Categories: Financial Cocktail Samosas

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Home loan strikes a big cord with people: with small monthly investments you create a big asset and get good tax savings. Is that the complete truth? If you take a loan of Rs 50 Lakhs at current 8.3% interest rate for 15 years for a 70L house, you will pay an EMI of Rs 48,652 for 15 years, a total interest of Rs 37.57L and thus end up paying back Rs 87.57L to home loan company for 50L borrowed. Your house costs you 1.07 Crores practically! On this you save a tax of maximum 11.27L over 15 years if in 30% tax bracket, a mathematical average of 75,000/- per year or Rs 6,261/- per month. So, to save a tax of 11.27L, you pay back 26.3L more! Learning – never take home loan only to save tax. Read more at http://humfauji.in/?s=home+loan

June 20th, 2018
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Commutation or no commutation should be decided more by your future likely requirements and not by just gut feeling or just because what your friend is doing. If you’re likely to need bulk money in future – children’s major educational requirements or marriage, house construction or major house renovation, desire to travel extensively, wanting to pay off big loans earliest etc – you may need to commute. Remember, you can commute anything between 0 – 50%. However, if you’re likely to need more monthly income in addition to pension rather than bulk, maybe you need lesser or no commutation. In the latter case, you can even commute and invest the bulk amount efficiently to get the monthly income that you need in a more tax-efficient manner. You may like to read more on this on our blog at the link: http://humfauji.in/?s=COMMUTATION

June 20th, 2018
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DSOPF is a provident fund (PF). The tax rules, applicable to all PFs, whether Govt. or private, clearly lay down that withdrawals from PFs, partial or complete, are tax-free only if the PF is invested into for a minimum of 5 years. When you retire, your previous DSOPF account is closed and a new account is started. The maximum that you can run it for is 4 years till 58 years of age on re-employment, if retired as a Col or equivalent. Hence, the entire DSOPF amount that you receive on final retirement after re-employment, the principal contributed as also the interest earned, is fully taxable! So far we’ve never come across a case where Income Tax Dept. has raised a tax notice on this issue for a re-employed officer. But for how long will this continue, is anybody’s guess.

June 20th, 2018
Micro-learning Initiative by Hum Fauji