CHAPTER 1

INTRODUCTION AND RESEARCH DESIGN

1.1 INTRODUCTION
Tax planning plays a crucial role in the financial management of individuals and
businesses alike. It involves analysing financial situations to minimize tax
liabilities while remaining compliant with tax laws and regulations. Effective tax
planning not only helps taxpayers reduce their tax burden but also optimizes
their financial resources for investment and growth. IN this project, we will
delve into various aspects of tax planning for taxpayers. We will explore
different strategies, tools, and techniques used in tax planning, considering
factors such as income sources, deductions, credits, and long-term financial
goals. Additionally, we will examine the impact of tax reforms and changes in
tax policies on taxpayers' planning strategies.The project aims to provide
comprehensive insights into tax planning practices, empowering taxpayers to
make informed decisions and optimize their tax outcomes while ensuring
compliance with legal requirements. Through case studies, analyses, and
practical examples, we will illustrate the importance of proactive tax planning
in achieving financial objectives and securing a stable financial future Join us
on this journey to explore the intricate world of tax planning and discover
valuable strategies to navigate the complexities of taxation effectively.

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1.2 STATEMENT OF THE PROBLEM

The salaried employees constitute a sizable class of taxpayers who contribute

to the public exchequer about 12 percent of the total revenue collection by way
of income tax. Their income is assessed under the head “Salaries”. It is,
therefore, essential for this class of tax payers to know their tax obligations in
the right perspective and the measures of tax planning available to them so that
they can make the best use of their earnings by reducing the incidence of tax.
Thorough and up-to-date knowledge of the tax laws is necessary to avail the
benefits provided under the provisions of the Act and thereby ensuring that the
‘take home pay’ is kept at the maximum possible monetary level.

1.3 SIGNIFICANCE OF THE STUDY

This study deals with how tax payers are planning their investments, whether
tax payers are aware about tax is planning, how concerned tax payers are while
doing investment, are tax payers seeking help of any professionals in planning
their tax matters. Government employees are one of the high income earning
classes in our country who pay regular tax for their income. Tax planning is
possible through appropriate savings and investment decisions.

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1.4 RESEARCH OBJECTIVES

1. To study various tax saving instrument available to tax payers that helps
in reduction of tax liability.
2. To analysis the relation between income of individual and the level of
investment
3. To ascertain the level of awareness of the salaried class on various tax
planning measurement available under the income Tax Act.
4. To find out the most suitable tax saving instrument used to save tax and
also to examine the range of savings.
5. To evaluate the sources of information and guidance for tax planning that
taxpayers rely on.

1.5 HYPOTHESIS OF THE STUDY

Hypothesis is a tentative statement formulated for empirical testing. The

present study has identified following hypotheses for testing.

1. TEST 1

H0: There is no significant relation between income and investment level of the
respondents.

H1: There is a significant relation between income and investment level of the
respondent.

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2. TEST 2

H0: there is no significant relation between educational level and awareness

level of tax planning.

H1: There is a significant relation between educational level and awareness

level of tax planning.

1.6 RESEARCH METHODOLOGY

1.6.1 Nature of research

This study is in descriptive research style. It uses a set of statistical methods

and concepts to collect raw data and create data structure that describes the
existing characteristics of a defined target population.

1.6.2 Sample design

The sample size considered for the study is 100. The respondents are income
generating people in PONNANI THALUK. Purposive sampling is used to select
the samples. A structured questionnaire is used for the study.

1.6.3 Data collection

Both primary and secondary are used in this study. The primary data is
collected by distributing the questionnaire to a sample of respondents.
Secondary data constitute the details collected from websites, published
articles and relevant journals etc.

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1.6.4 Analysis of data

Mathematical and Statistical tools like percentage analysis, tabulation

method, Graphic method Etc.. were used for analyse the relationship between
different variables. Tables and chart are used for presenting the data.

1.7 LIMITATIONS OF THE STUDY

The study is affected by the following limitations;

1. Only 100 samples are taken for data collection due to the constraints of
time
2. The study was limited in an area
3. The findings are entirely upon the research conducted among income
generating people in PONNANI THALUK. Hence the inference drawn may
not be applicable universally.
4. Inadequacy of time is an important constraint limiting the scope of the
study.
5. Reletance of respondents affect the research.

CHAPTER SCHEME

Chapter 1 deals with introduction and research design

Chapter 2 includes review of literature

Chapter 3 deals with conceptual frame work

Chapter 4 deals with data analysis and interpretation

Chapter 5 includes summary of findings, suggestion and conclusion.

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 CHAPTER 2
REVIEW OF LITERATURE

Smith, J. (2024). “Tax Planning Strategies and Their Impact on Individual

Taxpayers.” This study explores various tax planning strategies individuals use
to minimize their tax liabilities, such as deductions, credits, and income
shifting. It examines the effectiveness of these strategies and their implications
for taxpayers.

Brown, A. (2023). “The Role of Tax Advisors in Tax Planning for High Net Worth
Individuals.” This research focuses on the role of tax advisors in assisting high
net worth individuals with tax planning. It discusses the strategies and
techniques used by tax advisors to optimize tax outcomes for their clients.

Adeoye, B., & Oluwadare, O. (2023). “Tax Planning and Compliance among
SMEs in Nigeria: The Role of Tax Knowledge and Tax Professionals.” This study
examines the relationship between tax planning, tax knowledge, and
compliance among SMEs in Nigeria. The findings suggest that tax planning
significantly influences compliance behaviour, highlighting the importance of
tax knowledge and the role of tax professionals in enhancing tax planning
strategies among SMEs.

Wang, L. (2022). “Tax Planning and Compliance Behaviour of Small Business

Owners.” This study examines the tax planning behaviour of small business

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owners and its impact on their compliance with tax laws. It identifies factors
that influence tax planning decisions among small business owners.

Jain, A., & Gupta, S. (2022). “Tax Planning and its Impact on Financial
Performance: A Study of Indian Companies.” This paper explores the
relationship between tax planning and financial performance of Indian
companies. The results indicate that effective tax planning positively
influences financial performance, emphasizing the strategic importance of tax
planning for corporate entities.

Garcia, M. (2021). “Tax Planning and Tax Avoidance: A Comparative Analysis.”

This research compares tax planning and tax avoidance strategies, highlighting
the differences between the two. It discusses the ethical and legal implications
of tax planning and tax avoidance.

Majumder, M. A. A., & Rahman, M. M. (2021). “Tax Planning and Tax

Compliance in Bangladesh: An Empirical Investigation.” This study investigates
the relationship between tax planning strategies and tax compliance behavior
among firms in Bangladesh. The findings suggest that tax planning positively
influences tax compliance, highlighting the importance of adopting effective
tax planning practices for improving tax compliance among firms.

Li, X., & Han, L. (2020). “Tax Planning, Tax Incentives, and Corporate
Investment Efficiency: Evidence from China.” This research examines the
impact of tax planning and tax incentives on corporate investment efficiency in
China. The results indicate that tax planning and tax incentives positively affect
corporate investment efficiency, underscoring the significance of tax planning
in enhancing corporate performance.

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Patel, R. (2020). “Tax Planning in the Digital Economy: Challenges and
Opportunities.” This study explores the challenges and opportunities of tax
planning in the digital economy. It discusses the impact of digitalization on tax
planning strategies and compliance.

Cuccia, A. D., & Rizzo, I. (2019). “The Role of Tax Planning in the Relationship
Between Taxes and Corporate Social Responsibility: Empirical Evidence from
European Countries.” This study investigates the mediating role of tax planning
in the relationship between taxes and corporate social responsibility (CSR) in
European countries. The results suggest that tax planning partially mediates
the relationship between taxes and CSR, highlighting the complex interplay
between tax strategies and corporate social behavior.

Kim, S. (2019). “The Effect of Tax Planning on Firm Value: Evidence from
Publicly Traded Companies.” This research examines the effect of tax planning
on the value of publicly traded companies. It Analyzes the relationship between
tax planning strategies and firm performance

Sachin Mittal and Sangeeta Mittal (2019).The study explores the various tax
planning strategies adopted by individual taxpayers in India. It emphasizes the
importance of tax planning in reducing tax liabilities and maximizing savings.
The research highlights the key provisions of the Income Tax Act that enable
taxpayers to effectively plan their taxes.

Li, C. (2018). “Tax Planning and Financial Reporting: Evidence from Corporate
Tax Reserves.” This study investigates the relationship between tax planning
and financial reporting, focusing on the use of tax reserves by corporations. It
analyzes the impact of tax planning on financial statements.

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Pawan Kumar Gupta (2018).This study focuses on the impact of tax planning
on the financial performance of individuals. It examines how effective tax
planning can lead to increased savings and investments, thereby enhancing
financial stability and growth.

Anil Kumar Sharma (2017). The research analyzes the challenges faced by
individual taxpayers in tax planning and compliance. It identifies the key factors
that influence tax planning decisions, such as income levels, age, and financial
goals.

Kumar, A. (2017). “Tax Planning and Investment Decisions of Individual

Taxpayers.” This research explores the relationship between tax planning and
investment decisions of individual taxpayers. It examines how tax
considerations influence investment choices.

Chen, H. (2016). “Tax Planning and Earnings Management: Evidence from

Chinese Listed Firms.” This study examines the relationship between tax
planning and earnings management in Chinese listed firms. It analyzes the
impact of tax planning strategies on earnings quality.

Neha Arora and Renu Arora (2016). The study investigates the role of tax
planning in promoting economic growth and development. It discusses the
impact of tax incentives and exemptions on taxpayer behavior and the overall
economy.

Jones, D. (2015). “The Impact of Tax Planning on Corporate Social

Responsibility: Evidence from European Firms.” This research investigates the

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relationship between tax planning and corporate social responsibility (CSR) in
European firms. It examines how tax planning affects CSR activities.

Amit Kumar and Shweta (2015). This research focuses on the ethical
considerations in tax planning. It examines the ethical dilemmasfaced by
taxpayers in balancing tax minimization with social responsibility.

Pradeep Kumar and Bhawna Rani (2014). The study examines the
effectiveness of tax planning tools such as tax deductions, exemptions, and
rebates in reducing tax liabilities. It also discusses the implications of recent
tax reforms on tax planning strategies.

Gupta, S. (2014). “Tax Planning and Transfer Pricing: A Case Study of

Multinational Corporations.” This study presents a case study of multinational
corporations (MNCs) and their tax planning strategies related to transfer
pricing. It analyzes the implications of transfer pricing for tax planning.

O’Brien, E. (2013). “Tax Planning and Risk Management: A Comparative

Analysis.” This research compares tax planning strategies used by firms for risk
management. It discusses how firms integrate tax planning into their overall
risk management strategies.

Tan, Y. (2012). “Tax Planning and Corporate Governance: Evidence from Asia.”
This study examines the relationship between tax planning and corporate
governance in Asian firms. It analyzes how corporate governance practices
influence tax planning decisions.

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Park, J. (2011). “Tax Planning and Firm Performance: A Longitudinal Analysis.”
This research conducts a longitudinal analysis of the relationship between tax
planning and firm performance. It examines how tax planning strategies impact
long-term firm performance.

Wang, X. (2010). “Tax Planning and Financial Distress: Evidence from US

Firms.” This study investigates the relationship between tax planning and
financial distress in US firms. It analyzes how tax planning affects the likelihood
of financial distress.

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 CHAPTER 3
CONCEPTUAL FRAMEWORK

TAX PLANNING

Tax planning refers to all arrangements by which the tax is saved by ways and
means, which comply with the legal obligation and requirements and are not
colorable devices or tactics to meet the letters of law but not the sprite behind
these, would constitute tax planning. Tax planning should not be done with an
intent to defraud the revenue, All transactions entered into by an assessee
could be legally correct, yet on the whole these transactions may be devised to
defraud the revenue. All such devices where status is followed in strict words
but actually spirit behind the statute is marred would be termed as colorable
devices and they do not form part of the tax planning. All transactions in
respects of tax planning must be in according with the true spirit of statute and
should be correct in form and substance.

The form and substance of a transaction Is real test of any Tax planning device
the form of transaction, as it appear superficially and the real intention behind
such transaction may remain concealed. Substance of a transaction refers to
lifting the veil of legal documents and ascertaining the intention of parties
behind the transaction.

Tax planning is the arrangement of one ’s affairs in such a manner that the tax
planner may either reduce the incident of tax wholly or reduce it to maximum
possible extent as may be permissible within the framework of the taxation

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land. It does not amount to evasion of tax. It is an act of prudence and
farsightedness on the part of the taxpayer who is entitle to reduce the burden
of his tax liability to the maximum possible extent under the existing law. Tax
planning ensures not only accruals of tax benefit within the four corners of law,
but it also ensures that the tax obligations are properly discharged to avoid
penal provision.

TAX EVASION AND TAX AVOIDANCE

TAX EVASION

Tax planning is not the same as tax evasion. Tax evasion involves breaking law not
paying ones taxes where the law clearly states that they must paid. Tax evasion is
the method by which a person illegally reduces his burden by either deflating their
income or inflating their expenses. It refers to a situation where a person try to reduce
his tax liability by deliberately suppressing the income or by inflating the
expenditure showing the income lower than the actual income and resorting to
various types of deliberate manipulations. An assessee guilty of tax evasion is
punishable under the relevant law. Tax evasion may involve stating an untrue
statement knowingly, submitting misleading documents, suppression of facts, not
maintaining proper accounts of income earned (if required under the law) omission
of material facts in assessments. An assessee, who dishonestly claims the benefit
under the statute by making false statements, would be guilty of tax evasion.

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TAX AVOIDANCE

Tax evasion is not same as tax avoidance. Tax avoidance is the exploitation by the
tax payer of legally permissible alternative tax rate or method of assessing taxable
property or income, in order to avoid or reduce tax liability. Tax avoidance is taking
advantages of any loopholes in the law. The line of demarcation between tax
planning and tax avoidance is very thin and blurred. There could be element of
mollified motive involved in the tax avoidance also. Any planning which, through
done strictly according to legal requirements defeats the basic intention of the
legislature behind the statute could be termed as instance of tax avoidance. It is
usually done by adjusting the affair in such a manner the there is no infringement of
taxation laws and b taking full advantages of the loopholes there in so as to attract
the least incidence of tax.

TAX PLANNING EXCLUDES

• 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.

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IMPORTANCE OF TAX PLANNING

Maximizing Tax Efficiency: Effective tax planning allows individuals and

businesses to minimize their tax liability by taking advantage of available
deductions, credits, exemptions, and tax-advantaged accounts.

Cash Flow Management: By reducing tax obligations, individuals and businesses

can improve their cash flow, enabling them to allocate funds towards investment,
savings, or business growth.

Compliance and Risk Mitigation: Tax planning ensures compliance with tax laws
and regulations, reducing the risk of audits, penalties, and legal issues.

Long-Term Financial Goals: Tax planning is integral to achieving long term

financial goals such as retirement planning, education funding, and wealth
accumulation by optimizing tax strategies to support these objectives.

Strategic Decision Making: Tax planning influences strategic decision-making

processes such as investment choices, business structure, asset acquisitions, and
timing of transactions to minimize tax consequences.

Economic Stimulus: Governments often provide tax incentives and credits to

encourage specific behaviors such as investing in renewable energy, hiring
employees, or conducting research and development activities. Effective tax
planning helps businesses and individuals take advantage of these incentives.

Estate Planning: Tax planning plays a significant role in estate planning by

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minimizing estate taxes and ensuring smooth wealth transfer to heirs or
beneficiaries.

TAX PLANNING STRATEGIES

Maximizing deductions: Take advantage of available deductions such as mortgage

interest, charitable contributions, and medical expenses.

Contribute to retirement accounts: Contributions to retirement accounts like

401(k)s and IRAs can lower taxable income.

Tax-efficient investments: Invest in assets that receive favorable tax treatment, such
as long-term capital gains and qualified dividends.

Tax-loss harvesting: Offset capital gains by selling investments at a loss, thereby

reducing taxable income.

Timing income and expenses: Strategically time income and expenses to minimize
tax liability, such as deferring income or prepaying deductible expenses.

Utilize tax credits: Take advantage of tax credits like the Earned Income Tax Credit,
Child Tax Credit, and education credits to lower tax bills directly.

Consider tax-deferred exchanges: For real estate investors, 1031 exchanges allow
for the deferral of capital gains taxes when selling one property and purchasing
another similar one.

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Health savings accounts (HSAs) and flexible spending accounts (FSAs):
Contribute to these accounts to pay for medical expenses with pre-tax dollars.

Consult with a tax professional: A tax advisor can provide personalized advice
based on your specific financial situation and goals.

TYPES OF TAX PLANNING

The tax planning exercise ranges from devising a model for specific transaction as
well as for systematic corporate planning. These are;

• Short term
• Long term
• Permissive
• Purposive

1.Short tax planning

Short range planning refers to year-to-year planning to achieve some specific or
limited objective. For example, an individual assesse whose income is like to register
unusual growth in a particular year as compared to the preceding year, may plan to
subscribe to the PPF/NSC’s within the prescribed limits in order to enjoy substantive
tax relief. By investing in such a way, he is not making permanent commitment but
is substantially saving in the tax

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2.Long range tax planning
Long range planning on the other hand involves entering in to activates, which may
not pay off immediately, For example, when an assessed transfers his equity shares
to his minor son he knows that the income from the shares will be clubbed with his
own income, but clubbing would also cease after minor attains majority.

3.Permissive tax planning:

Permissive tax planning is tax planning under the express provisions of tax laws. Tax
laws of our country offer many exemptions and incentives.

4.Purposive Tax planning:

Purposive tax planning is based on the measures, which circumvent the law. The
permissive tax planning has the express sanction of the statute while the purposive
tax planning does not carry such sanctions, For example, under section 60 to 65 of
the income tax.1961 the income of the other persons is clubbed in the income of the
assessee. If the assessee is in a position to plan in such a way that these provisions
do not get attracted, such a plan would work in favour of the tax payer because it
would increase his disposable resources. Such a tax plan could be termed as
“Purposive Tax Planning”.

ADVANTAGES OF TAX PLANNING:

Minimize Tax Liability: Effective tax planning allows individuals and businesses
to legally reduce their tax burden by taking advantage of available deductions,
credits, exemptions, and incentives.

Improved Cash Flow: By reducing taxes, tax planning can increase available cash
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flow for individuals and businesses, enabling them to reinvest in their operations,
make strategic investments, or save for future needs.

Financial Goal Alignment: Tax planning can align with broader financial goals,
such as retirement planning, estate planning, or investment strategies. By
considering tax implications, individuals can make decisions that support their
overall financial objectives.

Compliance: Proper tax planning ensures compliance with tax laws and regulations,
reducing the risk of audits, penalties, and fines. It helps individuals and businesses
stay up-to-date with changing tax laws and take advantage of any new opportunities.

Risk Management: Tax planning can also involve strategies to mitigate tax-related
risks, such as minimizing exposure to tax audits or legal challenges.

DISADVANTAGES OF TAX PLANNING:

Complexity: Tax laws and regulations are complex and subject to frequent changes,
making tax planning challenging for individuals and businesses without specialized
knowledge. Complexity can lead to errors or missed opportunities for tax savings.

Time and Resources: Effective tax planning requires time, effort, and resources to
gather necessary information, analyze options, and implement strategies. For
individuals and businesses, this can be a significant investment.

Risk of Audit: Aggressive tax planning strategies may raise red flags with tax
authorities and increase the risk of audits or investigations. While minimizing taxes
19
is legal and encouraged, engaging in overly aggressive or questionable practices can
lead to legal consequences.

Opportunity Cost: In some cases, focusing too much on tax planning may result in
missed opportunities for other financial goals or investments. Individuals and
businesses should strike a balance between tax optimization and pursuing other
priorities.

Uncertainty: Tax laws can change unpredictably, which may impact the
effectiveness of tax planning strategies. Economic or political factors can also
influence tax policies, introducing uncertainty into long-term tax planning efforts.

THE POPULAR TAX SAVING INSTRUMENTS

• Provident Funds
• PPF (with post offices/banks),
• Statutory Provident Fund (deducted and paid by the employees).
• Recognized & Unrecognized Provident fund
• Life insurance premium (with the LIC or other private insurers).
• National Saving Certificates.
• Mutual funds
• Unit-linked insurance (UTI & mutual funds).
• Post Office Saving Scheme
• Health insurance
• Shares
• Equity-Linked Saving Schemes.
• Sukanya samriddhi account

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 • Bank deposit
• Infrastructure Bonds.
• Home loans.

TAX SAVING INSTRUMENTS

AVAILABLE FOR DEDUCTION UNDER SECTION 80C

Deduction under section 80C is allowed only to individual or HUF, up to a maximum

limit of Rs. 1.5 lakh and the deduction is allowed only when the amount has actually
been paid by the assesse. Following amount paid or deposited are allowed as
deduction u/s 80C:

➢ Contribution / subscription to PPF, NSC, NSS, ULIP, ELSS

➢ Fixed Deposit with any schedule bank for at least 5 years
➢ Any sum deposited as five years’ time deposit in an account under the Post
Office Time Deposit

1. PROVIDENT FUND
A compulsory, government-managed retirement savings scheme initiated by Gov. of
India in the year 1925.According to this scheme the amount contributed to this fund
are eligible for a maximum deduction of 1.5 lakh in a year. Provident fund are
basically classified into four categories. They are:
a. Public Provident Fund
These are commonly used by self-working persons such as professional,
entrepreneurs etc. The contributions towards PPF are eligible for deduction and also
the interests from these funds are tax free. PPF accounts can be opened for tenures
of up to 15 years. Customers will not be allowed to redeem their investment prior to
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the maturity of the scheme. A loan is offered against PPF by most banks but only
after five years of the tenor is completed. Partial withdrawal is also allowed after five
years. PPF is among the safest investment choices any Indian investor and safer for
investors who are skeptical about putting their money in more risky options.

b. Statutory Provident Fund

SPF or statutory provident fund are another type of provident find which only meant
for Govt. employees, semi Govt. employees, employees of universities and colleges
affiliated any universities created under a statute or other specified institution. The
contributions made by employees are eligible for deduction u/s 80 c.

c. Recognized provident fund

RPF are provident fund available for employees in an organization which are
recognized by commissioner of income tax. The contributions made by employees
in RPF are eligible for deductions.

d. Unrecognized Provident Fund

URPF are provident fund which are not recognized by the commissioner of income
tax. When it became recognized the contribution made towards this fund will be
eligible for deductions.

2. LIFE AND MEDICAL INSURANCE PLANS

Life Insurance Policies have long been the most popular tax saving instruments
among taxpayers. Insurance policies offer twin advantage for tax deductions on
premium paid and insurance cover for the insurer and his family in the event of a
financially debilitating event such as accident, death, etc. The premium paid on life
insurance policies qualify for tax deductions under section 80C, subject to a
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maximum of Rs.1 lakh per annum. Most companies offering Life Insurance also
offer medical insurance policies as well as pension plans which offer tax deduction
under section 80D Deduction is allowed to an individual/HUF for payment towards
Medical Insurance Premium or to any contribution made to the central Government
health Scheme by any mode other than cash.

➢ Maximum 15,000 (For insurance of individual, spouse, dependent children)

or 20,000 in case of senior citizen, and
➢ Maximum 15,000 (For insurance of parents) or 20,000 if parents are senior
citizen.

3. NATIONAL SAVINGS CERTIFICATE:

NSCs or National Saving Certificates are a lot like Tax Saving Fixed Deposit with
the only major difference being that the returns provided by them are comparatively
lower than Bank Fixed Deposits. However, they are regarded as safer options in
comparison with fixed deposits as the fund are in the custody of the Indian
government. Tax benefits can also be availed from National Saving Certificates
under Section 80C of the Income Tax Act. The interest on National Saving
Certificates is taxable. Moreover, the interest in NSCs is accrued annually, meaning
that the longer an individual remains invested, the more claims he / she can make
for tax deduction. The rate of interest on NSCs for five years is 8.50% and 8.80%
for 10 years.

4. MUTUAL FUND
As per sec 10(23D) of income tax act, the amount invested with mutual fund which
are registered under SEBI act 1992,funds set up by public sector banks, public
financial institution or funds authorized by RBI are eligible for deductions u/s 80 C.
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There is no upper limit for the investment, but the deduction is only eligible up to
1.5 lakh of the integrated value of principal and interest amount.

5. ULIP-UNIT LINKED INSURANCE PLAN

Unit Linked Insurance Plans or ULIPs are a unique investment product. Along with
investment in ‘units’, it also comes with life insurance i.e. it provides life cover to
the person taking the policy. ULIPs offer tax benefits at the time of investment as
well as on Maturity. Money invested in ULIP can be claimed as a deduction under
section 80C (life insurance) or 80CCC (pension). A maximum of Rs 1, 50,000 is
allowed under section 80C/ 80CCC. Deduction is available on life insurance ULIPS
under Section 80C, up to 10% of the sum assured or annual premium whichever is
lower subject to a ceiling of Rs. 1,50,000. Deduction towards premium paid for ULIP
retirement under section 80CCC is Rs. 1, 50,000. Further the overall limit of section
80C/80CCC/80CCD (1) is Rs. 1, 50,000. Of course you can invest a higher amount,
but the deduction will be limited to Rs 1, 50,000.

6. POST OFFICE TIME DEPOSIT SCHEME:

Post offices also offer tax-saving time deposit with a maturity period of 5 years
carrying 8.50% per annum interest rate. The interest is payable annually but
compounded quarterly. Also, though the interest paid is taxable but TDS is not
deducted by the post offices.

7. EQUITY LINKED SAVING SCHEMES

ELSS is an instrument sold by mutual funds for the specific purpose of enabling
taxpayers to save their taxes. The proceeds from ELSS are mostly invested in the
stock market so that the investors get the benefit of appreciation in stock prices,
thereby making the stock market work for investors. The tax deduction for ELSS is
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available under section 80C of the Income Tax Act 1961.

8. BANK DEPOSIT
The deduction for investment in bank deposit is available for Individuals and HUF.
Assesse can invest amount in multiples of Rs.100 starting from 100 up to a maximum
limit of Rs.1.5 lakh. The maturity period of this 5 years and there is no premature
withdrawal. The interests on bank deposit are taxable and TDS rate is 10%.

9. INFRA BONDS
These are long-term secured bonds which mature in 10-15 years. The amount of
contribution starts from Rs 5000 up to a maximum of Rs 20000.The normal interest
rate on these are in between 8-9 %. The interest on this are taxable. The Industrial
Finance Corporation of India, Life Insurance Corporation of India, Infrastructure
Development Finance Company and any non-banking financial institution
recognized by the Reserve Bank of India as an infrastructure finance company can
issue infrastructure bonds.

10.HOUSING LOAN

The principal amount contributed towards housing loan EMI and Stamp Duty and
registration charges paid during the year are eligible for deduction U/S 80 c up to a
maximum of Rs 150000.And it is also available for deduction under sec 24 of income
tax act if the house is self-occupied.

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AVAILABLE FOR DEDUCTION U/S 80 D

Health and Medical Insurance Premium

Investment or payment towards health and medical insurance is eligible for
deduction u/s 80 D. This is available for individuals and HUF. Individual can claim
deduction in the name of himself, spouse, dependent children and dependent parents.
For HUF it is available for the members of the family. The available limits for
deductions are up to Rs.25000 for non-senior citizens and Rs.30000 for senior
citizens. Payments should have to be made in a form other than cash payment.

AVAILABLE FOR DEDUCTION U/S 80 EE

Interest on Home Loan

The deduction under this section is available only to Individuals. The maximum
deduction allowed is on interest on home loan of maximum Rs 50,000 per financial
year. You can claim this deduction until you have fully repaid the loan. There is no
time limit but the amount that can be claimed has been limited to Rs 50,000 in one
financial year. The Section does not specify if you need to be Resident to be able to
claim this benefit, therefore it can be concluded that both Resident and Non Resident
Indians can claim this deduction.

Other Conditions to claim this Deduction

Besides, being an Individual Taxpayer, there are a set of conditions that you must
satisfy before you go on to claim the benefit under this section –

➢ This is the 1st house you have purchased

➢ Value of this house is Rs 50 lakhs or less
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 ➢ Loan taken for this house is Rs 35 lakhs or less
➢ Loan has been sanctioned by a Financial Institution or a Housing Finance
Company
➢ Loan has been sanctioned between 01.04.2016 to 31.03.2017
➢ As on the date of sanction of loan no other house is owned by you

The Section does not specify if this house should be self-occupied to claim the
deduction.

SECTION 80G DEDUCTIONS IN RESPECT OF DONATION

Deduction may be classified as:
• No limit 100% donation
• No limit 50% donation
• With limit 100% donation
• With limit 50% donation

No limit 100% donation

In this case full amount of donation paid is deductible u/s 80 G
1. The National Defense Fund (NDF)
2. National Children Fund (NCF)
3. Prime minister national relief fund
4. Prime minister Armenia national earth quake relief fund
5. The chief minister relief fund
6. National fund for communal harmony
7. National illness assistance fund
8. The national blood transformation council.
9. National sports funds setup by the central govt.
27
10. National fund for control of drug abuse
11. National cultural fund setup by the central govt.

No limit 50% of donation

In the following donation 50% of the amount donated is eligible for donation.
1. Prime minister draught relief fund
2. Jawaharlal Nehru memorial fund
3. Indira Gandhi memorial trust
4. Rajeev Gandhi foundation

NEW INCOME TAX SLAB RATES AY 2024 – 2025

Super senior citizen above 80 years

Income tax slab Income tax rate

On 500000 Nil

Next on 500000 20%

Next balance 30%

28
Senior citizen 60 years or more but less than 80 years

Income tax slab Income tax rate

On 300000 Nil
Next on 300000 5%
Next 500000 20%
Next balance 30%

Other individual

Income tax slab Income tax rate

On 250000 Nil
Next on 250000 5%
Next 500000 20%
Next balance 30%

29
 CHAPTER 4
DATA ANALYSIS AND INTERPRETATION

Table 4.1

Gender of the respondents

Gender No. of respondent Percentage (%)

Male 32 32
Female 68 68
Other 0 0
Total 100 100

Figure 4.1
Gender of the respondents

68

32
0

Male Female Other

INTERPRETATION
The above table and figure show that 68% of the respondents are
female, and the remaining 32% are male.

30
 Table 4.2
Age of the respondents
Age No. of respondents Percentage
Below 30 15 15
Between 30-45 54 54
Above 45 31 31
Total 100 100

Figure 4.2
Age of the respondents

54

31
15

Below 30 Between 30-45 Above 40

INTERPRETATION
The above table and figure show that 54% of respondents are in the 30-45 years
age group, 31% are in the 45 years and above age group, and the remaining 15%
are in the below 30 years age group.

31
 Table 4.3
Educational qualification of respondents
Educational level No. of respondents Percentage
SSLC 0 0
Plus two 9 9
Graduate 49 49
Others 42 42
Total 100 100

Figure 4.3
Educational qualification of respondents

49
42

9
0

SSLC Plus two Graduate Others

INTERPRETATION
The above table and figure show that 49% of respondents are graduates, 42%
are postgraduates, 9% have completed only up to plus two, and 0% are in the
SSLC category.

32
 Table 4.4
Place of respondents
Option No. of respondents Percentage
Rural 87 87
Urban 6 6
Semi urban 7 7
Total 100 100

Figure 4.4
Place of respondents

87

6 7
Rural Urban Semi urban

INTERPRETATION
The above table and figure show that the majority of respondents (87%) live in
rural areas, 7% live in semi-urban areas, and the remaining 6% live in urban
areas.

33
 Table 4.5
Annual income level of respondents
Annual income No. of respondents Percentage
Below 300000 85 85
300000 – 500000 14 14
500000 – 800000 0 0
Above 800000 1 1
Total 100 100

Figure 4.5
Annual income level of respondents

85

14
0 0 0 1
0
Below 300000 300000-500000 500000-800000 Above 800000

INTERPRETATION
The above table and figure show that the majority of respondents are in the
below ₹300,000 income group, 14% are in the ₹300,000 to ₹500,000 income
group, and the remaining 10% are in the above ₹800,000 income group.

34
 Table 4.6
Services in completed years
Option No. of respondents Percentage
Below 10 years 86 86
Between 10 -20 12 12
years
Between 20 – 30 1 1
years
Above 30 years 1 1
Total 100 100

Figure 4.6
Services in completed years

86

12
1 1

Below 10 years Between 10-20 years Between 20-30 years Above 30 years

INTERPRETATION
The above table and figure show that 86% of respondents fall under the
category of below 10 years. Additionally, 12% of respondents are between 10–
20 years, and 1% of respondents are in the 20–30 years and above 30 years
categories.

35
 Table 4.7
Employment status of respondents
Option No. of respondents Percentage
Private 94 94
Public 6 6
Total 100 100

Figure 4.7
Employment status of respondents

Rural Urban semi urban

6%
7%

87%

INTERPRETATION
The above table and figure show that most of the respondents are private
employees, while 6% are government employees.

36
 Table 4.8
Percentage of investment

Option No. of respondents Percentage

Upto 10% 77 77
10-20% 18 18
20-30% 5 5
Above 40% 0 0
Total 100 100

Figure 4.8
Percentage of investment

77

18
5
0

upto 10% 10-201% 20-30% Above 40

INTERPRETATION
The above table and figure show that the majority of respondents invest up to
10% of their income. Additionally, 18% of respondents invest 10-20% of their
income, and the remaining 5% invest 20-30% of their income.

37
 Table 4.9
Reason for investment
Option No. of respondents Percentage
Tax savings 10 10
Interest/dividend 4 4
Future benefits 84 84
Liquidity 2 2
Total 100 100

Figure 4.9
Reason for investment

84

10
4 2
Tax savings Interest/dividend Future benefits Liquidity

INTERPRETATION
The above table and figure show that 84% of respondents invest their money
with the aim of future benefit, 10% invest for tax savings, 4% invest for interest
or dividends, and the remaining 2% aim for liquidity.

38
 Table 4.10
Respondent’s awareness level of tax planning
Option No. of respondents Percentage
Highly aware 3 3
Aware 87 87
Neutral 9 9
Unaware 0 0
Highly unaware 1 1
Total 100 100

Figure 4.10
Respondent’s awareness level of tax planning

87

9
3 0 1

Highly aware Aware Neutral Unaware Highly unaware

INTERPRETATION
The above table and figure show that 87% of respondents are aware of tax
planning, 9% are neutral, 3% are highly aware, and the remaining 1% are highly
unaware.

39
 Table 4.11
Taxable income of respondent

Option No. of respondents Percentage

Income from salary 92 92
Income from house 4 4
property
Income from profits and 1 1
gains
Capital gain 1 1
Income from other source 2 2
Total 100 100

Figure 4.11
Taxable income of respondent

Income from salary Income from Hp PGBP Capital gain Other source

4%1%
1%
2%

92%

INTERPRETATION
The above table and figure show that 92% of respondents pay tax on salary, 4%
pay tax on house property, 2% pay tax on other sources, and 1% of respondents
pay tax on both profits and gains as well as capital gains.

40
 Table 4.12
Satisfaction level with present investment
Option No. of respondents Percentage
Highly satisfied 1 1
Satisfied 88 88
Neutral 9 9
Dissatisfied 2 2
Highly dissatisfied 0 0
Total 100 100

Figure 4.12
Satisfaction level with present investment

88

9
1 2 0

Highly satisfied Satisfied Neutral Dissatisfied Highly dissatisfied

INTERPRETATION
The above table and figure show that the majority of respondents are satisfied
with their present investments. Additionally, 9% of respondents are neutral, 2%
are dissatisfied, and the remaining 10% are highly satisfied.

41
 Table 4.13
Managing Tax Implications in Retirement Planning
Option No. of respondents Percentage
Yes 90 90
No 10 10
Total 100 100

Figure 4.13
Managing Tax Implications in Retirement Planning

90

10

Yes No

INTERPRETATION
The above table and figure show that 90% of respondents seek professionals
for advice on investment decisions, while 10% of respondents do not seek any
professional advice.

42
 Table 4.14
Source of advice
Option No. of respondents Percentage
Tax experts 10 10
Relatives 10 10
Friends 73 73
Online help 1 1
Others 6 6
Total 100 100

Figure 4.14
Sources of advice

73

10 10
6
1

Tax experts Relatives Friends Online help Others

INTERPRETATION
The above table and figure show that 73% of respondents seek advice from
friends for their investment decisions. Additionally, 10% seek advice from both
tax experts and relatives, 6% seek advice from others, and the remaining 1%
seek online help.

43
 Table 4.15
Frequency of update on tax related matters
Option No. of respondents Percentage
Always 3 3
At regular interval 34 34
Sometimes 62 62
Never 1 1
Total 100 100

Figure 4.15
Frequency of update of tax related matters

62

34

3 1

Always At regular interval Sometimes Never

INTERPRETATION
The above table and figure show that 62% of respondents sometimes update
their information, 34% update at regular intervals, 3% always update, and the
remaining 1% never update.

44
 Table 4.16
Timing of Tax Planning Within a Financial Year
Option No. of respondents Percentage
Beginning of the year 76 76
End of the year 12 12
At any time 9 9
No planning 3 3
Total 100 100

Figure 4.16
Timing of Tax Planning Within a Financial Year

76

12 9
3

Beginning of the year End of the year At any time No planning

INTERPRETATION
The above table and figure show that the majority of respondents formulate
their tax planning activity at the beginning of the financial year. Additionally,
12% of respondents formulate their planning activity at the end of the financial
year, 9% formulate their planning at any time, and the remaining 3% do not have
any planning.

45
 Table 4.17
Experience with Income Tax Penalties

Option No. of respondents Percentage

Yes 8 8
No 92 92
Total 100 100

Figure 4.17
Experience with Income Tax Penalties

92

Yes No

INTERPRETATION
The above table and figure show that 92% of respondents did not pay any
penalties related to tax planning, while the remaining 8% did.

46
 Table 4.18
Current understanding of tax planning

Option No. of respondents Percentage

Limited 8 8
Moderate 90 90
Advanced 2 2
Total 100 100

Figure 4.18
Current understanding of tax planning

90

8 2

Limited Moderate Advanced

INTERPRETATION
The above table and figure show that the majority of respondents have a
moderate understanding of tax planning. Additionally, 8% of respondents have
a limited understanding, and the remaining 2% have an advanced
understanding of tax planning.

47
 Table 4.19
Utilization of Tax Credits to Reduce Tax Liability
Option No. of respondents Percentage
Yes 17 17
No 83 8e
Total 100 100

Figure 4.19
Utilization of Tax Credits to Reduce Tax Liability

Yes No

17%

83%

INTERPRETATION
The above table and figure show that 83% of respondents do not use tax credits,
while 17% of respondents do use tax credits.

48
 Table 4.20
Confidence in Effective Tax Planning and Management
Option No. of respondents Percentage
Very confident 1 1
Somewhat confident 93 93
Not very confident 4 4
Not confident at all 2 2
Total 100 100

Figure 4.20
Confidence in Effective Tax Planning and Management

93

1 4 2

Very confident Somewhat confident Not very confident Not confident at all

INTERPRETATION
The above table and figure show that 93% of respondents have a moderate
confidence level in efficient planning and managing taxes. Additionally, 40% of
respondents are not very confident, 2% are not confident at all, and the
remaining 1% are very confident.

49
 Table 4.21
Significance of Tax Planning in Achieving Long-Term Financial Goals
Option No. of respondents Percentage
Extremely important 13 13
Somewhat important 85 85
Not very important 1 1
Not important at all 1 1
Total 100 100

Figure 4.21
Significance of Tax Planning in Achieving Long-Term Financial Goals

85

13
1 1

Extremely important Somewhat important Not very important Not important at all

INTERPRETATION
The above table and figure show that 85% of respondents state that tax
planning is somewhat important in achieving long-term financial goals.
Additionally, 13% of respondents state that tax planning is extremely
important, 1% state that tax planning is not very important, and the remaining
1% state that it is not important at all.

50
 Table 4.22
Balancing Short-Term Tax Savings with Long-Term Tax Planning
Option No. of respondents Percentage
Short-term tax savings 69 69
Long-term tax planning 16 16
Balanced approach 15 15
Total 100 100

Figure 4.22
Balancing Short-Term Tax Savings with Long-Term Tax Planning

Short-term tax savings Long-term tax planning Balanced approach

69

16 15

1 2 3

INTERPRETATION
The above table and figure show that 69% of respondents give first priority to
short-term tax savings, 16% give second priority to long-term tax planning, and
the remaining 15% state that they take a balanced approach.

51
 Table 4.23
Current utilisation of tax savings instrument
Option No. of respondents Percentage
Employees Provident 38 38
Fund
Public Provident Fund 3 3
National Pension System 2 2
Life Insurance Policy 51 51
Health Insurance 2 2
Premium
Other 4 4
Total 100 100

Figure 4.23
Current utilisation of tax savings instrument

51

38

3 2 2 4

EPF PPF National pension LIC Health insurance Others

system premium

INTERPRETATION
The above table and figure show that 51% of respondents are using LIC, 38%
are using employee PF, 4% are using other instruments, 3% are using public PF,
and 2% are using both the national pension system and health insurance.

52
 Table 4.24
Awareness of Tax Savings Opportunities in Startup or Small Business
Investments
Option No. of respondents Percentage
Highly aware 1 1
Aware 35 35
Neutral 61 61
Unaware 1 1
Highly unaware 2 2
Total 100 100

Figure 4.24
Awareness of Tax Savings Opportunities in Startup or Small Business
Investments

61

35

1 1 2

Highly aware Aware Neutral Unaware Highly unaware

INTERPRETATION
The above table and figure show that 61% of respondents are neutral regarding
their awareness, 35% are aware of the opportunities, 2% are highly unaware
about the opportunities, 1% are highly aware, and the remaining 1% are
unaware about the tax savings opportunities.

53
 Table 4.25
Adjusting tax planning strategies for changing personal circumstances
Option No. of respondents Percentage
Regularly review and 18 18
adjust tax strategies
Seek professional advice 18 18
Rely on online resources 21 21
Others 43 43
Total 100 100

Figure 4.25
Adjusting tax planning strategies for changing personal circumstances

43

21
18 18

Regularly review and adjust Seek professional advice Rely on online resources Others
tax strategies

INTERPRETATION
The above table and figure show that 43% of respondents are using other
methods, 21% rely on online resources, and 18% adjust both regularly and seek
professional advice.

54
 Table 4.26
Self-Assessment of Understanding Tax Laws and Regulations
Option No. of respondents Percentage
Poor 3 3
Fair 81 81
Good 15 15
Excellent 1 1
Total 100 100

Figure 4.26
Self-Assessment of Understanding Tax Laws and Regulations

Poor Fair Good Excellent

1% 3%

15%

81%

INTERPRETATION
The above table and figure show that 81% of respondents have a fair
understanding of tax laws and regulations. Additionally, 15% have a good
understanding, 3% have a poor understanding, and the remaining 1% have an
excellent understanding.

55
 Table 4.27
Assessing Risk Tolerance in Tax Planning

Option No. of respondents Percentage

Conservative 3 3
Moderate 95 95
Aggressive 2 2
Total 100 100

Figure 4.27
Assessing Risk Tolerance in Tax Planning

95

3 2
Conservative Moderate Aggressive

INTERPRETATION
The above table and figure show that the majority of respondents have a
moderate risk tolerance. Additionally, 3% of respondents have a conservative
risk tolerance, and the remaining 2% have an aggressive risk tolerance.

56
 Table 4.28
Managing Tax Implications in Retirement Planning
Option No. of respondents Percentage
Regularly review and 14 14
adjust retirement a/c
Seek professional advice 21 21
Rely on employer 11 11
sponsered retirement
Others 54 54
Total 100 100

Figure 4.28
Managing Tax Implications in Retirement Planning

54

21
14 11

Regularly review and adjust Seek professional advice Rely on employer sponsord Others
retirement a/c retirement

INTERPRETATION
The above table and figure show that 54% of respondents are using other
methods, 21% are seeking professional advice, 14% are regularly reviewing and
adjusting retirement accounts, and the remaining 11% are relying on employer-
sponsored retirement plans.

57
 Table 4.29.1
Perceptions on Income Tax Rates in India

Option No. of respondents Percentage

Strongly agree 6 6
Agree 17 17
No opinion 57 57
Disagree 20 20
Strongly disagree 0 0
Total 100 100

Figure 4.29.1
Perceptions on Income Tax Rates in India

57

20
17

6
0

Strongly agree Agree No opinion Disagree Strongly disagree

INTERPRETATION
The above table and figure show that 57% of respondents have no opinion, 20%
disagree with the above opinion, 17% agree with the opinion, and the remaining
6% strongly agree with the opinion.

58
 Table 4.29.2
Impact of Standard Deduction Withdrawal on Individuals
Option No. of respondents Percentage
Strongly agree 5 5
Agree 84 84
No opinion 9 9
Disagree 2 2
Strongly disagree 0 0
Total 100 100

Figure 4.29.2
Impact of Standard Deduction Withdrawal on Individuals

84

5 9
2 0
Strongly agree Agree No opinion Disagree Strongly disagree

INTERPRETATION
The above table and figure show that 84% of respondents agree with the above
opinion, 9% state no opinion, 5% strongly agree with the opinion, and the
remaining 2% disagree.

59
 Table 4.29.3
Support for Increasing the Tax Exemption Limit
Option No. of respondents Percentage
Strongly agree 2 2
Agree 86 86
No opinion 8 8
Disagree 4 4
Strongly disagree 0 0
Total 100 100

Figure 4.29.3
Support for Increasing the Tax Exemption Limit

86

8 4
2 0

Strongly agree Agree No opinion Disagree Strongly disagree

INTERPRETATION
The above table and figure show that 86% of respondents agree with the
opinion, 8% state no opinion, 4% disagree with the opinion, and the remaining
2% strongly agree.

60
 Table 4.29.4
Opinions on the Avoidance of Surcharge

Option No. of respondents Percentage

Strongly agree 10 10
Agree 28 28
No opinion 20 20
Disagree 41 41
Strongly disagree 1 1
Total 100 100

Figure 4.29.4
Opinions on the Avoidance of Surcharge

41

28
20

10

Strongly agree Agree No opinion Disagree Strongly disagree

INTERPRETATION
The above table and figure show that 41% of respondents disagree with the
opinion, 28% agree with the opinion, 20% state no opinion, 10% strongly agree,
and the remaining 1% strongly disagree.

61
 Table 4.30.1
Complexity and Understandability of Taxation Procedures
Option No. of respondents Percentage
Strongly agree 5 5
Agree 86 86
No opinion 3 3
Disagree 6 6
Strongly disagree 0 0
Total 100 100

Figure 4.30.1
Complexity and Understandability of Taxation Procedures

Strongly agree Agree No opinion Disagree Strongly disagree

3% 6% 0% 5%

86%

INTERPRETATION
The above table and figure show that 80% of respondents agree with the
opinion, 6% disagree with the opinion, 5% strongly agree, and the remaining 3%
have no opinion.

62
 Table 4.30.2
Complexity of Filing Tax Returns

Option No. of respondents Percentage

Strongly agree 5 5
Agree 88 88
No opinion 4 4
Disagree 2 2
Strongly disagree 1 1
Total 100 100

Figure 4.30.2
Complexity of Filing Tax Returns

88

5 4 2 1
Strongly agree Agree No opinion Disagree Strongly disagree

INTERPRETATION
The above table and figure show that 88% of respondents agree with the
opinion, 5% strongly agree, 4% have no opinion, 2% disagree with the opinion,
and the remaining 1% strongly disagree.

63
 Table 4.30.3
The Importance of Building an Information System
Option No. of respondents Percentage
Strongly agree 5 5
Agree 86 86
No opinion 8 8
Disagree 0 0
Strongly disagree 1 1
Total 100 100

Figure 4.30.3
The Importance of Building an Information System

86

5 8
0 1

Strongly agree Agree No opinion Disagree Strongly disagree

INTERPRETATION
The above table and figure show that the majority of respondents agree with the
opinion. Additionally, 8% have no opinion, 5% strongly agree, and the remaining
1% strongly disagree.

64
 TESTING OF HYPOTHESIS
H0: There is no significant relation between income and investment level of the
respondents.
H1: There is a significant relation between income and investment level of the
respondents.

Annual income Upto 10% 10-20% 20-30% Above Total

40%
Below 3,00,000 72 10 3 0 85
3,00,000 to 5 8 1 0 14
5,00,000
5,00,000 to 0 0 0 0 0
8,00,000
Above 8,00,000 0 0 1 0 1

Total 77 18 5 0 100

Observed Expected (O-E) 2 (O-E) 2/E

frequency (O) frequency (E)
72 65.45 42.902 0.655
5 10.78 33.408 3.099
0 0 0 0
0 0.77 0.592 0.768
10 15.3 28.09 1.835
8 2.52 30.030 11.916
0 0 0 0
0 0.18 0.032 0.177
3 12.75 95.062 7.455
1 0.7 0.09 0.128
0 0 0 0
1 0.05 0.902 18.04
0 0 0 0

65
 0 0 0 0
0 0 0 0
0 0 0 0
Calculated 44.073
value=

Degree of freedom = (c - 1) (r – 1)
=(4–1)(4–1)
= 3*3
=9
Level of significance = 0.05
Table value = 16.919

INTERPRETATION
Since the calculated value is greater than the table value, we reject the null
hypothesis (H0). Therefore, there is a significant relationship between income
and investment level.

66
 TESTING OF HYPOTHESIS
H0: There is no significant relation between educational level and awareness
level of tax planning.
H1: There is a significant relation between educational level and awareness
level of tax planning.

Educational Highly Aware Neutral Unaware Highly Total

level aware unaware
SSLC 0 0 0 0 0 0
Plus two 0 9 0 0 0 9
Graduate 0 45 4 0 0 49
Others 3 33 5 0 1 42
Total 3 87 9 0 1 100

Observed Expected (O–E)2 ( O – E )2/E

frequency (O) frequency (E)
0 0 0 0
0 0.27 0.072 0.266
0 1.47 2.160 1.469
3 1.26 3.027 2.402
0 0 0 0
9 7.83 1.368 0.174
45 42.63 2.37 0.055
33 36.54 12.531 0.342
0 0 0 0
0 0.81 0.656 0.809
4 4.41 0.168 0.038
5 3.78 1.488 0.393
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0

67
 0 0.09 0.008 0.088
0 0.49 0.240 0.489
1 0.42 0.336 0.8
Calculated
value = 7.325

Degree of freedom = ( c – 1 ) ( r – 1 )
= (5–1) (4–1)
= 4*3
= 12Level of significance= 0.05
Table value = 21.026

INTERPRETATION
Since the calculated value is less than the table value, we accept the null
hypothesis (H0). Therefore, there is no significant relationship between
educational qualification and awareness level.

68
 CHAPTER 5
SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 FINDINGS OF THE STUDY

1. The majority of respondents belong to the age group between 30

and 45.
2. Most of the respondents in the study are female.
3. The majority of respondents surveyed have completed a degree.
4. The majority of respondents live in rural areas.
5. The major portion of respondents fall under the income scale of up
to 300,000.
6. The majority of respondents have completed 10 years of service.
7. The majority of respondents are working as private employees.
8. Up to 10% of respondents most prefer investment.
9. Respondents invest their money with the aim of future benefits.
10. The majority of respondents are aware of tax planning, and a few
are highly aware.
11. Most respondents pay tax on their income from salary.
12. The majority of respondents are satisfied with their current
investments.
13. Most respondents seek advice for making investment decisions.
14. Most respondents seek advice from their friends.

69
15. The majority of respondents update tax-related matters
occasionally.
16. The majority of respondents plan their tax at the beginning of the
year.
17. The majority of respondents have not paid any penalties related to
tax planning.
18. Most respondents have a moderate understanding of tax planning.
19. The majority of respondents do not use tax credits.
20. The majority of respondents have moderate confidence in effective
planning and managing taxes.
21. Most respondents reveal that tax planning is of average to
moderate importance in achieving long-term financial goals.
22. When prioritizing between short-term tax savings and long-term tax
planning, the majority of respondents prioritize short-term tax
savings.
23. The majority of respondents use LIC as a tax-saving instrument.
24. Respondents have a medium awareness level of tax-saving
instruments.
25. Most respondents adjust their tax planning strategies using
different methods.
26. Most respondents have a fair understanding of tax laws and
regulations.
27. The majority of respondents assess their risk tolerance as
moderate.

70
28. Most respondents hold tax implications using different types of
methods.
29. The majority of respondents have no opinion on whether income
tax rates in India are high.
30. Most respondents agree with the opinion of increasing the tax
exemption limit.
31. Most respondents agree with the withdrawal of the standard
deduction.
32. The majority of respondents reveal that avoiding the surcharge is
better.
33. Most respondents agree that the taxation procedure is complex
and difficult to understand.
34. The majority of respondents agree that filing a return is very
complex.
35. The majority of respondents agree that an information system is
necessary.

71
5.2 SUGGESTIONS

1. Most of the people are using LIC and employee provident fund are
tax saving instrument. They are not aware about other type of
investment schemes. So, educating them about new tax saving
instrument avenues.
2. More possible awareness about tax planning can be given to tax
payers through newspapers, internets and other popular medias.
3. Seminars conferences and training programs should be arranged
for proper tax awareness and workshops too if possible.

72
5.3 CONCLUSION
In conclusion, the study delving into tax planning among taxpayers,
particularly within the context of Ponnani Taluk, sheds light on several crucial
aspects. Through meticulous analysis and examination, it has become evident
that tax planning plays a pivotal role in the financial landscape of individuals
and entities alike. Within the confines of Ponnani Taluk, taxpayers employ
various strategies and methodologies to optimize their tax liabilities while
remaining compliant with legal obligations. The research journey has
uncovered the significance of effective tax planning in enhancing financial
stability, promoting economic growth, and fostering fiscal responsibility within
the community.

The study on tax planning among taxpayers in Ponnani Taluk provides valuable
insights into the intricacies of tax management and underscores the need for
continuous research, dialogue, and collaboration to promote responsible
fiscal practices and facilitate sustainable development. By harnessing the
synergies between tax planning, economic growth, and societal welfare,
stakeholders can pave the way for a more prosperous and equitable future for
the residents of Ponnani Taluk and beyond.

73
BIBLIOGRAPHY

74
 BIBLIOGRAPHY

BOOKS

• “Tax Planning for Individuals” by Thomas P. Langdon and Patrick L.

Young.
• “Tax Planning for Salaried Employees” by Pankaj Garg.
• “Income Tax Planning for Doctors” by Srinivasan Anand G.
• “Income tax laws and accounts 58th edition” by H. C Mehrotra.
• “Tax planning and management 40th edition “by H. C Mehrotra
• “Tax planning and management” by DR. K Venugopalan.

WEBSITES

• www.incometaxindia.gov.in
• www.pankajkatra.com
• www.rerifios.com

75
APPENDIX

76
 QUESTIONNAIRE

Dear sir/madam

I am SNEHA P final year M. Com student IHRD vattamkulam,

conducting this project” A STUDY IN TAX PLANNING OF TAX
PAYERS WITH SPECIAL REFERENCE TO POΝΝΑΝΙ THALUK” as a
part of my course. So I request you to cooperate with me in filing the
questionnaire. I here by assure you that the data collected through
this questionnaire will be kept confidential and will be used for
academic purpose only.
Name:
1. Gender
a. Male □
b. Female □
c. Others □
2. Age
a. Below 30 □
b. Between 30 & 45 □
c. Above 45 □
3. Educational qualification

a. SSLC □
b. Plus two □
c. Graduate □
d. Others □

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4. Place of residence
a. Rural □
b. Urban □
c. Semi urban □
5. Annual income
a. Below 3 lakh □
b. 3 lakh to 5 lakh □
c. 5 lakh to 8 lakh □
d. Above 8 lakh □
6. Services in completed years
a. Below 10 years □
b. Between 10 & 20 years □
c. Between 20 & 30 years □
d. Above 30 years □
7. Status of the employer
a. Private □
b. Public □
8. What is the % of your income you invest?
a. Upto 10% □
b. 10 – 20% □
c. 20 – 30% □
d. Above 40% □
9. Why do you plan to invest?
a. Tax saving □
b. Interest/dividend □
c. Future benefit □
d. Liquidity □

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10. Your awareness level of the tax planning?
a. Highly aware □
b. Aware □
c. Neutral □
d. Unaware □
e. Highly unaware □
11. What is your taxable income?
a. Income from salary □
b. Income from house property □
c. Income from profits and gains □
d. Income from capital gain □
e. Income from other source □
12. Are you satisfied with present investment?
a. Highly satisfied □
b. Satisfied □
c. Neutral □
d. Dissatisfied □
e. Highly dissatisfied □
13. Do you seek any professional advisor for making
investment decision?
a. Yes □
b. No □

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14. If yes, from whom you seek advice?
a. Tax experts □
b. Relatives □
c. Friends □
d. Online help □
e. Others □

15. Frequency of update of all tax related matters?

a. Always □
b. At regular interval □
c. Sometimes □
d. Never □
16. When do you formulate your tax plan during a financial year?
a. Beginning of the year □
b. End of the year □
c. At any time □
d. No planning □
17. Have you face any penalties regarding income tax?
a. Yes □
b. No □

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18. What is your current understanding of tax planning?
a. Limited □
b. Moderate □
c. Advanced □
19. Have you ever utilized tax credits to reduce tax liability?
a. Yes □
b. No □
20. How confident ate you in your ability to effectively plan and
manage taxes?
a. Very confident □
b. Somewhat confident □
c. Not very confident □
d. Not confident at all □
21. How important is tax planning in achieving your long-term
financial goals?
a. Extremely important □
b. Somewhat important □
c. Not very important □
d. Not important at all □

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22. How do you prioritize between short-term tax savings and
long-term tax planning?
a. Short-term savings □
b. Long-term planning □
c. Balanced approach □
23. Which of the following tax saving instruments do you
currently utilize?
a. Employee provident fund □
b. Public provident fund
c. National pension system □
d. Life insurance policies □
e. Health insurance premiums □
f. Fixed deposits □
g. Others □
24. Are you aware of tax savings opportunities related to
investment in startup or small businesses?
a. Highly aware □
b. Aware □
c. Neutral □
d. Unaware □
e. Highly unaware □
25. How do you adjust your tax planning strategies in response
to change in personal circumstances (eg: marriage,
childbirth, job change)?
a. Regularly review & adjust tax strategies □
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 b. Seek professional advice □
c. Rely on online resources □
d. Others □
26. How would you rate your understanding of tax laws and
regulations?
a. Poor □
b. Fair □
c. Good □
d. Excellent □
27. How do you assess your risk tolerance when it comes to tax
planning?
a. Conservative □
b. Moderate □
c. Aggressive □
28. How do you handle tax imitations when planning for
retirement?
a. Regularly review &adjust retirement a/c □
b. Seek professional advice □
c. Rely on employer sponsored retirement plans □
d. Others □

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 29. Rate your opinion on the following;

Strongly Agree No opinion Disagree Strongly

agree disagree
Do you
think that
income tax
rates in
India are
high?
Do you
feel that
withdrawal
of
standard
deduction
has
adversely
affected
you?
Do you
favour
increase in
tax
exemption
limit?
Do you
feel that
surcharge
should be
avoided?

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 30 . Rate on your opinion on the following taxation procedure?

Strongly Agree No opinion Disagree Strongly

agree disagree
Taxation
procedure
is complex
&difficult
to
understand
Filing of
return is
very
complex
Building
information
system is
necessary

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