In order to plan for his taxes it is important that Mr. Smith should be aware of the tax implications of the various investment avenues. Before discussing the tax implications, itt is important to understand the all pervading standard section of the income tax act, which provides a deduction under that section, upto Rs. 1,00,000/-. The earlier rebate under section 88 has been replaced with section 80C. Mr. Smith should understand the following aspects while planning for his taxes:
► Tuition fees paid for his child is eligible for a deduction under section 80C
► Premium paid on insurance policies
► Contribution towards national savings certificate and public provident funds are also eligible for a deduction
Conclusion
Normally any personal financial planning is a highly comprehensive exercise involving close interaction with the clients. It covers a number of dimensions and involves studying the needs and requirements of the client closely. This case just touched the tip of the ice berg and aimed at bringing light on the basic elements of financial planning when planning for the children’s expenses.
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