMBER- 4)
DEPARTMENT OF FAMILY RESOURCE MANAGEMENT
HRM-325 Financial Management and Consumer Education
TOPIC: Saving, Investment and Taxation

2. TOPIC
 Saving: objectives, types and saving institutions
 Investment: objectives, types of investments, test and
principles of investment
 Taxation: objectives, characteristics, classification,
advantages and disadvantage; principles of sound
taxation systems

4. SAVINGS REFERS TO THAT PARTOF INCOME WHICH IS NOT SPENTON CONSUMPTION.
INFACT MOST INDIVIDUALS DO NOT SPENT THE WHOLE INCOME EARNED BY
THEM. THEREFORE THEAMOUNT WHICH IS NOT SPENTBYTHEM BECOMESSAVING
AND A SOURCE OF INVESTMENT.
SAVINGS = INCOME –CONSUMPTION
S = Y - C
IN OTHER WORDS, SAVING IS EXCESSOF INCOME OVER CONSUMPTION EXPENDITURE.
THERE IS DIRECT RELATIONSHIP BETWEEN SAVING AND INCOME.

5. FACTORS AFFECTING SAVINGS
INCOME LEVEL.
RATE OF INTEREST.
VOLUME OF NET INCOME.
TAX POLICY OF GOVERNMENT.
GENERAL PRICE LEVEL.
CHANGE IN POPULATION.
UNFORESEEN EMERGENCIES.
ALL THESE FACTORSAFFECT SAVINGS DIRECTLY OR INDIRECTLY.

11. INVESTMENT
• An asset or item acquired with the goal of generating income or appreciation over time.
(Appreciation refers to an increase in the value of an asset over time)
• When an individual purchases a good as an investment, the intent is not to consume the good but
rather to use it in the future to create wealth.
• An investment requires putting capital to work, in the form of —time, effort, money, or an asset—in
hopes of a greater payoff in the future than what was originally put in.
• For example, an investor may purchase a monetary asset now with the idea that the asset will provide
income in the future or will later be sold at a higher price for a profit.

12. OBJECTIVES OF INVESTMENT
Main objective of investment are
1.Maximisation of return
2. Minimization of risk
Other subsidiary objectives are:
1. Maintaining liquidity
2. Hedging against inflation
3. Increasing safety

13. 1. Fixed-rate Investment Instruments:
• give fixed returns over a period of time.
• have a low-risk investment as chances of default by the
issuer/bank/government are negligible.
some of the best fixed-income investment instruments:
a. Bank Fixed Deposits
• It offers fixed interest rate on your principal amount.
• With guaranteed fixed returns and flexible maturity periods.
• An investor makes a lump-sum deposit and earns interest at a greater rate
TYPES OF INVESTMENT

14. b. Public Provident Fund Public
• It is started by Government of India. (saving scheme)
• Current interest rate = 7.10% (risk free, guaranteed return)
• Tax free return (interest)
• Starts from Rs. 500 to 1.5L/year lumpsum or installments
• Locking (maturity) period 15 years
• After 6 years we can withdraw 50% of amount
c. Bonds
• It is a loan which an investor lends to the issuer of the bonds.
• These issuers can be corporate firms or the Government of India, they issue bonds to raise
funds to finance their operations
• Bonds are another low-risk investment option

15. 2. MARKET- LINKED INVESTMENT INSTRUMENTS:
Returns from these instruments are directly related to market fluctuations.
a. Stocks
• It is a financial instrument that represents part ownership
• Returns dependent on market fluctuations
b. Mutual Funds
It pool in resources from multiple investors, which in return generate money
c. National Pension Scheme (NPS)
• Founded in 2009, 13 years ago by Pension fund Regulatory Authority of India (PFRDA)
• Regular investment throughout your working life is withdrawn partially at retirement and the
remaining amount is disbursed as regular pension.
• Any Indian citizen between the age of 18-60 years can open an NPS account.
• Current interest rate of NPS is 8-10%

16. 3. Alternative Investment Instruments:
a. Gold
• Gold is a commodity whose price fluctuation over the years has made it the most
reliable investment
• It is considered a low-risk investment viewed from a long-term perspective
• An investor should invest some percentage of their total investment amount in gold
to hedge themselves against any potential market risk.
b. Real Estate
• Any investment made in physical properties such as land, buildings, shops, etc.
• It involves purchase, ownership and management of the real estate property

17. CATEGORIES OF INVESTMENTS
OWNERSHIP INVESTMENTS
As the name clearly suggests, are the assets that are purchased and owned by the
investor. Examples of this kind of investment include stocks, real estate properties.
Funding a business is also a kind of ownership investment.
• Stocks
• Mutual Funds: type of investment where money from multiple investor are pooled
and invested by professional fund manager.
• Public Provident Fund(PPF): PPF is considered as one of the best investment
options for long- term investors who are seeking guaranteed returns. Current PPF
interest rate is 7.1% p.a. till sept 2022.

18. CREDIT INVESTMENT
Examples of CI are Bonds , debentures
BONDS : a bond is loan from an investor to a borrower such as a company or government. The
borrower uses the money to fund its operations, and the investor receives interest on the investment.
The market value of a bond can change over time.
• a loan to a company or government. It pay investors affixed rate of return.
• a certificate that you can buy from a government or company that promises to pay you interest on
the money you have given.
DEBENTURES: Debentures refer to long-term debt instruments issued by a government or
corporation to meet its financial requirements. In return, investors are compensated with an interest
income for being a creditor to the issuer.
They are usually an unsecured form of borrowing from the public and have a lengthy tenure, usually
exceeding ten years.
A debenture is a type of long-term business debt not secured by any collateral.

19. • Saving simply mean putting aside a part of your earnings over time.
• The saved amount of money is subject to no risk and, therefore, does not help you earn
any profit or returns.
• However, its value appreciation remains more or less stagnant, as there is no addition
over and above.
Investment is based on concept of earning returns or profit on the money you first put in a
fund or spent on an asset purchase. Remember here involvement of risk is what makes
them profitable.
DIFFERENCE BETWEEN SAVING AND INVESTMENT

20. Taxation
Taxation is the imposition of compulsory levies on individuals or
entities by governments in almost every country of the world.
Taxation is used primarily to raise revenue for government
expenditures, though it can serve other purposes as well.
A tax is a compulsory payment imposed by the Central or the State
government on the citizens of a country for the service of public
power.

21. Objectives of taxation
1. Raise revenue to meet expenditure :
The government through budget attempts to raise as much revenue as possible
to meet the expenditures for the service of public power.
2. Reduce inequality of income :
As the economic progress takes place , people benefit in terms of their living
standard but this benefit of progress is not equally distributed so to reduce this
inequality , rich are taxed more and the poor, less or not taxed at all.
3. Eliminate absolute poverty :
We in India have about 22% of our population, below poverty line for whom
numerous programmes are designed to help them for which huge amount of money
is required that’s why taxation helps in collecting money to meet these expenses.
4. Economic development and full employment :
Taxation helps in generation of money or capital formation which then leads to
economic development . Employment is inversely proportional to tax rates which
means by reducing the tax rates , full employment can be attained as there is rise in
disposable income which then leads to increase in demand of goods and services.

22. 5. Promoting saving and investment :
The objective of development and full employment involves huge investment which depends on
savings. Taxation policy through proper tax planning should promote savings. Non-essential
consumption including harmful consumption like tobacco and alcohol must be discouraged through
high tax rate.
6. Price stability :
Wide fluctuation in price level resulting in inflation and deflation must be regulated and
controlled through tax policy. Inflation may require to have high tax rates while deflation may require
to have low tax rates.
During inflation, rate of direct taxes are raised so that private spending can be controlled but indirect
taxes imposed on commodities fuel inflationary tendencies.

23. Direct Taxes
• These are the taxes that are paid directly to the government .
• These taxes are administered and governed by the Central Board of Direct Taxes (CBDT).
• Eg: Corporate tax and capital gain tax
Indirect taxes
• These are taxes paid to government if one makes any purchase of goods and services.
• These taxes are administered and governed by the Central Board of Indirect Taxes and Customs (CBIC).
• eg: Service tax and sales tax

27. Tax Rates Products
0.25% Cut and semi-polished stones are included under this tax slab.
5% Household necessities such as edible oil, sugar, spices, tea, and coffee (except
instant) are included. Coal, Mishti/Mithai (Indian Sweets) and Life-saving drugs are
also covered under this GST slab.
12% This includes computers and processed food
18% Hair oil, toothpaste and soaps, capital goods and industrial intermediaries are
covered in this slab.
28% Luxury items such as small cars, consumer durables like AC and Refrigerators,
premium cars, cigarettes and aerated drinks, High-end motorcycles are included
here.

28. Ad Valorem Specific
Ad valorem tax is the tax imposed
according to the assessed value of item.
Specific tax is a fixed amount tax imposed
on a product regardless of its value.
Charged according to the value of the item
not quantity.
Charged according to no of units sold not
value.
The tax is usually expressed in percentage. The tax is expressed in specific sums.
Example: 10% ad valorem tax on cell phone
Rs 20,000 worth cell phone will cost rs2000
tax, while Rs 30,000 worth cell phone cost
Rs 3000 tax.
Example: Rs 100/ bag cement, for 50 bags
100*50= 5000
If price increases Rs 100 the tax will be
same.
They are progressive in nature. They are regressive in nature.
Ad valorem versus Specific
Tax

29. 1.A proportional tax is imposed on income at uniform rate .
• All taxpayers contribute the same proportion of their income.
• Example- Everyone having food in an A/C restaurant pays GST of 5% irrespective of
the income level or bill amount
2. A progressive tax increases as the taxable amount increases.
• Imposes a lower tax on low-income earners than on those with a higher income.
• Example- income tax
3.Regressive tax rate diminishes as the taxable amount increases
• Inverse relationship between tax rate and taxable income.
• Example – Those goods whose consumption society wishes to discourage, such as
tobacco, gasoline, alcohol.1.
PROGRESSIVE, PROPORTIONAL AND REGRESSIVE
TAXES

30. Classification Of different types of
Taxes
(I) Direct TAX
• Income TAX: by governments on citizens to generate income to boost
economy.
• Wealth TAX: on super-rich people (legacy or earned)
• Gift TAX
• Capital Gains TAX: tax paid by an investor upon selling their asset, based
on the amount by which the asset appreciated during the time it was held.
• Corporate TAX: When a company pays from its revenue earned.
• Security transaction TAX: on share’s price (buy or sell)
• Divident Distribution TAX: on domestic companies which pay dividents to
their investors.

32. Income Tax Slab
New Regime Income Tax Slab Rates FY 2021-
22
(Applicable for All Individuals & HUF)
Rs 0.0 – Rs 2.5 lakh NIL
Rs 2.5 lakh – Rs 3.00 lakh
5%
Rs 3.00 lakh – Rs 5.00 lakh
Rs 5.00 lakh- Rs 7.5 lakh 10%
Rs 7.5 lakh – Rs 10.00 lakh 15%
Rs 10.00 lakhs – Rs 12.50 lakh 20%
Rs 12.5 lakhs – Rs 15.00 lakh 25%
> Rs 15 lakh 30%
Income tax slab rate FY 2021-22 (AY
2022-23) – Applicable for New Tax
regime

34. 1.Social and economic balance
2.Higher productivity
3.Elastic
4.Promotes Certainty
5.Productive
6.A means of developing civic sense
7.Saves time and money
ADVANTAGES OF DIRECT TAXES

35. DISADVANTAGES OF DIRECT TAXES

38. THE PRINCIPLES OF A GOOD TAX POLICY
Transparency
A tax system involves tax payers hence should know the basics of taxes. They should the WHO, WHY ,
WHEN , and HOW.
Complexity
Tax is itself a complex concept , in market economy where taxes are practiced the distortions and instability
should be minimum.
Simplicity
When taxes get complex it costs both the market and the taxpayer. Simplicity will keep illegitimate income
undisguised.
Stability
No continuous change should occur, permanance is the key to a tax policy. Instability leads to long term
difficulty & uncertainity in economy.

39. Retroactivity
Taxpayers must rely on existing tax laws and regulations only.
Open process is a must
Tax legislation of a good tax policy should be based on open hearings and proper legislative
procedures . Taxpayers should have full opportunity to make criticism.
Other taxes
National taxes are important but also the state and local taxes. Since higher level taxes are built
up only due to such secondary and tertiary taxes.

40. THANK YOU
Niharika Dagar 57802
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Divya Lingwal 57923
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Simran Pokhariya 58350