Different Types Of Mutual Funds In India

 

As a first time investor, it can be a daunting task to select the right type of mutual fund to invest in. The first step to accomplishing this is to have an investment objective. That in itself is a dilemma as you will now be thinking about how you should determine an investment objective when investing in mutual funds.
An investment objective can be simply defined as what you expect to achieve from a mutual fund investment in terms of growth and dividends. This objective is based on parameters like the investment term and your risk taking appetite.

Mutual Fund related terms that you should know

Assets: These are the market instruments like stocks, bonds etc. that a mutual fund invests in.
Asset Management Company: This is a company that comprises of a fund manager and financial experts who manage the assets of the mutual fund that you have invested in.
Corpus: The combined total investment of all the investors in a mutual fund.
Exit Load: The cost that you need to pay to withdraw your invested capital from a mutual fund.
Investment Portfolio: This portfolio is the collection of the assets in which an AMC invests. The asset allocation is based on the mutual fund’s investment objective.
NAV: Net Asset Value is the price at which investors can buy or sell their units and is measured by this simple formula –

Net Asset Value =                Market value of assets–Liabilities
                                       Total number of asset units in the mutual fund on a given day

Here, the market value of assets (or securities like shares,bonds etc.) is the value that your securities in a mutual fund hold on a given day while the liabilities refer to the charges that the Company takes for managing mutual funds.

Types of Mutual Funds

While the wide array of options in mutual funds make for a selection headache, it is also beneficial as it makes it easier for you to find a mutual fund that is in line with your investment objective.
Let’s have a look at the types of mutual funds you can invest in: –

Equity Funds

Equity funds comprise of the largest part of the financial market investment. These funds invest primarily in stocks and have a high risk-return ratio. This ratio implies that shares with higher risk are capable of fetching higher returns.
The stock investment can be in small, mid or large cap companies which can be focused on an individual sector or diversified among different sectors. If you have a high risk-taking appetite and a long-term outlook, investment in equity mutual funds can be very rewarding as the long term capital gains from them are exempted from tax.

Debt/Income Funds

Debt funds invest primarily in corporate or government bonds and securities. Well suited for a less risk taking investor, debt funds are a good option to generate a fixed income as well as fixed returns. The ability of your asset portfolio to counter any unforeseen risk plays an important role. Investment in these funds can be made from a short-term as well as a long term objective. A welcome characteristic of debt funds is that you can avail indexation benefits on long-term investments to save on tax.
Indexation benefits are a measure to safeguard returns on long-term investments from the rise in inflation. The indexation benefit for an investment is calculated using the Cost Inflation Index (CII) value and once applied, gives investors the benefit of paying lower amounts of tax on returns from investments.
A very prominent type of income fund is the Liquid Fund. These are short term funds where the risks are low and the returns are easily liquefiable i.e. can be received in the form of cash.

Balanced Funds

These are the hybrid funds that incorporate equity as well as debt investments. The intent is to generate high income from the equity portion and get steady returns from the debt portion. Moreover, the presence of debt instruments also helps to balance out any losses that you may face from the equity investment.
However, here, the asset allocation is primarily based on different objectives. For example – a Monthly Income Plan is a type of balanced fund where a large percentage is allocated to debt instruments and the remainder to equity instruments. This allows fixed returns at a low risk and a decent exposure to get gains that can be achieved through stock investments.
Other forms of balanced funds might focus more of equity instruments as the objective there would be higher gains, even if the risk level increases a bit.

Index Funds

Index funds are designed to replicate the portfolio of a particular market index like the NIFTY or the S&P BSE 500 Index which expands to Standard & Poor’s Bombay Stock Exchange 500.
Before we go any further, the difference between active and passive management requires explanation. With the market fluctuations involved, most mutual funds are actively managed i.e. constant buying and selling is required to stay on course to attain the objective of the fund.
Now since the index fund follows the pattern of a market index, they do not need to be aggressively monitored and hence, are passively managed. The risks involved are in proportion to the fluctuations of the index it is following.

Gilt Funds

These Funds invest exclusively in government securities where there is null risk by default. However, the values of these fund units are dictated by market volatility and the risk-return ratio for these funds can be seen in the same vein as equity funds.

Global Funds

Global Funds invest in debt and equity instruments in a number of countries across the globe and is an additional layer to the domestic diversification of your capital. These funds are meant for those investors who have a good reading of international markets and an understanding of the country-specific risks involved.

Fund of Funds

This type of fund invests in mutual funds instead of assets. In other words, your investment is diversified among mutual funds rather than market instruments. Here, the performance and returns of the Fund of Funds will be affected neither by the best performing nor the worst performing fund, but the average of all the funds within the portfolio.
As is evident, there is no dearth of options as these different types of mutual funds cater to different investment objectives. So if you are thinking of investing in a mutual fund, ensure that you understand the market risks as well as the fact that the mutual fund selected is in tune with your objective of investing in it.

Now that we have understood different types of mutual funds in India.

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What Are Balanced Funds & Its Advantages

 

The intent to get aggressive returns is what drives you to invest in equity and equity-oriented mutual funds. On the other hand, if you believe in taking lower risks then it is very likely that you will opt for debt-oriented investment options to have predictable returns and fixed income.

But if you want to draw the maximum out of your investment and yet not take high risk, then going for a Balanced Fund makes perfect sense.

Balancing your investment

A Balanced Fund (or a Hybrid Fund as it is known sometimes), gives your capital an exposure to both equity and debt instruments in good measure. By combining these two classes of investment, a Balanced Fund combines the best facets- low risk and higher returns. A Balanced Fund can be primarily of two types based on asset allocation –

Equity Balanced Fund

In this type of fund, the majority of the capital (generally 70-75%) is invested in equity instruments with the rest for debt instruments. The higher risk that the equity investment holds is balanced out by the percentage invested in debt instruments.

Debt Balanced Fund

Here, the motive is safer investment while still taking advantage of returns from the stock market. The equity-debt ratio here is practically the opposite of an equity-oriented Balanced Fund.

Advantages of a Balanced Fund

• A Balanced Fund offers the best of both worlds – the potential of higher returns from the equity component and stability of the debt component. This makes Balanced Funds less volatile.
• The returns that you get from Balanced Funds are risk-adjusted. This factor is governed by how Fund Manager allocates the assets. By selecting small cap and mid cap stocks, the gains that the equity component can give are much higher and the associated risk is well taken care of by the debt investment.
• If your Balanced Fund is equity focussed and for the long term, then the major part of your investment is exempt from long term capital gains tax and the debt component comes with indexation benefit for holding periods beyond a year. That makes Balanced Funds a good tax saving investment as well.

From a broader outlook, Balanced Funds tick all the boxes for a Conservative investor who wants to benefit from the stock market as well as fixed income options and it represents a very sensible long-term investment option that can give steady yet promising capital appreciation and provide respectable returns for the later phase in life.

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How To Create A Personal Financial Plan

 

Today, it is imperative to supplement your savings with a sound Investment Strategy which is why financial planning is a must! For many of us, creating a financial plan may seem like a daunting task and leaves us unwilling to even start. However, the truth is – it’s simple as well as beneficial! Its All About Money throws light on 8 easy steps – starting from goal planning, investment planning, risk management, retirement planning, and so on; that will help you create your financial plan from start to finish.

FOLLOW THE STEPS BELOW TO CREATE YOUR OWN PERSONAL FINACIAL PLAN

STEP 1. GOAL PLANNING

• Identify your goals & prioritize them
• Assign a value to each goal
• Save for emergencies

STEP 2. INVESTMENT PLANNING

Make a monthly budget where you divide your income into three parts
• Savings
• Expenditure
• Investment
Your investment plan depends on below factors:
How much risk you can take depending on your demographics such as Age, Income, Number of dependants, etc.
• How much risk you are willing to take
• How much time you can spend on monitoring the investment
• Your purpose for investing

STEP 3. RISK MANAGEMENT (INSURANCE)

There are many allied benefits of getting insured if you plan carefully, such as below:
• Your dependants are secured in case of your sudden demise or in case of an accident that leaves you unable to earn
• You can insure an asset that you have purchased (Your Home) using loan
• In case of hospitalization or critical illness, the cost will be taken care of through insurance
Note: It is advisable to start Insurance planning early, as the premium rates are higher when you are older

STEP 4. RETIREMENT PLANNING

One must start laying foundations for one’s retirement from the start of one’s career. Long term investment options are best suited
Equity Investment helps you build serious wealth over the long term. Besides, the risk in equity investing considerably reduce if one stays invested over a long term.
Other retirement investment options are –
• Pension Plans
• Provident/Gratuity/Superannuation
• Public Provident Fund
• National Pension Scheme

STEP 5. CREATING THE FINANCIAL PLAN

Planning your cash flow: Keeping an account of your current and future cash flow will help you plan your investments, stay liquid and deal with emergencies comfortably
An Organised Budget: The numerous, one-time, small expenses add up to land a giant blow to our financial health.
A budget serves three purposes:
• Gives a detailed itinerary of your expenses
• Shows where you can cut down expenses
• Helps you spend and save wisely
• Regulates your expenses
Loan Management: Managing your loan involves –
• Allocating funds for EMI
• Planning large repayments

STEP 6. TAX PLANNING

• Invest in tax-saving investment options
• Make the investment early to enjoy the interest for the entire year
• Compute your taxable income for planning your cash flows
• Use all possible tax deductions that you are eligible for, in order to minimise your tax burden

STEP 7. REVIEWING YOUR PLAN

Financial Planning is an ongoing process and you must review your plan regularly, because the circumstances in your life change. Any major changes in your life such as marriage, children, education & job change must be accounted for to consider altered circumstances.
This is because as per your life situation:
• Your risk capacity changes
• Your asset allocation gets altered
• Insurance needs will arise or get altered
Review your plan every six months or annually and monitor your investments regularly to protect yourself against sudden shocks.

STEP 8. ESTATE PLANNING

• Create a list of all your assets
• Get familiarised with the estate devolution rules to avoid disputes later
• Create a Will after discussing it with your family and friends
• Place your Will with someone or somewhere that can be accessed easily by your family
In the end, it is your wealth that you will be giving away, so plan for it wisely and generously.

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Types of Insurance & Which type of insurance should you buy?

 

With so many types of insurance products available it could become difficult to decide what type of product is best suited for you. Here’s what you need to know to help you decide what to buy, based on your financial needs or life stage…

Technically, insurance should be sold based on the needs of the person who is to be insured. But sadly, we often come across overzealous insurance agents who oversell expensive insurance products, in some cases to earn fat commissions. Now, become a proactive buyer by educating yourself about different types of insurance products designed for various life stages.

Term Insurance Plans:

The sum assured of such plans is paid to the beneficiaries (family, parents or children) only if the policyholder dies within the policy term. This type of product is designed for 100 per cent risk coverage. Hence, the premiums for this type of life insurance policies are the lowest amongst the entire insurance category.

Suitability: Single or Married with or without Kids

Whole Life Plans:

The policyholder enjoys life coverage throughout his or her entire life. On the death of the insured, the validity of this life insurance policy expires and the corpus is paid to the family.

Suitability: Single or Married with or without Kids.

Endowment Plan:

In this type of plan, if the insured dies during the term of the plan, the beneficiaries receive the sum assured. If, however, the insured survives the term of the plan, he or she receives a lump sum of money. Such plans help you to accumulate funds over a longer period of time enabling you to meet future obligations such as buying a flat or an annuity policy.

Suitability: Ideal for individuals who wish to save for the future and at the same time purchase insurance cover.

Money-Back Plans:

With such plans, the insured regularly receives a percentage of the sum assured at regular intervals throughout the policy term. The periodic payouts of Money Back Plans are useful for meeting financial obligations from time to time such as children’s higher education or marriage, foreign tours, etc.

Suitability: Ideal for those looking for a 2-in-1 product – insurance cover plus savings.

ULIP:

This category of insurance combines the advantages of risk coverage with the benefits of mutual funds. A certain percentage of the premium is invested in listed equities, debt funds and/or bonds, depending on what options you choose, and the balance meets insurance and fund management expenses.

Suitability: ULIPs are a good option for investors who would like to get involved in managing their investment cum insurance funds.

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Importance Of Life Insurance & Its Advantages

A life insurance policy is a contract between an insurance company and you as a policy holder. By paying a pre-decided premium amount every year to the company for a fixed term, your family members get a protection cover in events of critical illness or death.

Through Life Insurance, you ensure that your family stays financially independent in case of an unexpected eventuality. That objective itself makes it an integral component of life planning.

An insurance policy covers you as the insured and ensures sustenance of your beneficiaries- the individuals you have enlisted under the policy to be looked after in case of any unforeseen circumstances.

It provides financial support and assistance to your dear ones including spouse, children, aging parents or even your business partners and employees.

How Much Life Insurance Cover Do You Need?

How much coverage you should have on your insurance policy is a difficult figure to determine because you would want to make sure that your coverage is adequate. That is because excess coverage can affect your finances due to higher premium payments and being underinsured is never ideal. To make matters easier, a very elementary thumb rule is that your life cover should be 10-12 times your annual income.

The best way to figure out the perfect policy coverage option is to let an insurance consultant conduct a Financial Needs Analysis for you. This gives you the estimated coverage you’ll need to ensure a secure future for your loved ones. Insurance is a ‘prevention is better than cure’ adage applied to real life.

Features of Life Insurance Policy

Life insurance policies have a number of features that make them a much needed life-planning tool.

• You get to choose the best coverage option, payable in affordable premiums.
• Based on your lifestyle, needs and preference, you can select from a variety of life insurance options ranging from pure insurance to hybrid insurance products like ULIPs and endowment plans where you get maturity benefits.
• Life insurance provides financial security of your dependents in case of any eventuality.
• Additionally, you also enjoy tax benefits on different types of policies under different sections of the Income Tax Act, 1961.

Asserting the point

By now, it must be evident how important a life insurance is for you to ensure your family’s financial independence. Depending on the type of insurance you choose, you are either building a corpus that you will get on maturity or you are simply insuring yourself and your loved ones to sustain their financial

independence in case of an emergency or an eventuality. In either case, having life insurance allows you to live a life free from financial worries as far as your future is concerned.

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Importance Of Filing Income Tax Returns

 

Complete Guide to Online Income Tax e-filing

Importance Of Filing Income Tax Returns

If you have earned Rs. 5 lakh or more during the financial year 2012-13 i.e. the year starting from 1 April 2012 and ending on 31 March 2013, you will need to file your returns electronically. The income tax authority i.e. the Central Board of Direct Taxes is responsible for the diktat.

And as usual, you need to file your return before 31st of July, 2013. Well, this task may seem a little daunting at first glance as we are all so used to the paper mode of filing returns, but don’t despair since the process is quite simple and easy. Read on to know more.

Steps for e-filing returns

The e-return can basically be filed in two ways as detailed below:

1. Directly on the website: If you have only salary and interest income, you may simply visit https://incometaxindiaefiling.gov.in/, register yourself if not already done, and key in the details online in Form- ITR 1, prepare the return and submit it. You would then have to print the acknowledgement, sign it and send it to the central processing unit.
2. By downloading the excel utility: Here, you have to log on to the above site, select the applicable return form. You then need to download the excel utility, fill in all the details offline and then upload this as an XML file. On successful submission, an acknowledgment in ITR V would be mailed to your email address. If you have digitally signed your return, then the process is completed. If not, you would have to sign and send the printed acknowledgement to the central processing unit.

Which form is applicable to you?

The Pros and Cons of E-filing:

As with everything else in life, there are both advantages and disadvantages in this method of filing income tax returns. Here’s a look.

Advantages:

• Tax calculation is accurate and simplified as it is done automatically by the software based on your inputs.
• Possibility of quicker refunds since the e-return is processed centrally at the central processing unit at Bangalore. You would be spared of the hassles of following up on your refund with your income tax office as is the practice now.

Disadvantages:

• You may now need to seek professional help if you wish to do this process offline, and this may cost money.
• Given the rather poor internet connectivity in most parts of India, the process could be quite time consuming.

However, the online process if far more efficient than the offline one, and in the long run, it will only help smoothen the filing and refund process.

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How to Calculate Income Tax

 

For any tax paying individual, to have a working knowledge of how income tax is calculated can only make life simpler. It not only helps you assess the amount of tax you have to pay in a financial year but also gives you a clearer idea on how to save tax.

Income Tax is tax levied on the income of an individual by the Government. Computing your Income Tax for a year might seem like a complex process but you will see that it is easy, if you are aware of the income tax slabs of that particular year and know the mathematical calculation.

Knowing Taxation amount as per the Income Tax Slabs

The first step to understand the workings of Income Tax in India is to be aware of the taxation slabs released each financial year by the Indian Government. The taxation slabs for the financial year 2014-15 for General tax payers and Women: –

Slab	Income Slab (Rs.)	Income Tax Rate
0	0 to 2,50,000	NIL
I	2,50,001-5,00,000	10%
II	5,00,001-10,00,000	20%
III	10,00,001 and above	30%

If you fall in Slab I, tax will be deducted on the amount that exceeds Rs. 2,50,001/- . Similarly, tax for Slab II and Slab III will be calculated for the amount that exceeds Rs. 5,00,001/- and Rs. 10,00,001/- respectively. The same principle also applies to the tax slabs for senior citizens (Aged 60 years but less than 80 years):-

Slab	Income Slab (Rs.)	Income Tax Rate
0	0 to 3,00,000	NIL
I	3,00,001 to 5,00,000	10%
II	5,00,001 to 10,00,000	20%
III	10,00,000 and above	30%

India Income tax slabs 2014-2015 for very senior citizens (Aged 80 and above):-

Slab	Income Slab (Rs.)	Income Tax Rate
0	0 to 5,00,000	NIL
I	5,00,001 to 10,00,000	20%
II	10,00,000 and above	30%

Deductions available for saving tax

To opt for saving the maximum amount of tax, examine the deductions defined under different sections of the Income Tax Act, 1961.

The available deductions are:–

• Investment under Section 80

This section includes: –

• Mediclaim insurance premium (u/s 80D)
• Donations with 100% benefit (u/s 80G)
• Interest repayment for education loans (u/s 80E)
• New Pension Scheme for a maximum of 10% of the basic salary (u/s 80CCD)
• And Rajiv Gandhi Equity Savings Scheme (u/s 80CCG).

The Investment limit for the deduction under Section 80C of the Income-Tax Act, 1961 was raised from Rs 1 lakh to Rs 1.5 lakh as per the budget 20014-15. This will result in a maximum saving of Rs. 15,450 to investors in the 30% tax bracket. The most common investments fall under this section: –

• Life Insurance policies
• Employees Provident Fund/Public Provident Fund
• National Savings Certificates or Interest accrued on old NSCs
• ULIPs (Unit Linked Insurance Plans)
• Repayment of home loan for principal amount only.
• Pension Funds u/s 80CCC
• Tax saver Mutual Funds  – ELSS: Equity Linked Savings Scheme
• Tuition fees of children’s education.

• Housing Rent Allowance u/s 10(13A).This is an allowance you get as a company employee for paying house rent. Deduction available on House Rent Allowance is an amount which is the least of the following parameters:–

Actual HRA received

OR

Actual rent paid by you minus 10% of your basic salary and other allowances (excluding HRA)

OR

50% of your basic salary

In cases where the last two parameters determine the deduction amount, and turns out to be less than the HRA paid by your company, the excess amount is considered as a part of your taxable income.

• Home Loan Benefit u/s 24. This gives you deduction for the interest that you pay on your home loan and the maximum deduction limit has been raised (as per 2014-2015) to Rs. Rs.2,00,000 for a self-occupied property. For a property that is not self-occupied, there is no upper cap on the deduction limit.

Calculating your Taxable Income and Income Tax

In order to do the calculation, it is imperative to understand how income tax is deducted. If your income falls within a certain slab only, say Slab I (as per the tax slabs mentioned above), then the calculation is simpler. But if your salary falls in more than one range, the income tax is the sum of the tax calculated from each slab as per the designated tax rate of the said financial year.

In other words,

Income tax for income in Slab II = 10% of Slab I + 20% of slab II

Income tax for income in Slab III = 10% of Slab I + 20% of Slab II + 30% of Slab III

Here’s an example* of the income tax calculation of a person earning Rs.10 lakhs, and a comparison of how he will fare with this year’s budget rules as opposed to those of last year’s –

 

As shown in the examples above, tax calculation is not as complex an affair as it is made out to be. You just need to be aware of the tax slabs for the financial year in question, the deductions available and how taxable income is determined. Once you have clarity on these three aspects, calculating your income tax becomes very simple.

*sourced from – http://www.jagoinvestor.com/2014/07/budget-2014-highlights-and-download-income-tax-calculator.html

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Tax Benefits On Different Types Of Loans

While taking a loan allows you to fulfill requirements like buying a house or financing your child’s education, the repayment of this loan along with the interest levied on it, does affect your monthly as well as annual finances for other expenditures. However, there is an additional beneficial side to loans which is the tax saving angle.

The Indian Government allows tax benefits for individuals who are repaying loans and these benefits vary according to the type of loan taken. As per different sections of the Income Tax Act, 1961, loans can be used as tax saving instruments as well. The following tax benefits have been updated to include changes introduced by the budget 2014-15

Tax Benefits/Exemption on Home Loans

When taking a home loan for purchasing a property, an individual is eligible for tax deductions on both principal amount as well as on the interest that is paid for servicing the loan.

Deductions on Principal Amount

Tax benefits for the principal loan amount as defined under Section 80C of the Income Tax Act, 1961, now allows a maximum deduction limit of 1,50,000 INR (increased from Rs.1 Lakh as per the budget 2014-15); and this amount is inclusive of other tax saving investments as well. These deductions are applicable only once the construction of the property is complete and not for the time period during which the property was under construction.

But if you have availed tax benefits on a property and transferred its ownership before 5 years from the date of acquiring, then the tax amount saved during the financial years when the property was under your ownership will be considered void. That amount will now be considered as a part of your taxable income and you will have to pay tax on that amount accordingly.

For those who invest in under-construction properties (e.g. – Flats in township projects) whose values are less than the basic value once the project gets completed, they also have to pay service tax on the loans taken to acquire the property.

Note that the basic value here is the actual market value for the sale of a residential flat once the construction is complete.

The only exception for getting exemption from this service tax is in cases where the property in question is a single residential unit or up to 60 square meters. This exception is included under the “Scheme of Affordable Housing and Partnership” as devised by government bodies namely “Ministry of Housing” and “Urban Poverty Alleviation” and strategized under National Urban Housing & Habitat Policy (NUHHP), 2007 and is in effect since April 1, 2009.

Deductions on Interest Amount

Section 24 of the Income Tax Act has certain provisions that allow tax benefits on the interest paid on the principal loan amount.

For construction or purchase of a new property, you are eligible for deduction of up to Rs. 2 Lakhs for the interest amount paid (as per the budget 2014-2015), if the property construction was completed within 3 years from the end of the financial year in which the loan was issued. If the property is not acquired/constructed completed within 3 years from the end of financial year in which the loan was taken, the interest benefit in this case would be reduced from 2 Lakhs to Rs 30 thousand only.

If you’ve taken a loan for repairing or renewing your property, you are eligible for a deduction under Section 24(b). This is over and above the flat 30% deduction available annually for the maintenance of property. However, there is a restriction on the amount—Rs.30,000 per fiscal, irrespective of whether it is self-occupied or you rent it out.

Tax Benefits/Exemption for Educational Loans

Unlike home loans, only the interest on repayments is applicable for deduction and not the principal amount. As defined in Section 80E of Income Tax Act, 1961, this deduction is applicable only for an individual for higher education with no fixed upper limit.

Here, higher education can be defined as any course that you pursue after Senior Secondary School Level in India or abroad.

It is important to understand that the education loan should be taken from a financial or approved charitable institution, to be eligible for tax benefits and you can avail this tax benefit for a maximum period of 8 years or full loan repayment period, whichever is applicable. For e.g., if you have paid off your education loan within 5 years of the course completion, deduction benefit can be availed only for that time frame and not beyond that.

Tax Benefits/Exemptions on Car and Personal Loans

For salaried individuals, no tax benefits are available if you have taken a car loan. Deductions from payable tax can be availed only if you are self-employed or a businessman, and you declare the profit or capital gains earned from your work or business, or if you purchase a vehicle for business use. In that case, you get exemption on the interest as well as depreciation of the vehicle.

For example – Borrower A, who works in a private software company, has bought a brand new car to commute to and fro from home and work. He might be reaping the convenience of owning a four wheeler but he will not get any tax benefit for taking a loan to purchase it. On the other hand, a small time businessman who has a textile store has also bought a new car. Now if he declares his earnings as deductible under section 80C, he will be able to include the interest paid for his car loan for tax exemption.

Another way of getting tax exemption for your vehicle is by financing it through a home loan. However, this umbrella loan puts your property at the highest risk in case of any payment defaults.

For personal loans, deductions are applicable only for a declared business and its earnings; or for the interest on loan repayments used for property construction.

While this is a broad overview, it is useful to be informed about loan tax benefits if you are going to take a loan, or if you are already repaying one. Being aware can be beneficial in saving on your taxes.

As per different sections of the Income Tax Act, 1961, loans can be used as tax saving instruments as well.

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