Let your family members reduce your tax!

Have you ever thought about it – your family can help you reduce your tax liability…
We’ve all noticed that towards the end of each financial year, there’s a rush among taxpayers to invest in various tax-saving instruments but we should also know that there are some other smart ways as well through which we can earn tax free income.

Let’s discuss some ways that help us earn but keep our tax liability low:-

Avail of minor income exemption: The income earned by a minor gets clubbed with that of the parent who is earning more. But the minor’s income does not get added to the parent’s income if the minor’s income is less than Rs. 1,500/- and this is applicable for up to two children. So, if you invest Rs 25,000 in a bank FD giving interest at 6% in the name of your minor child, no tax is payable on that interest.

Investing in a Mutual Fund in minor’s name: Similarly, if you invest in a child’s name in a Mutual Fund and never take out the money till the child is a major, barely any tax is payable at maturity and No tax while it is invested. We have a large number of investors who save big amounts for their children in a Children’s Mutual Fund which earns them handsome gains and they take it out only when the child turns a major, to take advantage of this facility. This is so because of the way Mutual Funds are taxed – you would not be able to do it with say, bank FDs.

Take help of your adult child: After 18, one is treated as a separate individual for tax purposes. His/her earnings are no longer clubbed with the parent’s income but the parents can gift any amount to the child. Since a child may not earn anything for many more years while studying and also be in a very low tax bracket in initial years of service, a lot of tax can be saved by prudent planning.

Parents can save you tax: If any or both of your parents do not have a high income while you are in the highest 30% tax slab, you can invest legally in their name to earn tax-free income. Such income is not clubbed with your income.

Form HUF with inherited wealth: HUF is a tool advocated by CAs to save tax. HUF is actually a virtual member in your family with the same tax slabs as you and any income earned by the HUF is taxed separately. While it is a good tool for saving tax on inherited wealth, be vary of doing this with your own income and earnings since it can be a potential source of conflict and headache.

Magic Wand: The basic exemption limit of Rs 2.5 lakh and Rs 1.5 Lakh deductions under section 80C is available to every grown up in the family. Make use of it.

(Contributed by Sumeet Kumar, Associate Financial Planner, Team Sukhoi, Hum Fauji Initiatives)

Beware if you are ditching mutual funds for stocks

The year 2020 was the worst year for many investors when the market collapsed due to the pandemic. But many started participating in the market rally when it spiked back to its all-time high and kept on going up by the day. A large chunk of retail, generally new investors, opened Demat accounts and started DIY (Do it yourself) investing in stocks since it seemed to them that stocks can only go up, never down. Since mid-Jan 2022, reality has dawned on them and many are very scared.

Well, when it comes to investments, there are many fundamental differences between mutual funds (MFs) and stocks. Apart from the return on investment and risk, both instruments differ in investment approach and management.
Let us understand why you should not ditch your mutual funds for stocks especially if you cannot devote adequate time and energy to stocks.

1. Professional Management: When you choose to invest through a MF, you are relieved from analysing, picking, timing, tracking, and managing the purchase. Everything is managed by a qualified and experienced fund manager and his big team. To prepare and manage an equity portfolio, you have to do a detailed analysis of company reports, economy, particular industry, markets etc which can be very time-consuming and hectic.

2. Diversification: In MFs, the invested money gets diversified across a large common pool of assets such as domestic and international stocks, bonds, gold and silver, REITs, and Invits. When buying direct equity, the diversification is comparatively tiny, leaving you vulnerable to the vagaries of those small number of companies’ stock movements.

4. Investment as per You: This is where investing through a MF is more beneficial. You can start with an amount as small as Rs 5000, add more in bulk as small as Rs 1000 when you want or automatically have it deducted as a SIP, start or stop it when you want, take it out when you need. In direct Equity, the requirement is always larger and very few platforms give the facility of automatic regular investments.
There are many more advantages of MFs over direct equity which make them a better choice for most Indian investors. Please remember that real wealth creation happens with long-term undisturbed investing. MFs provide just that fill-it-shut-it-forget-it tool which one just has to monitor once in 6 months or so if the initial selection has been correct.

(Contributed by Bibhuti Gaurav, Associate Financial Planner, Team Prithvi, Hum Fauji Initiatives)

Natural Ways to lower blood pressure without medication and with Vitamin M

Blood pressure is the pressure generated in arteries during contraction and relaxation of heart muscles. The average normal blood pressure is 120/80 in an adult.

Hypertension ̶ or elevated blood pressure ̶ is a serious medical condition that significantly increases the risks of heart, brain, kidney and other diseases.
It is very important for us to have a holistic approach through exercise, meditation, yoga and a balanced diet which will help in maintaining a healthy life and normal blood pressure.

Fruits that are helpful in controlling blood pressure are: Orange Juice, Bananas, Pineapple, Grapes, Watermelon etc
Other useful intakes that you can include in your diet are: Bottle Gourd, Olive/Mustard Oil, Onion and Garlic, Saffron/Kesar, Soyabean etc

Why are we talking about it?
Because as per a recent study 82% of the Indians are bogged down by stress and more than half of them think they are not equipped and reliant financially.

Now that we have shared a lot of facts around how to beat stress and lower the blood pressure, here are the additional 2 cents about the relationship with money.
Anxiety/Stress is one of the root causes of high blood pressure. Lack of planning always makes us anxious. It’s better to plan everything before proceeding ahead. Coming to how we can mend the relationship with money, vitamin M? Here it is…

Make money your best friend: A large amount of our anxiety is linked with our money management. And that’s too obvious as all our responsibilities – securing the health of family members, children’s education or marriage etc – are linked to money only. Proper financial planning can make money as your best friend. You must approach a professional financial planner who can assist you in achieving your goals comfortably if you find yourself getting stressed out on this issue.

If you take care of all of the above, Just Chill.. and say All is well..!! 😊

(Contributed by Jatin Uppal, Dy Manager, Hum Fauji Initiatives)

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