1. Abhiraj Patel (IM-2K8-01)
Ankur Pandey (IM-2K8-007)
Devpreet Kaur (IM-2K8-24)
Jasneet Kaur Khanuja (IM-2K8-37)
Khushwant Singh (IM-2K7-47)
MBA (MS) 5yrs. Sem VIII

2.  PFM or Personal Financial Management is the
application of the principles of finance to the
monetary decisions of an individual or family
unit. It addresses the ways in which individuals or
families obtain, budget, save, and spend
monetary resources over time, taking into
account various financial risks and future life
events. Components of personal finance might
include checking and savings accounts, credit
cards and consumer loans, investments in
the stock market, retirement plans, social
security benefits, insurance policies, and income
tax management.

3. Asset Cash Discipline
I flow
n
Debt Spending
v habits
e
s Savings Budget Liabilities
t line

4. Speculation
Financial Goals &
Priorities
Protecting
Financial
Security

5. Income
Balance Sheet
Statement
Income
Asset Liabilities
Expense

6.  Income Tax
 Wealth Tax
 Property Tax
 Personal Taxes are the taxes levied on an
Individual regardless of his/her Business or
Profession.

7.  The government of India imposes an income tax on taxable
income of individuals, Hindu Undivided Families (HUFs),
companies, firms, co-operative societies and trusts (identified
as body of individuals and association of persons) and any
other artificial person. Levy of tax is separate on each of the
persons. The levy is governed by the Indian Income Tax Act,
1961. The Indian Income Tax Department is governed by
the Central Board for Direct Taxes (CBDT) and is part of the
Department of Revenue under the Ministry of Finance, Govt. of
India. There are close to 35 million income tax payers in India.
 In India, individual income tax is a progressive tax with three
slabs. About 10 per cent of the population meets the minimum
threshold of taxable income.

8. The total income of a person is divided into
five heads, viz. taxable heads:
 Income from Business or Profession
 Income from Salary
 Income from Other Sources
 Income from Capital Gains
 Income from House property

9. I TAX RATES FOR INDIVIDUALS OTHER THAN II, III & IV BELOW
 Upto 1,80,000 - Nil
1,80,000 to 5,00,000 - 10% of the amount exceeding 1,80,000
5,00,000 to 8,00,000 - Rs.32,000 + 20% of the amount exceeding 5,00,000
8,00,000 & above - Rs.92,000 + 30% of the amount exceeding 8,00,000
II TAX RATES FOR RESIDENT WOMEN BELOW 60 YEARS
 Upto 1,90,000 - Nil
1,90,000 to 5,00,000 - 10% of the amount exceeding 1,90,000
5,00,000 to 8,00,000 - Rs.31,000 + 20% of the amount exceeding 5,00,000
8,00,000 & above - Rs.91,000 + 30% of the amount exceeding 8,00,000
III TAX RATES FOR INDIVIDUAL RESIDENTS AGED 60 YRS AND ABOVE & BELOW 80 YEARS (SENIOR CITIZEN)
 Upto 2,50,000 - Nil
2,50,000 to 5,00,000 - 10% of the amount exceeding 2,50,000
5,00,000 to 8,00,000 - Rs.25,000 + 20% of the amount exceeding 5,00,000
8,00,000 & above - Rs.85,000 + 30% of the amount exceeding 8,00,000
IV TAX RATES FOR INDIVIDUAL RESIDENTS AGED 80 YRS AND ABOVE (VERY SENIOR CITIZEN)
 Upto 5,00,000 - Nil
5,00,000 to 8,00,000 - 20% of the amount exceeding 5,00,000
8,00,000 & above - Rs.60,000 + 30% of the amount exceeding 8,00,000
 There is no surcharge in the case of every individual, Hindu undivided family, Association of persons and body
of individuals.
EDUCATION CESS
 The amount of Income-tax shall be increased by Education Cess of 3% on Income-tax.

10.  Property tax or 'house tax' is a local tax on buildings, along with appurtenant
land, and imposed on owners. It resembles the US-type wealth tax and
differs from the excise-type UK rate. The tax power is vested in the states
and it is delegated by law to the local bodies, specifying the valuation
method, rate band, and collection procedures. The tax base is the annual
ratable value (ARV) or area-based rating. Owner-occupied and other
properties not producing rent are assessed on cost and then converted into
ARV by applying a percentage of cost, usually six percent. Vacant land is
generally exempt. Central government properties are exempt. Instead a
'service charge' is permissible under executive order. Properties of foreign
missions also enjoy tax exemption without an insistence for reciprocity. The
tax is usually accompanied by a number of service taxes, e.g., water tax,
drainage tax, conservancy (sanitation) tax, lighting tax, all using the same
tax base. The rate structure is flat on rural (panchayat) properties, but in the
urban (municipal) areas it is mildly progressive with about 80% of
assessments falling in the first two slabs. By all accounts, the property tax is
under-utilised in the municipalities and not effectively used in the
panchayats, mainly due to tax payer resistance.

11.  Wealth tax came into existence on 1st April 1957. Wealth tax is
derived from the property owned by the proprietor. The
proprietor needs to pay tax every year on property owned by
them. The residential property that does not yield any income to
its owner is also subjected to wealth tax.Wealth tax is termed as
most significant direct tax.
As per the wealth tax act, wealth tax is applicable to the following:
 An individual person
 A group of people who own a property
 A company or organization
 A Hindu undivided family (HUF)
 Person belongs to 1-by -6 categories
 A representative or heir of a dead person
 Non corporative tax payer

12.  Tax planning is a broad term that is used to describe the processes utilized
by individuals and businesses to pay the taxes due to local, state, and federal
tax agencies. The process includes such elements as managing tax
implications, understanding what type of expenses are tax-deductible under
current regulations, and in general planning for taxes in a manner that
ensures the amount of tax due will be paid in a timely manner.
 Thus, planning for taxes involves knowing which types of income currently
qualify for as exempt from taxation. The process also involves understanding
what types of expenses may be legitimately considered as deductions, and
what circumstances have to exist in order for the deduction to be claimed on
the tax return.
 For individuals, this can mean income sources such as interest accrued on
bank accounts, salaries, wages and tips, bonuses, investment profits, and
other sources of income as currently defined by law.

13.  Tax Planning is NOT tax evasion. It involves
sensible planning of your income sources and
investments. It is not tax evasion which is illegal
under Indian laws.
 Tax Planning is NOT just putting your money
blindly into any 80C investments.
 Tax Planning is NOT difficult. Tax Planning is
easy. It can be practiced by everyone and with a
very little time commitment as long as one is
organized with their finances.

14.  It is because Tax planning is an essential part
of your financial planning. Efficient tax
planning enables you to reduce your tax
liability to the minimum. This is done by
legitimately taking advantage of all tax
exemptions, deductions rebates and
allowances while ensuring that your
investments are in line with your long term
goals.

15.  The first is to reduce the adjusted gross income for the tax
period. This is where understanding current tax laws as they
relate to allowances and exemptions come into play.
 A second approach to tax planning is to increase the amount
of tax deductions. Again, this means knowing current laws and
applying them when appropriate to all usual and normal
expenses associated with the household or the business. Since
these can change from one annual period to the next, it is always
a good idea to check current regulations.
 One final approach that may be applicable to effective tax
planning has to do with the use of tax credits. This can include
credits that relate to retirement savings plans, college expenses,
adopting children, and several other credits. One common
example of a tax credit is the Earned Income Credit, which is
intended to relieve the tax burden for persons who earn less
than a certain amount within a given calendar year.

16.  You should think about the following criteria, before selecting your tax saving
investments for the year:
 Liquidity: How quickly will you need the money? Will you need to access the money
within the next year or two years or over what duration ?
None of the above instruments let you withdraw your money quickly, in fact there
is a minimum three year lock in for all tax saving investments.
 Risk and Return: How much risk do you want to take. There is a trade off between
the two, some instruments are very low risk, but as a result they give low returns
which are capped.
 Inflation protection: The instruments that give you a low return typically are the
worst type of investments regarding inflation. This is important because many of
the instruments give you a fixed rate of interest, and lock in your money for a long
period. This is not a good protection against inflation.
 Tax Exemption: All tax saving investments under Section 80C are alike in one
respect that they are tax exempt when they are invested. But they differ with
respect to the tax on the income you earn from such an investment as well as the
tax on the maturity of the investment.

17. 1. Make full use of the entire Section 80C deduction
The maximum reduction available in Section 80C is Rs.100,000 and salaried
citizens whose gross salary is Rs.250,000 or more are entitled to use the full
Rs.100,000 limit.
Individuals who make monetary infusions of over Rs.100,000 in Section 80C in
selected areas fail to understand that the advantages are limited. In spite of
investing Rs.70,000 and Rs.40,000 in Public Provident Fund and ELSS
respectively, the amount entitled by the investor is only Rs.100,000.
Following investments/contributions meet the criteria for Section 80C reduction:
 Public Provident Fund
 Accrued interest on National Saving Certificate
 Life Insurance Premium
 National Saving Certificate
 Tuition fees paid for children's education (maximum 2 children)
 Principal component of home loan repayment
 5-Year fixed deposits with banks and Post Office
 Equity Linked Savings Schemes (ELSS)

18. 2. Reduction of tax liability beyond Section 80C deductions
If your salary surpasses Rs.250,000 pa and the reductions under Section 80C are
not enough to minimize the general tax liability consider the following:
Home loan: Interest payments of upto Rs.150,000 pa are entitled for reduction under
Section 24.
Medical insurance: A deduction of upto Rs.15,000 pa under section 80D is
applicable under this.
Donations: Tax advantages under Section 80G entitle the donations to particular
funds/institutions.
3. Assert tax advantages on house rent paid
If HRA is not included in the salary structure then the salaried individuals can asset
rent paid by them for residential lodging. This reduction is accessible under
Section 80GG and is smallest amount of the following:
25% of the total earnings or,
2,000 every month or,
Surplus of housing charge paid over 10% of total salary.

19. 4. Reorganize the salary
Reorganizing the salary and incorporating certain apparatus can help in the long run
in minimizing the tax liability. In order to assert tax benefits salary reform is a
more competent measure. The following can be included in an individual's salary
structure:
 Food coupons can release up to Rs.60,000 per year from tax.
 Medical expenses which are compensated by the employer spare up to Rs.15,000
per year.
 House Rent Allowance (HRA) should be incorporated in the salaries of individuals
who stay in rented houses
 Transport allowance discharge upto Rs.800 per month.
5. Go for a combined home loan
 The primary reimbursement on a home loan is entitled for a reduction of up
to Rs.100,000 pa and the interest rewarded is entitled for a reduction of up
to Rs.150,000 pa. When a home loan is for a considerable amount then the
interest and chief reimbursement surpass the allotted limit. A salaried individual
can go for a combined joint home loan with his parent, spouse or sibling, to
guarantee the best utilization of tax advantages.
In this way both the owners can assert tax reductions in the percentage of their
stake holding in the loan.

20.  Inefficient use of resources.
 Risk of not meeting financial
objectives.
 Unprepared for the storms of life.
 Pay higher taxes than necessary.
 Delay retirement; live on less money.
 May be difficult fulfilling God’s
purpose for your life.

21. A good Tax Planner is always happy
Have a happy financial year with a
burden of increased Taxes.