Tax saving

I am a lawyer working in a law firm on a retainer basis. I needed some sound advice on saving on income tax. As per my calculations the tax which I will be required to pay for the FY 2015-2016 (AY 2017-2018) will be in excess of INR 60,000. I have started investing in PPF. I have also bought a pre-owned four wheeler. I request you to kindly provide me some advise on investment options. I do not trade in shares/securities and do not have a knack for it either. 

Would also appreciate assistance in filing of returns in future.
Asked 1 year ago in Income Tax from Mumbai, Maharashtra
Dear Sir,

With respect to your quarry please find below answer :

The details you have provided is not sufficient enough specially it do not contain details of all investment you do, family structure and gross amount of receipts by you though my advise on different applicable investment options shall be as below :

1. ELSS - It is investment in mutual fund with lock in for 3 years ( As compared to 14 Years in case of PPF) and on an average gives annual return of around 12%  - 15% (As Compared to 9% in case of PPF) Max. Upto Rs. 1,50,000/- (To be reduced if any PPF is paid)

2. LIC - Life insurance plan is must for safety of family and hence you should invest into it in order to save taxes.

3. Mediclaim - Mediclaim Insurance is also must looking to doctors expenses and hence same shall give you tax benefits upto Rs. 25,000/- and if it covers for your parents than same shall be Rs. 50,000/-

4. School Fees of children

5.  Housing Loan Interest if any payable by you.

6. Also in case of retainer ship you will be eligible for expenses all incurred by you for your duty including petrol, telephone, internet expenses etc. which will give you tax benefits.

For further details please free to contact me.

Thanks & Regards
CA Vishrut Shah
(+91-98214798534)
vishrut1303@gmail.com
Vishrut Rajesh Shah
CA, Ahmedabad
231 Answers
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Sir can you please let us know if you are receiving salary or consultancy fees from the law firm
Shyam Sunder Modani
CA, Hyderabad
955 Answers
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The need for investments will have to be balanced with your age and risk profile based upon your sustainability of your earnings on regular basis. As your income is in the nature of retainer basis, your income will be considered as professional income. You will be entitled to claim all the reasonable expenses incurred for the purpose of earning your professional income. Few examples of such expenses are - travel, conveyance, vehicle maintenance, power, communication expenses, rent, books & periodicals and depreciation on assets such as computers & vehicle.

Your investments for the purpose of claiming deductions u/s 80C upto Rs. 1.50 Lakhs can be towards Life insurance policies, PPF, NSCs, repayment of housing loan etc. You need to balance these investments/expenses based upon your financial commitments of short term and long term in nature and see how best they add to your wealth and not just for tax saving purposes. 

In addition to deductions u/s 80C, you can also invest in NPS for an additional sum upto Rs. 1.5 lakhs subject to the compliance with the conditions specified therein.  

The deductions towards medical insurance and medical expenses can be claimed.

While the above are few suggestions general in nature, proper and relevant advice for investment will depend upon the facts of your case. 

  
B Vijaya Kumar
CA, Hyderabad
290 Answers
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Hello Sir,

Firstly as you have mentioned that you work for a Law Firm on a Retainership Basis, it appears that you are not drawing a Salary but instead being paid Professional Fees after deducting 10% as withholding Tax i.e TDS.

If that is the case that you have a Number of Expenses which can be claimed as an Expense as you will be filing ITR 4 i.e a Return for Professionals and not ITR 1 i.e a Return for Salaried People.

Claiming of such expenses which eventually reduce your Tax Liabilty to a great extent. So i assume in your case you may not have to shell out that INR 60,000/- out of your pocket at the end of the day.

Then you have mentioned about Investment Options but you were not clear as to what are you looking for in the Investment Front. General Investments or TAX Saving Investments. As far as investments are concerned it is more important to understand your need, risk apetite, investment capacity, existing investment portfolio, spending pattern, insurance cover and N more number of things.

So for that it is advised to better approach a Consultant and engage in a personal conversation who will in turn guide you through the Tax Planning as well as help you build up a Strong Investment Portfolio.

Regards,

CA Rohit R Sharma
Mumbai.
Rohit R Sharma
CA, Mumbai
719 Answers
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