Source: ET Wealth : 7 Mar 2011
Pension Funds
What's changed? - Annuity income to be exempt from tax
Your Strategy: - Invest in low-cost NPS but choose your fund manager carefully
Public Providend Fund
What's changed? - Nothing
Your Strategy: - Continue investing in this tax-free haven as per your allocation of debt.
Fixed Deposits, Bonds
What's changed? - Nothing. Interest to be taxed at normal rates
Your Strategy: - Build a ladder of fixed deposits of different maturities
Real Estate
What's changed? - Deduction for interest to continue but not for principal. No more tax on notional rent.
Your Strategy: - Big EMI payers have to save more. A second house may be a good option now.
Equities and Equities-Oriented Funds
What's changed? - No change for long-term gains. Short term gains to be taxed at lower rate.
Your Strategy: - Continue investing as per your asset allocation. Use SIPs to counter volatility.
Life Insurance (Including ULIPS)
What's changed? - Deduction lowered to Rs. 50000 a year
Your Strategy: - Buy term plans for life insurance. If buying a ULIP or traditional plan, go for long terms to be eligible for tax breaks.
Debt Funds & Other Non-Equity Schemes
What's changed? - Long-term gains to be taxed as income just like income from fixed deposits. Indexation rules also changed
Your Strategy: - Go for arbitrage funds that are treated as equity funds. Buy before the financial year ends to gain from indexation.
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