Vara Full Project

A project Report Titled "A Study on Financial
Planning for Salaried Employees and Strategies

for Tax Savings "
Submitted in Partial Fulfillment of the Requirements of
Post graduation degree of Master of commerce in
BENGALURU NORTH UNIVERSITY
Submitted By
VARALAKSHMI.K
Reg.No.CM194434
Under the guidance of
CHOWDAPPA.CB M.A, M.Phil,Med,

LLB,KSET,(Phd). DEPT OF ECONOMICS.
S.E.A COLLEGE K.R PURAM
BENGALURU-560036
PG DEPARTMENT OF COMMERCE S.E.A COLLEGE
K.R PURAM BENGALURU-560036
This is to certify that VARALAKSHMI K. a bona fide student of final year

M.COM bearing Register.No.CM194434 has completed a project titled
“FINANCIAL PLANNING FOR SALARIED EMPLOYEES AND
STRATEGIES FOR TAX SAVINGS". This project was completed and carried
out at the stipulated time period.
Place: HOD
Date :
PG DEPARTMENT OF COMMERCE
S.E.A COLLEGE K. R PURAM
BENGALURU-560036
This is to certify that VARALAKSHMI.K student of final year M.COM of S.E.A

COLLEGE bearing Register. No. CM194434 has successfully completed a project
report titled “A STUDY ON FINANCIAL PLANNING FOR SALARIED
EMPLOYEES AND STRATEGIES FOR TAX SAVINGS", completed by for
the award of Master of commerce Course for the academic year 2019-2021 of
Bengaluru North University .Under my guidance and direction to the best of my
knowledge. The findings of this report are genuine and are not reported earlier.
Place: PROJECT GUIDE
Date: CHOWDAPPA.C B
I am VARALAKSHMI.K Final year M COM hereby declare that this project
report, A STUDY ON " FINANCIAL PLANNING FOR SALARIED
EMPLOYEES AND STRATEGIES FOR TAX SAVINGS”, Is a record of
independent research work carried by me, under the supervision and guidance of
CHOWDAPPA.CB M.A,M.Phil,MED,LLB,KSET,(Phd).dept of economics.
This has not been previously submitted for the award of the degree or diploma to
institution or universities.
Place: VARALAKSHMI.K
Date: (CM194434)
ACKNOWLEDGEMENT
.
I would like to express my deep sense of gratitude to Bengaluru North

University for having given me the opportunity to do my research project
I am indebted to our institution S.E.A COLLEGE K.R PURAM for its very ideals and
inspiration.
I would like to thank CHOWDAPPA.C B M.A,M.PHIL,M.ED,LLB,KSET (Phd)

Dept of Economics S.E.A COLLEGE K.R. PURAM for providing me with
valuable inputs and support for conducting my study.
Ialsoexpressmygratitudetoalllecturersand my friendsandallotherswho directlyor

indirectly helped me in successful completion of this project
Date: VARALKSHMI.K
Place: (CM194434)
EXECUTIVE SUMMARY
Saving form an important part of any economy of any nation with saving invested various option
available to people. An investment refers to the commitment of funds at present, in anticipation
of some positive rate of return in future today the spectrum of investment is indeed wide
.Individuals are more aware about the different investment avenues. Among all investments
avenues individuals consider saving account, fixed deposit, public provident fund, life insurance,
gold/silver etc as a safer and low risk investments avenues compare share market, bonds, state,
hedge funds. Salaried Individuals are aware about share market, mutual funds but they consider
these investments avenues as a high risk investments avenue.
The main reason behind the study are the factors like awareness level and factors consider
individuals before investments like safe and low investment avenues, moderate risk avenues, high
risk investment avenues, traditional investment avenues, emerging investment avenues. The
findings relates to the awareness among individuals and individuals risk taking ability while
investing in different investment avenues.
TABLE OF CONTENT
CHAPTER. CONCEPTS PAGE NO.

NO.
1 INTRODUCTION 1
REVIEW OF LITERATURE 25
2
3 METHODOLOGY OF STUDY 32
PROFILE OF STUDY 37
4
DATA ANALYSIS AND INTERPRETATION 71
5
6 CONCLUSION , FINDINGS , SUMMURY , 87

BIBLIOGRAPHY
LIST OF TABLE
SL. Table Page.
No. No
1 Age distribution of the respondent 71
2 Income distribution of respondent 73
3 Investment made by the respondent in various avenues 74
4 Satisfaction of investors on their previous investment 76
5 Various sources of information/reference for investor 78
which influence investment decision.

6 Investment Objectives of Individuals 80
7 Respondent frequency of investment 82
8 Financial Literacy of respondent 84
9 Do respondent have enough time to manage their 85
investment affairs
LIST OF CHART
SL. CHART Page.
No. No
1 Age distribution of the respondent 71
2 Income distribution of respondent 73
3 Investment made by the respondent in various avenues 75
4 Satisfaction of investors on their previous investment 77
5 Various sources of information/reference for investor 79
which influence investment decision.

6 Investment Objectives of Individuals 81
7 Respondent frequency of investment 83
8 Financial Literacy of respondent 84
9 Do respondent have enough time to manage their 85
investment affairs
A STUDY ON‘‘FINANCIAL PLANNING FOR
SALARIED EMPLOYEES AND STRATEGIES
CHAPTER NO. 1
INTRODUCTION
1.1 INTRODUCTION TO FINANCIAL PLANNING

Financial planning is the process of assessing financial goals of individual, taking an
inventory of the money and other assets which the person have, determine life goals and
then take necessary steps to achieve goals in the stipulated period. It is a method of
quantifying a person‘s requirement in terms of money.
Financial services refer to services provided by the finance industry. The finance industry
encompasses a broad range of organizations that deal with the management of money.
Among these organizations are banks, credit card companies, insurance companies,
consumer finance companies, stock brokerages, investment funds and some government
sponsored enterprises. Financial Planning is one such advisory service, which is yet to get
recognition from investors. Although financial planning is not a new concept, it just needs
to be conducted in organized manner. Today we avail this service from Insurance agent,
Mutual fund agents, Tax consultant, Equity Brokers, Chartered Accountants, etc. Different
agents provide different services and product oriented. Financial Planner on other hand is
a service provider which enables an individual to select proper product mix for achieving
their goals.
The major things to be considered in financial planning are time horizon to achieve life
goals, identify risk tolerance of client, their liquidity need, the inflation which would eat
up living and decrease standard of living and the need for growth or income. Keeping all
this in mind financial planning is done with six step process. These are self assessment of
client, identify personal goals and financial goals and objective, identify financial
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S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

problems and opportunities, determining recommendations and alternative solutions,

implementation of appropriate strategy to achieve goals and review and update plan
periodically.
A good financial plan includes Contingency planning, Risk Planning (insurance), Tax
Planning, Retirement Planning and Investment and saving option.
Contingency planning is the basic of financial planning and also the most ignored.
Contingency planning is to be prepared for major unforeseen event if it occurs. These
events can be illness, injury in family, loss of regular pay due to loss of job. Such events
are not certain but may have financial hardship if they occur. Thus a person should have
enough money in liquid form to cover this risk.
Risk Coverage is done through insurance. Risk can be classified into life risk, health risk
and property risk. Today we have different insurance which covers different risk. Everyone
is exposed to life risk but the degree of risk varies. Life insurance provides an economical
support to the family and dependents. Apart from life risk we are also exposed to health
risk. Health insurance covers health risk by funding medical expenses and hospital charges.
Also we have property insurance to cover risk attached to house property like theft, fire,
damage, etc. and various auto insurance.
Tax planning is what every income earner does without fail and this is what financial
planning is all to them. A good plan is one which takes the maximum advantage ofvarious
incentives offered by the income tax laws of the country. However, do understand that the
tax incentives are just that, only incentives. Financial planning objective should be getting
maximum advantage of various avenues. It is to be remembered that tax planning is a part
and not financial planning itself. There are many investments which do not offer tax shelter
that does not mean they are not good investments. The prudent investment decision made
and the returns that accrue will more
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than offset the tax outgo. In any case the primary objective of a good financial plan is to
maximize the wealth, not to beat the taxmen. However many investment provides great
returns which can offset the tax on it. A detailed study of various investment which
provides deduction and exemption is given in report.
Retirement Planning is also an important aspect of financial planning. To a greater extend

most earning people do retirement planning. There are various schemes in market through
which a person can do his retirement planning. To list a few are AnnuityInsurance Plan,
PPF and EPF.
In market there are different instruments which can be adapted to fulfill the need of various
planning objective. These instruments are different from each other in terms of returns,
risk, fund allocation, charges, investment term, tax incentives, etc. A detail description of
instruments like Life insurance, Equity, Mutual Funds, PPF, Investment in Gold,
Investment in Real Estate, Deposits with Banks and Post Office, etc. are covered in this
report. This will help the investor to make their investment decisions.
Taxation and Tax saving Instruments under Indian Income Tax Act, 1961. It also discusses
the various deductions, and exemptions under Income Tax Act. It gives a clear
understanding on the concept of investment in tax saving schemes. This chapter also gives
the explanation of the first objective of the project i.e. to study the various investment
avenues available with reference to tax planning under the Indian Income Tax Act, 1961.
1.1.1 Theoretical background
INVESTMENT
An asset or item that is purchased with the hope that it will generate income or appreciate
in the future is called investment. In an economic sense, an investment is the purchase of
goods that are not consumed today but are used in the future to create wealth. In finance,
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an investment is a monetary asset purchased with the idea that the asset will provide
income in the future or appreciate and be sold at a higher price. The building of a factory
used to produce goods and the investment one makes by going to college or university is
the examples of investment in economic sense. In the financial sense, investments include
the purchase of bonds, stock and real estate property.
An investment is the purchase of a financial vehicle with the intention of making a profit
from it .
Advantages of Invesment
Investing is the process of making your money work for you, instead of simply sitting safely in the
back, and it is increasingly a necessity of modern life. It is frequently no longer possible for an
individual to work in one job all their life and retire on their pension. People move from job to job,
or from career to career, and due to government cutbacks the responsibility for providing for their
retirement falls increasingly on the individual. By investing your money wisely you can make
profit that you can then reinvest or put aside as a nest egg. A good return on an investment can
maximize earning potential. The two main advantage of investment are:
You can save money for your future.
Your money grows at a good rate when compared to the inflation rate.
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Disadvantages of investment
The major disadvantage of investing is that it is always possible to lose money on whatever
investment you make. If you invest in a rare collectible, the value of it can rise or fall
depending on its popularity and its availability on the market. Stock prices fluctuate based
on everything from how the competition is doing to the public confidencein the market.
The year 2008 demonstrated how even house prices, traditionally the most secure
investment, don‘t have guaranteed return. Hence the only disadvantage of investment is
that you may lose money if you choose high risk investment options. Apart from this there
are no disadvantages of investment.
TYPES OF INVESTMENT
Investments can be broadly classified into two types, namely:
1. Financial instruments
2. Non-Financial instruments
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Financial instruments
a. Equities:
Equities are the type of security that represents the ownership in a company. Equities are
traded in stock markets. Alternatively, they can be purchased via the Initial PublicOffering
(IPO) route. Investing in equities is a good long term investment option as the return on
equities over a long time horizon are generally higher thanmost other investment avenues.
However, along with the possibility of greater returns comes greater risk.
b. Mutual Funds:
A mutual funds allows a group of people to pool their money together and have it
professionally managed, in keeping with the predetermined investment objective. The
investment avenue is popular because of its cost-efficiency, risk diversification,
professional management and sound regulation. One can invest as little as Rs 1000 per
month in a mutual fund. There are various general and thematic mutual funds to choose
from and the risk and return possibilities vary accordingly.
c. Bonds:
Bonds are fixed income instruments which are issued for the purpose of raising capital.
Both private entities such as companies, financial institutions and the central and state
government and other government institutions use this instrument as a means of garnering
funds. Bonds issued by governments carry the lowest level of risk but could deliver a fair
return.
d. Deposits:
Investing in bank or post-office deposits is a very common way of securing surplus
funds. These instruments are at the low end of the risk return spectrum.
e. Cash Equivalents:
These are relatively safe and highly liquid investment options. Treasury bills and
money market funds are cashequivalents.
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Non financial instruments

a. Real estate:
With the ever-increasing cost of land, real estate has come up as a profitable investment
proposition.
b. Gold:
The ‗yellow metal‘ is a preferred investment option, particularlywhen markets arevolatile.
Today, beyond physical gold, a number of products which derive their value from the price
of gold are available for investment. These include gold futures and gold exchange traded
funds.
CHARACTERISTICS OF INVESTMENT
The options for investing our savings are continually increasing, yet every single
investment vehicle can be easilycategorized according to three fundamental characteristics
- Safety, income, and growth- which also correspond to the type of investor objectives.
While it is possible for an investor to have more than one of these objectives, the success
of one must come at the expense of others. Let‘s examine these three types of objectives,
the investments that are used to achieve them and the ways in which investors can
incorporate them in devising a strategy.
1. Safety:
Perhaps there is truth to the axiom that there is no such thing as a completely safe and
secure investment. Yet we can get close to ultimate safety for our investment funds through
the purchase of government issued securities in stable economic systems or through the
purchase of the highest quality corporate bonds issued by economy‘s top companies. Such
securities are arguably the best means of preserving principal while receiving a specified
rate ofreturn.
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2. Income:
The safest investments are also the ones that are likely to have the lowest rate of income
return, or yield. Investors must inevitably sacrifice a degree of safety if they want to
increase their yields. This is the inverse relationship between safety and yield as yield
increases, safety generally goes down, and vice-versa.
3. Growth of capital:
Capital gains are entirely different from yield in that they are only realized when the
security is sold for a price that is higher than the price at which it was originally purchased.
Selling at a lower price is referred to as a capital loss. Therefore, investors seeking capital
gains are likely not those who need a fixed ongoing source of investment returns from their
portfolio, but rather those who seek the possibility of longer- term growth.
4. Marketability / Liquidity:
Common stock is often considered the most liquid of investments, since can usually be sold
within a day or two of the decision to sell. Bonds can also be fairly marketable, but some
bonds are highly il-liquid, or non tradable possessing a fixed term. Similarly, moneymarket
instruments may only be redeemable at the precise date at which the fixed term ends. If an
investor seeks liquidity, money market assets and non-tradable bonds aren‘t likely to be
held in his/her portfolio.
5. Tax minimization
An investor may pursue certain investments in order to adopt tax minimization as part of
his /her investment strategy. A highly paid executive, for example, may want to seek
investments with favorable tax treatment in order to lessen his or her overall income tax
burden. Making contributions to an IRA or other tax-sheltered retirement plan can be an
effective tax minimization strategy.
1.2 CONCEPT OF TAX

Tax can be defined as a levy or other type of a financial charge or fee imposed by state or
central governments on legal entities or individuals. Local authorities like local
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governments, provincial governments, and municipal corporations also have the right to
impose taxes. The rates, rules and regulations of taxation differ from one country to
another and they are complex in character. Tax is a principal source of revenue for a
country‘s government. A country‘s tax laws determine who should bear the tax burden
and who should pay it. The tax rate is imposed as a certain percentage of the income
earned. Taxation policies play an important role in the financial and economic
development of a country. The default or partial payment of taxes attracts penalties. The
penalties can be civil or criminal penalties.
Tax Classification
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a. Indirect Tax:
An indirect tax is a form of tax collected by mediators who transfer the taxes to
government, and also perform functions associated with filing tax returns. The customers
bear the final tax burden. Examples of indirect taxes are sales tax and Value added tax
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b. Direct Tax:
A direct tax is a form of tax collected directly by the government from the persons who
bears the tax burden. Taxable individuals file tax returns directly to the government.
Examples of direct taxes are corporate taxes, income taxes and transfer taxes.
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1.2.1 INTRODUCTION FOR TAX SLABS
In India, income tax is levied on individual taxpayers on the basis of a slab system where
different tax rates have been prescribed for different slabs and such tax rates keepincreasing
with an increase in the income slab.
Such tax slabs tend to undergo a change during every budget.
Further, since the budget 2018 has not announced any changes in income tax slabs this
time, it remains the same as that of last year.
There are three categories of individual taxpayers:
1. Individuals (below the age of 60 years) which includes residents as well as non- residents
2. Resident Senior citizens (60 years and above but below 80 years of age) 3.Resident
Super senior citizens (above 80 years of age)
Income Tax Slabs Tax Rate Health and Education Cess

Up to ₹2,50,000* Nil Nil
5% of total income
₹2,50,001to ₹5,00,000 exceeding ₹2,50,000 4%
₹12,500 + 20% of total
income exceeding
₹5,00,001to₹10,00,000 ₹5,00,000 4%
₹1,12,500 + 30% of total
income exceeding
Above ₹10,00,000 ₹10,00,000 4%
Income Tax Slabs for Individual Tax Payers & HUF (Less Than 60 Years Old) for
FY 2019-20 – Part I
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.
Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.
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*Income tax exemption limit for FY 2019-20 is up to Rs. 2,50,000 for individual & HUF
other than those covered in Part(II) or (III)
Income Tax Slabs for Senior Citizens (60 Years Old Or More but Less than 80
Years Old) for FY 2019-20 – Part II

Income up to Rs
3,00,000* No tax
Income from Rs 3,00,000
– Rs 5,00,000 5% 4% of Income Tax
– 10,00,000 20% 4% of Income Tax
Income more than Rs
10,00,000 30% 4% of Income Tax
*Income tax exemption limit for FY 2019-20 is up to Rs. 3,00,000 other than those
covered in Part(I) or (III)
Income Tax Slabs for Super Senior Citizens (80 Years Old Or More) for FY 2019-20
– Part III

Income up to Rs
5,00,000* No tax
– 10,00,000 20% 4% of Income Tax
Income more than Rs
10,00,000 30% 4% of Income Tax
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covered in Part(I) or (II)
Income Tax Slabs for Domestic Companies for FY 2019-20 – Part IV
In addition cess and surcharge is levied as follows: Cess: 4% of corporate tax
Turnover Particulars Tax Rate

Gross turnover upto 250 Cr. in the
previous year 25%
Gross turnover exceeding 250 Cr.

in the previous year 30%
Surcharge: Taxable income is more than 1Cr. but less than 10Cr.: 7%
Taxable income is more than 10Cr. :12%
Income Tax Slabs Rates for FY 2018-19(AY 19-20)
Income Tax Slabs for Individual Tax Payers & HUF (Less Than 60 Years Old) for
FY 2018-19 – Part I

Up to ₹2,50,000* Nil Nil
5% of total income
₹2,50,001 to ₹5,00,000 exceeding ₹2,50,000 4%
₹12,500 + 20% of total
income exceeding
₹5,00,001 to ₹10,00,000 ₹5,00,000 4%
₹1,12,500 + 30% of total
Above ₹10,00,000 income exceeding 4%
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₹10,00,000
*Income tax exemption limit for FY 2018-19 is up to Rs. 2,50,000 for individual & HUF
other than those covered in Part(II) or (III)
Income Tax Slabs for Senior Citizens (60 Years Old Or More but Less than 80
Years Old) for FY 2018-19 – Part II

Income up to Rs
3,00,000* No tax

– Rs 5,00,000 5% 4% of Income Tax

– 10,00,000 20% 4% of Income Tax
Income more than Rs

10,00,000 30% 4% of Income Tax
covered in Part(I) or (III)
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Income Tax Slabs for Super Senior Citizens (80 Years Old Or More) for FY 2018-19
– Part III

Income up to Rs
5,00,000* No tax
– 10,00,000 20% 4% of Income Tax
Income more than Rs
10,00,000 30% 4% of Income Tax
covered in Part(I) or (II)
Income Tax Slabs for Domestic Companies for FY 2018-19 – Part IV
In addition cess and surcharge is levied as follows: Cess: 4% of corporate tax
Turnover Particulars Tax Rate

Gross turnover upto 250 Cr. in the
previous year 25%
Gross turnover exceeding 250 Cr. in

the previous year 30%
Surcharge: Taxable income is more than 1Cr. but less than 10Cr.: 7%
Taxable income is more than 10Cr. :12%
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1.3 TAX PLANNING
Systematic analysis of differing tax options aimed at the minimization of tax liability in
current and future tax periods is called Tax planning. Whether to file jointly or separately,
the timing of a sale of an asset, ascertaining over how many years to withdraw retirement
funds, when to receive income, when to pay expenditures, the timing and amounts of gifts
to be made, and estate planning are examples of tax planning.
The tax implications of individual or business decisions throughout the year, with the goal
of minimizing the tax liability and the exercises undertaken to minimize tax liability
through the best use of all allowances, deductions, exclusions, exemptions, etc, is to reduce
income and/or capital gains . In other words, it is the process of systematically making
decisions with regard to their impact on taxation.
There is need for salaried individuals to devote adequate time and effort to the tax planning
exercise and be aware of the various benefits that theycan avail of.
DEDUCTIONS UNDER INCOME TAX ACT
Indian tax laws contain certain provisions, which are intended to act as an incentive for
achieving certain desirable socio-economic objectives. These provisions are contained in
Chapter VI A and are in the form of deductions (80C to 80U) from the gross income. By
reducing the chargeable income these provisions reduce the tax liability, increasethe post-
tax income and thus induce the tax payers to act in the desired manner. There are various
kinds of deductions.
Some of them are to encourage savings, some are for certain personal expenditure, a few
are for socially desirable activities, and some are for economic growth.
The first course of action while doing tax planning is to avail all the tax breaks related to
expenses (Whether under section 80C or any other section such as 80E) before making
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any further investment commitments for tax saving under section 80. The various
deductions available to an asses see under the Income Tax Act are as follows:
1. Deductions u/s 80C

Section 80C of the Income Tax Act, 1961, sets out a number of options or tax saving
instruments that are eligible for tax deduction. Broadly, we can divide tax saving avenues
into two categories: first is expenditure related deductions such as tuition fees and home
loan principal repayment; and second one is investment instruments or options such as:
EPF (Employee‘s provident fund)
PPF (Public Provident Fund)
VPF (Voluntary Provident Fund)
NSC (National Savings Certificates)
ULIPs (Unit-Linked Insurance Plan)
ELSS (Equity Linked Saving Schemes)
5-Yr POTD (Post Office Time Deposit)
5-Yr Tax saving fixed deposits (FDs) of banks
Mutual Funds Pension Plans
Life Insurance Premium
Given below is a brief overview of various Tax saving avenues or options u/s 80C of the
IT Act, 1961:
1. Expenditure avenues u/s 80C

a. Tuition Fees:
Expenses- only Tuition fees incurred on Children‘s full time education in India are
eligible for deduction under section 80C. No other charges or expenses are allowed.
b. Repayment of principal sum of home loans: The EMI (Equated Monthly
Installment) that is paid on home loan comprises of two components: Principal and
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interest. While principal part is deductible u/s 80C, there is a separate deduction for
interest portion u/s 24(b) of IT Act.
c. Expenses incurred on purchase of house property:
Stamp duty, registration fees, and other expenses incurred for the purpose of purchase of
house property are also entitled for section 80C deductions.
2. Investment options or avenues u/s 80C:

Various investment options can be broadly divided into three categories: first is equity
instruments, second are debt instruments, and third one is life insurance and pension plans.
Equity Instruments:
a. Equity Linked Saving Schemes (ELSS):
There are some mutual funds schemes specially created for tax savings, and these are called
ELSS. The investments that you make in ELSS are eligible for deduction u/s 80C.
Considered as the best section 80C option, it‘s a mutual fund scheme investing entirely in
equities and therefore has potential to deliver the best returns.
Debt Instruments:
b. Public Provident Fund (PPF):
Among all the assured returns small saving schemes, PPF is one of the best. Current rate
of interest is 8% tax free and the normal maturity period is 15 years. Minimum amount of
contribution is Rs 500 and maximum is Rs 70000. A point worth noting is that interest rate
is assured but not fixed.
c. Employees Provident Fund (EPF):
EPF is automatically deducted from the salary. Both the asses see and his employer
contribute to it. While Employer‘s contribution is exempt from tax, the assessee‘s
contribution (i.e., employee‘s contribution) is counted towards section 80C investments.
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You also have the option to contribute additional amounts through VPF. Current rate of
interest is 8.5% p.a. and is tax free.
d. National Savings Certificates (NSC):
NSC is a 6 year small savings instrument eligible for section 80C tax benefit. Rate of
interest is eight per cent compounded half-yearly, i.e., the effective annual rate of interest
is 8.16%. If you invest Rs.1000, it becomes Rs. 1601 after six years. The interest accrued
every year is liable to tax (i.e., to be included in your taxable income) but the interest is
also deemed to be reinvested and thus eligible for section 80C deduction.
e. 5-yr Post Office Time Deposits (POTD) Scheme:
POTDs are similar to bank deposits. Although available for varying time duration like one
year, two year, three year and five year, only 5-yr post office time deposits- which currently
offers 7.5% rate of interest- qualifies for tax saving u/s 80C. The interest is entirelytaxable.
f. 5-yr Bank Fixed Deposits (FDs):
Tax saving fixed deposits of scheduled banks with tenure of 5 years is also entitled for
section 80C deduction.
Life Insurance and Pension Plans
g. Life Insurance:
Any amount paid towards life insurance premium for the assesses or his family (spouse
and children) is eligible for section 80C tax break. This is the most popular investment
avenue among all the tax saving instruments but for all the wrong reasons.
h. Unit Linked Insurance Plans (ULIPs):
Although ULIPs are covered under life insurance but still require a specific mention due
to its popularity. Undoubtedly, better than traditional Insurance plans. ULIPs are
considered as most complex financial products. They combine the features of both mutual
funds and insurance.
i. Mutual Fund Pension Plans:
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Another variable return instrument available under section 80C is pension plans ofmutual
funds. There are only two such plans available in the market- Templeton India Pension
Plan (TIPP) and UTI Retirement Benefit Pension Plan (UTI-RBP). These are open ended
debt oriented mutual fund schemes with a maximum exposure of 40% to equities. These
are long term investments and premature break is very costly.
j. Pension Plans Of Insurance Companies:
Contribution towards pension plans offered by insurance companies qualifies for tax
benefit u/s 80CCC instead of section 80C. However, the aggregate deduction allowed u/s
80C and section 80CCC can‘t exceed Rs One Lakh. There are basically two kinds of
pension plans are offered by insurance companies: traditional pension plans which invest
mostly in fixed income products and unit linked pension plans which are more flexible.
1. Health Insurance Premium Under Section 80D

One can claim a deduction of Rs 15000 (Rs 20000 for senior citizens) u/s 80D for medical
and health insurance-popularly known as mediclaim policy- premium paid on health of
oneself, spouse and dependent children.
Additionally a further deduction of Rs 15000 u/s 80D for buying health insurance policy
for his parents (Rs. 20000 if either of his parents is a senior citizen) irrespective of whether
they are dependent or not is also allowed. Part payment of premium is also eligible for
deduction u/s 80D. For example, suppose that his parents buy a health insurance policy
having an annual premium of Rs 14000. Out of the total premium let‘s say his parents pay
only Rs 5000 and the balance of Rs 9000 is paid by him. So, he will be allowed a tax
deduction of Rs 9000 under section 80D and his parents will be allowed a deduction of Rs
5000.
2. Medical treatment of disabled dependent under section 80DD

A fixed deduction of Rs 50000 (irrespective of the actual expenses) is also allowed u/s
80DD, if the assesses happens to incur any expenditure on the medical treatment
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(Including nursing, training and rehabilitation) of handicapped dependent (spouse,

children, parents, brothers and sisters). For severe disability, the amount of deduction
available is Rs 100000.
Furthermore, section 80DD also allows deduction on insurance premium paid on certain
specified life insurance policies. JEEVAN ADHAR policy of LIC qualifies for deduction
u/s 80DD.
3. Medical treatment of certain specified ailments under section 80DDB
one is also allowed a deduction of actual expenditure incurred- minus any amount
reimbursed by employer or by an insurance company- up to Rs 40000 (Rs 60000 for senior
citizens) for medical treatment of certain specified diseases and ailments (e.g. AIDS,
Cancer, etc.) of himself or any of his dependent family members (spouse, children,
parents, brother and sisters) under section 80DDB subject to certain conditions.
Educational loan under section 80E
One is allowed a deduction u/s 80E for the repayment of loan taken (from any bank,
financial institutions, or approved charitable institutions) for higher studies (full time
studies including graduation of specified courses such as management, engineering, and
medicine) for himself or any of his family members (children and spouse) and any
vocational studies pursued after passing senior secondary examinations. However, the
deduction u/s 80E is only on the interest portion and unlike home loans, deduction for
principal repayment is not allowed. Finally the deduction u/s 80E is limited to a maximum
period of 8 years.
4. Donations under section 80G

Donations paid to specified institutions also qualify for tax deduction under section 80G
but is subject to certain ceiling limits. Based on limits, we can broadly divide all eligible
donations under section 80G into four categories:
a. 100% deductions without any qualifying limit (e.g. Prime Minister‘s National Relief
Fund).
b. 50% deductions without any qualifying limit (e.g. Indira Gandhi Memorial Trust).
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c. 100% deductions subject to qualifying limit (e.g. an approved institution for promoting
family planning).
d. 50% deductions subject to qualifying limit (e.g. an approved institution for charitable
purpose other than promoting family planning).
The qualifying limits u/s 80G is 10% of the adjusted gross total income.
5. Rent paid under section 80GG
If the assess is either self employed or employed but not getting any HRA from his
employer, one can get deduction under section 80GG for the rent paid by him. However,
unlike HRA exemption under section 10(13A) of IT Act, here the maximum amount
allowed is only Rs 2000 per month (Rs 24000 annually) and is also subject to certain
conditions.
STATEMENT OF THE PROBLEM
Financial planning and saving tax these days is the most important aspect for the salaried
class people, so that they can save their hard earned income to spend on themselves and
their family. There are many investment avenues which are most beneficial to the salaried
class for their tax planning purpose, so to study those avenues is also very important. The
Income tax Act also provide some sections as deductions, which can save tax and be proved
as tax saving schemes implemented by the government. Now it is the need of hour that in
this inflating period one should be highly aware of all the tax saving schemes to save money
and enjoy their life with fullsatisfaction.
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OBJECTIVES OF STUDY
1. To know the mode of investments of the salaried individuals in various investment

avenues.
2. To study the factors influencing the investment pattern of the salaried individuals.
3. To study the factors influencing enquires into the profile, portfolio practices,
experiences, preferences & risk, perceptions, and intentions of salariedindividuals.
4. To study the various investment avenues available specific to tax planning under
Indian Income Tax Act.
5. To study the importance of tax saving among the salaried class people.
NEED FOR STUDY
This study gives the various financial planning and investment opportunities
available.
It is the brief study about the tax saving schemes available under section 80 of the
Income Tax Act.
It also gives the investment avenues which are most beneficial to the salaried class
for their tax planning purpose.
It is inclusive of the study of the current investment patterns of the salaried class
in the society and analyses the views of the salaried class on investment related to
tax saving avenues.
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CHAPTER PLAN
CHAPTER. CONCEPTS PAGE NO.

NO.
1 INTRODUCTION 1
2 REVIEW OF LITERATURE 25
3 METHODOLOGY OF STUDY 32
4 PROFILE OF STUDY 37
5 DATA ANALYSIS AND INTERPRETATION 71
6 CONCLUSION , FINDINGS , SUMMURY , 87

BIBLIOGRAPHY
Page 25

CHAPTER NO. 2
REVIEW OF LITERATURE
2.1 PAST CITINGS

A number of studies have been conducted from time to time to understand the investment
in tax saving schemes by salaried class people. However, most of them focused on tax
planning and the deductions or exemptions for which salaried class people are eligible, so
that they can reduce their tax liability. A review of important studies is presented below:
Taxguru 1 (2011) In his article titled ―Tips to save income tax for salaried person‖ aims
at creating awareness about tax planning and he also gives some tips to save incometax for
salaried person. In his article he talks about process one should start his tax planning. He
says firstly to jot down your key financial objectives, the tentative time of money
requirement and the corpus needed to achieve those goals. He says investments in tax
saving tools are very effective to achieve financial objectives. There are range of avenues
with different level of risk, return and liquidity. Choose an appropriate mix of investments
to maintain an appropriate asset allocation and to help achieve the set financial objectives.
He concluded his article by talking about the exemptions/ reimbursements and deductions
under Income Tax Act, 1961, to maximize the tax saving.
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Niraj Mahajan 2 (2012) In his article titled ―Tax Compliance and planning for salaried
Individuals‖ aims at creating awareness amongst salaried employees about various tax
compliance and possible tax planning over the years. His article also aims to provide
solutions for tax savings, awareness of tax benefits and steps to be taken beforehand for
tax planning. It also talk about Form 16 which is a certificate for TDS (Tax Deducted at
Source) i.e. tax deducted on your salary by the employer and is deposited with the
government on behalf of the employee. It also talks about the prime responsibility of the
employer to furnish accurate details in Form 16, failure which attracts penalty to the
employer. It also talks about various investment options available under section 80 to red
tax liability. The
article also explains the calculation of tax of an employee who switched his employment
during a financial year, with an example. It thus concludes by talking about the benefits of
submitting the returns online as the return gets processed quickly and thereby reducing your
wait for refund amount.
3
Dr. Anil Menon (2012) In his article titled ―Financial Planning‖ aims at why
financial planning, time value of money, higher education for your children, insurance
planning, tax planning, retirement planning and impacts of rising expenses. He said
financial planning is very important to manage income and expenses, to create an
awareness of your current financial status, to provide a system of evaluation and revision
for financial progress and to plan for the future by developing goals and devising ways to
achieve those goals. He also talks about why one should develop a financial plan. With his
point of time value of money he want to say that today what we can afford is unaffordable
tomorrow, worth today becomes worthless tomorrow. For tax planning he talks about all
the exemptions, deductions and rebate which is used to minimize the tax liability. He ended
up his article by talking about the cost of not planning taxes. He said one looses for long
run by not planning taxes. He even focused on inflation and rising expense. His overall
summary is done with an axiom ―manage the unplanned and minimize taxes‖.
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Shveta Sinha 4 (2012) In her article titled ―Tax saving instruments: Much more than
saving taxes‖ aims at One must realize that tax saving instruments do much more than
only saving taxes. Smart planning with right tax saving instruments adds value to a
portfolio. She also talks about the role of tax saving instruments in details explaining its
tenure, liquidity level, tax rate, frequency of investment and their features. She explained
tax planning in a step by step process, in which she says that a handpicked combination
of tax saving instruments not only reduces tax liability of the individual but effectively
contributes to meet various life goals. She ended up her article by saying that investments
to save taxes are one of the commonest and yet one of the least well planned investments.
She said that at the start of the career an individual usually starts his saving with tax
saving instruments but without any plan. Once he starts to take his financial decisions
randomly, it takes a long to come him back on right track. The duality of concerns, first
tax and second investment, prevents investors to perfectly understand what they actually
need. Smart planning with right tax saving instruments adds value to a portfolio. So take
a wiser approach and avoid last minute rush for tax saving.
Raghu Palat (2005)5 has written book for Indian salaried employee who while
safeguarding their employers‘ interest, often neglect his own. It is for him who resource
at times of inflation and he for to live with a steady decreasing purchasing power of the
rupees. This book makes aware the salaried person about the tax laws as it pertains to him
and exemptions, reliefs and deductions that are available under the Income Tax Act. It is
written with intent that the salaried employee gets full information about the income tax
laws as it relates to his salary income and tax planning measures for tax efficiency. it
contain all relevant information relating to personal income tax, salaried employee apart
from becoming aware of the rules and should also plan his income and expenses in such a
manner that he pays as little tax he has to. The book has written very lucid, free from
professional jargons with easy understand examples. It is for salaried employee to him
plans his affairs in such a manner that he is able to minimize the incidence of tax and
maximize his take home pay. The author as far as possible attempted to provide detail
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information various matter that are required for effective tax planning thereby salaried
employee minimize tax incidence and maximize his take home salary.
V. A. Avadhani (2008)6: Author has showed the importance of securities analysis
in the financial markets which are changing time to time as per economic and financial
scene. In the financial sector of 2001 to 2006 period was depressed market conditions for
security market then during 2005-06 was boom period for security market. Author has
explained this phase was good economic fundamentals of industries and companies with
inflows of huge foreign funds into financial markets. The economic and financial reforms
were occasionally slow down. Thus book has been incorporated the changes and 25
trends of financial market towards globalization, privatization. Reform influenced the
portfolio management.
V. K. Bhalla (2011)7 : Author has explained in this book about technique of
investments, vehicles who drives for investments, strategies for best investment planning,
implantation process for investment avenues and overseeing the optimal allocation of the
funds of an investors or an institutions with challenging investment environment. Book
has divided into six parts such as Investment Environment, Alternative Investment
Outlets for Funds, Security Analysis, Portfolio Analysis and Management, Financial
Derivatives and International Financial Flows. Under first part i.e. under investment
environment covered operations of the stock market, with its structure, regulatory
framework and financial development in India. Also examined the recent reforms
introduced in the capital market. In second part of alternative investment explained
various formulated objective ideas and philosophies with respective various types of
securities. Third part of book focused on stock market forecasting and the independence
of stock market. For taking investment decision, the role of market has focused on this
chapter. In third part of portfolio analysis and management explained the problems of
both theory and practice with related to portfolio management. In financial derivatives
has covered the every aspect of domestic and international capital and money market.
Last part that is International Financial Flows covered the growing global finance.
Preeti Singh (2013)8: Book titled ‗Investment Management‘ explained that in stock
market individuals have taking active participation. Individuals are giving preference to
systematic investment by taking knowledge of different kinds of investments. It is noticed
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A STUDY ON‘‘FINANCIAL PLANNING FOR SALARIED
EMPLOYEESAND STRATEGIES FOR TAX SAVINGS
by the Individuals that quick money trading will not give profitable results. Before
investment calculation of risk and return are important factors. Now a day, every income
earner is taking interest of investment of money. Investors like experienced people,
retired people, housewives and students are ready to take risk in stock market security.
This theory stated that no any investors can give continuously good returns or yield from
market so every investor should investigate pit falls before investing the money in
particular investment avenues. With prior understanding of risk and return of particular
investment, investors are taking decision whether specific investment satisfies the
expectations or not. This book has provided theories of fundamental, technical analysis
and efficient market theory which is beneficial to the investors for analyzing the
investment background and framework. It gave basic idea of managing portfolio through
cautious risk and return analysis. The CAPM model and Arbitrage Theory discussed for
26 pricing of assets. To analysis the portfolio and diversification of investment avenuesto
get the maximum return, Harry Markowitz and William Sharp theory are effective.
Research Articles / Papers Bandgar P. K. (2000) 9 : has undertaken this study

to investigate the existing pattern of financial instruments, investment preferences of
middle income class investors, their behavior and problems relating to investment in
financial instruments in India. The study used primary data which has been collected
through survey and analyzed it with average, skewness, Chi-square test, Fisher Irving test
to drawn statistical inferences. The study identified that nearly 16 percent of the
respondents were suffering from the tribulations while trading the securities. It is revealed
by the study that though the middle class investors were highly qualified, they lacking the
skill and knowledge about the investing. The study also identified the fact the middle
class investors moderately and regularly shifting from bank deposits to corporate
securities and massively shifted towards the traditional investments like LIC policies and
government securities.
Singh Avinash Kumar, (2006)10 has under taken a study to analyze the
investment pattern of the people. The Analysis in the study was done with survey data
collected from the investors in Bangalore city. With analysis of data, it was observed that
the investors in Bangalore have more awareness about various investment avenues and
Page 30

risk associated with these avenues than that of investors in Bhubaneswar. Investors of all
the age groups were preferred to invest in equity and except those who have in the age
group of above 50 years preferred to invest in insurance, fixed deposits and tax saving
schemes. Further it is found that, the investors who have preferred investments in equity
were following the stock market daily while those invested in mutual funds were
watching stock market weekly or fortnightly.
C Krishnamurthy (2007)11 has conducted a study to analyze the profile and

awareness of salaried class investors about various investment avenues. All the investors
are aware bank deposits followed by 81 percent investors known insurance products with
the range 13 investment avenues involved in the study. Almost in equal number of
respondents were known provident fund and public provident fund instruments, 63
percent of the investors are more familiar with postal savings and deposits, while 42
percent and 38.2 percent investors were aware about the investment in Gold and
Jewellery and investment in chit fund respectively.
2.2 RESERCH GAP
After observing number of review of literature concern to my project work ,-No body
face on financial planning for salaried employees and strategies for tax savings .hence it
think it is best area and fill up the gap in research .I choose above tittle for project work.
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CHATER NO. 3
METHODOLOGY OF STUDY
3.1 INTRODUCTION AND MEANING : Research may be defined as the systematic and
objective analysis and recording of controlobservation that may lead to generation principles or
theories resulting in prediction and possibly ultimate control of the events. Research means
careful, critical inquiry or examination in seeking facts or principles for ascertaining something.
Research is directed towards finding a solution of a problem.
Clifford Woody -―Research is the process which includes defining and redefining problems,
formulating hypothesis or suggested solution, collecting, organizing and evaluating data; making
deductions and reaching conclusions and at last carefully testing the conclusions to determine
whether they fir the formulating hypothesis.‘‘
Martyn Shuttleworth--"In the broadest sense of the word, the definition of research includes any
gathering of data, information and facts for the advancement of knowledge."
Creswell --"Research is a process of steps used to collect and analyze information to increase our
understanding of a topic or issue". It consists of three steps: Pose a question, collect data to
answer the question, and present an answer to the question.-
The Merriam-Webster Online Dictionary defines research in more detail as "a studious inquiry or
examination; especially :investigation or experimentation aimed at the discovery and
interpretation of facts, revision of accepted theories or laws in the light of new facts, or practical
application of such new or revised theories or laws".
Redman and Mory define research as a ―systematized effort to gain new knowledge‖. Page | 89
Research: Research in common parlance refers to ―a search for knowledge‖. One can also define
research as a scientific and systematic search for pertinent information on a specific topic. In
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fact, research is an art of scientific investigation. The advanced learner‟s dictionary of curre
English lays down the meaning of research as ―a careful investigation or inquiry especially
through search for new facts in any branch of knowledge‖.
3.1.1 Research Methodology

It refers to the overall approach to a problem which could be put into a practice in a research
process, from the theoretical underpinnings to the collection and analysis of data (Collis and
Hussey, 2003). It is a way to systematically solve the research problem. It may be understood as a
science of studying how research is done scientifically. To provide a proper representation a
comprehensive approach is to be adopted and put in action.
A researcher adopts sequential steps to understand the research problem, accordingly plans the
techniques and the methodology for the work undertaken. An understanding and clarity of the
statistical tools to be applied, the reasoning and relevancy behind the same is to be decided by the
researcher. Hence knowing the research methods or techniques is not sufficient but also the
methodology is equally important Therefore it is necessary for the researcher to design a
methodology suited to the research problem. In order to gain an understanding ofthe effect of the
research undertaken various methodologies can be applied which could be publication research,
interviews, surveys and other research techniques. It may be inclusive of both present and historical
information.
Methodology is the method adopted by the researcher for the collection of the data. The research
is conducted with the help of various methods of data collection which are dependent on the nature
and scope of research work. Research Methodology means various methods used by the
investigator to obtain the knowledge of information about the subject which may differ from person
to person, subject to subject. It gives guidelines as to how the data is to be collected and the
presentation of information. It must be collected with the help of some technique. Collection of
data is through primary and secondary sources.
Primary data is the data which is being collected by the investigator for the first time for a
specific purpose. Primary sources are original materials on which research is based. They are first
hand testimony or direct evidence concerning a topic under consideration. They present
information in its original form, neither interpreted nor condensed nor evaluated by other writers.
Page 33

Some of the common techniques used for collection of data through primary sources are: interview,
observation, questionnaires, longitudinal studies, life histories, action research, case studies, and
ethnographic research.
The secondary data is the data which have already been collected by someone else, used for
some purpose and stored. Government reports, Web information, Journal articles, Historical data
and information, Official statistics, Dissertations, Biography, Newspaper articles, Mass media
reports, Diaries, Encyclopedias, Monographs, Annual reports, Books and Previous research are
some examples of secondary sources.
3.1.2 Research Design

The study is about to know about the financial planning for salaried employees
and strategies for tax saving and find various avenues available for an individual
to invest and ways to achieve long term and short term financial goals through
financial planning. it intend to study the pattern in which individual allocates
his savings in various asset class. It describes the awareness of
investor about various alternatives available to them. It also aims at creating
awareness of financial planning.
Page 34

The data required for the study would be acquired through personal interview and
questioner and it was collected by means of cold calling (Cold calling is the process of
approaching prospective customers or clients, who were not expecting such an
interaction),and the research period was spread out in twenty days. For this purpose
researcher local area, where researcher could find enough educated office going people,
which will help us getting better understanding of how financial planning and strategies for
tax is done bythe salaried employees.
DATA COLLECTION TECHNIQUES AND TOOLS
For the purpose of data collection researcher took help of both primary data and
secondary data collection method.
Primary data: are those, which are collected afresh and for the first time, and thus
happen to be original in character. This method was used by means of Personal Interview,
wherein researcher had face-to-face contact with the persons. The reason behind choosing
this method was to have detailed information on the subject. It also provided opportunity
for selecting the sample for interview. The interview conducted were a mixture of
structured and unstructured interviews. Scope was kept open for detailed discussion at the
discretion of the interviewee. Where there was a time crunch a structured procedure was
followed wherein predetermined questions were put forward.
The other method was adopted in primary data collection was Questionnaires. This was
used to assist a more structured form of information. The information thus obtained was
standard and in a more unbiased form. It assisted to collect data from a large sample size.
The pattern adopted was a general form of questionnaire. Questions are in dichotomous
(yes or no answers), multiple choice and open ended question. Open ended questions are
Page 35

restricted due to the difficulty faced in analyzing. The questioner was kept short and to the
point.
Secondary data: means data that are already available i.e., the data which is already
collected and analyzed byother. To get a better understanding and to have a larger exposure
on the subject this method was used. Methods use was data available on World Wide Web,
articles in newspapers, financial industry reports, Financial Planning board ofIndia reports
and article, reports published by Government of India, etc. Support was alsoprovided by
the project guide by giving inputs from his years of experience.
3.1.3 SAMPLE DESIGN
Sample design was based on principles of sample survey. Sample was decided on socio
demographic factors such as income and age group. The numbers of respondent were
restricted to 50 due to lack of time. Sampling unit was geographical unit where the research
was carried in Nearby local area. Source list for respondents was not predetermined it was
on random basis. The various parameters on which the research wasto be conducted
are:
1 .Awareness of financial Planning
2.Alignment of life goals and financial
goals
3. Investment distribution in various assets
classes
4. Decision influencing investment
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CHAPTER.4
PROFILE OF THE STUDY
Most organizations provide a service of some sort or other. For organizations such as
airlines, trains, universities, car rentals, etc., service represents a major part of what they
have to offer. They are known as service organizations. Others who are in manufacture of
products service is of lesser importance albeit significant importance.
There are particular problems in services industries namely – tangibility, inseparability,

variability, and perish ability. Services have to be contended with uncertainties over
customer involvement and what they expect.
A service is an activity or series of activities of more or less intangible nature that

normally, but not necessarily, take place in interactions between the customer and the
service employee and/or physical resources or goods and/or systems of the service
provider, which are provided as solutions to customer problems. A service is an act or
performance offered by one party to another. Although the process may be tied to a
physical product, the performance is essentially intangible and does not lead to ownership
of any of the factors of production. Put in most simple terms services are deeds, processes
and performances.
Services include all economic activities whose output is not a physical product or
construction is generally consumed at Talking to Phone Credit/Debit cards Riding a bus
ATM machines Hair cut Medical examination College Libraries Canteen Hostel
Bookstore Post office Internet access Bank Food Entertainment Introduction to Services
Marketing 3 the time it is produced and provides added value in forms that are essentially
intangible concerns of its first purchases. It encompasses a wide range of industries. The
best way to define services is to distinguish between core and peripheral elements of the
services. The core services offering is the necessary outputs of an organization which are
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Intended to provide the intangible benefits customers are looking for. Peripheral services
are those which are either indispensable for the execution of the core services or available
only to improve the overall quality of the service bundle.
Services include all economic activities whose output is not physical product or
construction, is generally consumed at the time it is produced and provides added value
in forms that are essentially intangible concerns of its first purchaser, e.g., are
transportation and public utilities, hotels, personal services, etc.
―According to Kotler, Armstrong Saunders and Wong (1999) services are activity or
benefit that one party can offer to another which is essentially intangible and does not
result in the ownership of anything. Its production may or may not be tied to a physical
product.‖
Services are:
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Deeds, processes and performances – examples might include transportation, utilities, or

media;
Different to goods or products – they have different, defining

characteristics;
Often linked to goods or products – to varying degrees
. Services fall into three broad categories.
(a) Pure standalone services like physiotherapy, counseling and consultancy
(b) A combination of services and goods like restaurant, retailing, etc.
(c) Service as a component of goods in the total marketing-mix, like after- sales services,
services and repair of home appliances, etc.
Goods
1. Goods are tangible in nature i.e. they can be seen and touched.
2. There is a time gap between production and consumption of goods as they

are produced first and consumed later.
3. They can be stored and utilized when required.
4. They can be transferred from one place to another
Services
1. Services are non-tangible in nature i.e. they can neither be seen nor be touched.
2. There is no time gap between the production and consumption of services. That iswhy
they are produced and consumed simultaneously.
3. Services cannot be stored.
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4. Transfer of service is not possible.
ROLE OF SERVICES IN MODERN ECONOMY

Service Sector in India The service sector has contributed around 52% of India‘s GDP in
2014-15. In value a term the sector has contributed US $ 783 bill to the 2014-15 GDP (at
constant price) and is growing at compound annual growth rate (CAGR) of 9% which is
faster than the overall GDP CAGR of 6.2% in the past four years. The service sector is
not only the dominant sector in India‘s GDP, but has also attracted significant foreign
investment flows, Contributed significantly to exports as well as provided largescale
employment.
India‘s service sector covers a wide variety of activities such as trade, hotel and 4
Service Marketing restaurants, transport, storage and communication, financing,
insurance, real estate, business services, community, social and personal service, and
construction services. According to the Department of Industrial Policy and Promotion
(DIPP), the Indian services sector has attracted the highest amount of FDI equity inflows
in the period April 2000 – September 2015, amounting to about US $ 45.38 bill which is
Page 40

about 17% of the total foreign inflows. Example: Amazon, the world‘s largest online
retailer plans to invest ` 31,700 Cr (US $ 40)
FACTORS CONTRIBUTING GROWTH OF SERVICE SECTOR IN

INDIA
Let us know see what are the factors contributing to the growth of the Service sector in
India.
(a) Government Policies:
Government has taken lot of initiatives to promote the service sector in India.
Especially after the economic reforms of 1991, we have seen some significant steps
taken by the government to promote the service sector in India. Government
regulations and privatization has given a boost to the service sector in India.
(b) Social Changes:
the last 2 decades in India has seen a radical change in the behaviour and expectations
of the consumers. The expectations of the Indian consumers are an ever high. We have
seen the ever growing and highest number of affluent people in India in the new
millennium. Now consumer are not only purchasing the product but now they lookfor
an experience
(c) Business Trends:
The trend of during business is also changing rapidly. The manufactures are now
adding value through services. The corporate has initiated the total quality revolution.
Now the companies aim at providing better quality of services in each and everytough
point to their audience. The growth in the franchising business add yet another
dimension to improve and standardize the services
(d) Advances in Information Technology:
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The growth of Internet has immensely benefitted the service firms to improve the service.
The convergence of computers and telecommunications has proved to be a boon for the
service firms and customers. It becomes easier and faster for the service firms to provide
quality services to the customers.
(e) Internationalization:
After opening up of the boundary through globalization, we have been some service
excellence firm to come to India, Companies like Dell, Samsung, Accenture, IBM, etc are
working on a transnational basis and assimilate the best practices across globe and raise
the level of service provided to the customers. International mergers and acquisitions are
yet another contributing factor for the growth of the service sector.
DISTINCTIVE CHARACTERISTICS OF SERVICE

Service, marketing academics and practitioners argued that services required special
treatment as a result of their distinctive characteristic; intangibility, inseparability,
heterogeneity and perish ability. These characteristics were outlined during the ―crawling
out‖ stage. Intangibility refers to the fact that a large component of many service offers is
immaterial or intangible and cannot be presented in a concrete manner to consumers prior
to purchase. For example, a customer cannot touch the aerobics class prior to attending the
class neither can assess the quality without attending the class. Inseparability refers to the
notion that, in much service operation the production and consumption cannot be separated,
that is, a service is to great extent consumed at the same time as it is produced.
.
A detailed insight of the distinctive characteristics of services is provided below:
1. Intangibility
2. Inseparability
3. Variability
4. Perishability
5. Simultaneity
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6. Heterogeneity
7. Lack of ownership Intangibility:
Services cannot generally be seen, tasted, felt, smelt, heard before being bought. The
potential customer‘s is unable to perceive the service before the service delivery. Service
is totally intangible and cannot be seen what is done.
Inseparability:
There is marked difference between physical goods and services in terms of thesequence
of production and consumption.
SEQUENCE OF PRODUCTION AND CONSUMPTION
Physical Goods Services
Production Sale
Storage Produced and consumed at the same time Sale Consumption
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Variability:
An unavoidable consequence of simultaneous production and consumption is variability

in performance of a service. The quality of a service may vary depending upon who
provides it as well when and how it is provided
Perishability:
Services cannot be stormed for later sale or use
Heterogeneity:
To handle a service sector even though standard sectors may be used, e.g., to book in the
cab service, to quote for insurance in one‘s life, etc., each unit may differ from each other
unit. Franchise operations ensure to bring a standardization but 0ultimately it is difficult
to ensure the same level of output in terms of quality.
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INVESTMENT AVENUES
LIFE INSURANCE
Life Insurance is a policy provided by an insurance company, according to which in

exchange for premium payments, the insurer is obliged to pay a certain sum (a lump sum
or portions of smaller sums) to the beneficiary in the event of insured death. Life Insurance
is literally a matter of life and death, since purchasing Life Insurance is basically planning
for after the death. When healthy and well, people from all walks of life prefer not to think
that one day they would pass away. However planning for after the death may be as
important as planning other significant actions in life. Bypaying a very small sum of money
a person can safeguard himself and his family financially from an unfortunate event. Life
insurance provides economic support to the dependent in family and in some cases can
even create an estate for heirs.
Factor to be considered before buying an Life Insurance Policy
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Before buying a Life Insurance Policy it is always important to find out why do I want to
buy Insurance and for what purpose. How much Life Insurance Cover do I need, comes
second. Few factors which need to be considered are:
Age and number of dependents.

Annual Income and Annual Expenses.
Outstanding Liabilities like Home Loan, Car Loan etc. Investments and Savings.
Life Style Expenses. Money require in Future.
As a rule of thumb when buying first Life Insurance Policy it is suggested that person
should have Insurance Cover of at least 5 to 10 times of their annual income.
There are many different scientific methods available to access the total Life Insurance
Cover. The need for Insurance changes and increases with age depending on the
combination of factors stated above. It is advised that one should review his Insurance
needs every 3 years. Every individual is different and his needs are different and one set of
rules for Insurance cannot be applied to all. Life Insurance is a very important and integral
part of Financial Planning for the Future.
A wide range of insurance products are available in the market. Each insurance product is
different from the others having some unique attributes which are devised to meet specific
needs of different individuals. However, with such a wide range of products available, it
becomes very difficult for an individual to choose an insurance plan that is best suited to
meet his requirements. Based on the financial plans and needs and one's affordability to
pay premium, an individual can choose any of the plans available in the market. Some of
those plans are listed in the table below:
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a. Term Insurance
Term Insurance, as the name implies, is for a specific period, and has the lowest possible
premium among all insurance plans. Person can select the length of the term for which they
would like coverage, up to 35 years. Payments are fixed and do not increase during the
term period. In case of an untimely death, dependents will receive the benefit amount
specified in the term life insurance agreement. Term policies, cover only the risk during
the selected term period. If the policyholder survives the term, the risk cover comes to an
end. Person can renew most Term Insurance policies for one or more terms even if their
health condition has changed. Each time the policy is renewed for a new term, premiums
may climb higher. When a policy holder survives the policy term person is not entitled to
any payment; the insurance company keeps the entire premium paid during the policy
period. So, there is no element of savings or investment in such a policy. It is a 100 percent
risk cover. It simply means that a person pays a certain premium to protect his family
against his sudden death. He forfeits the amount if he outlives the period ofthe policy. This
explains why the Term Insurance Policy comes at the lowest cost.
No surrender, loan or paid-up values are granted under term life policies because reserves
are not accumulated. If the premium is not paid within the grace period, the policy lapses
without acquiring any paid-up value. A lapsed policy can be revived during the lifetime of
the life assured but before the expiry of the period of two years from the due date of the
first unpaid premium on the usual terms. Accident and / or Disability benefits are not
granted on policies under the Term plan.
b. Endowment Insurance
Combining risk cover with financial savings, endowment policies is the most popular
policies in the world of life insurance. Endowment insurance are policies that cover the
risk for a specified period and at the end the sum assured is paid back to the policyholder
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along with all the bonus accumulated during the term of the policy. The Endowment
insurance policies work in two ways, one they provide life insurance cover and on the other
hand as a vehicle for saving. If the insured dies during the tenure of the policy, the
insurance firm has to pay the sum assured just as any other pure risk cover. A pure
endowment policy is also a form of financial saving, whereby if the person covered
remains alive beyond the tenure of the policy; he gets back the sum assured with some
other investment benefits. In addition to the basic policy, insurers offer various benefits
such as double endowment and marriage/ education endowment plans. The cost of such a
policy is slightly higher but worth its value. They are more expensive than Term policies
and Whole life policies. Normally the bonus in calculated on the sum insured but the only
drawback is that the bonuses are not compounded. Endowment insurance plans are best
for people who do not have a saving and an investing habit on a regular basis. Endowment
Insurance Plans can be bought for a shorter duration period. Endowment Insurance is ideal
if person has a short career path, and hope to enjoy the benefits of the plan (the original
sum and the accumulated bonus) during life time. Endowment plans are especially useful
when person retire; by buying an annuity policy with the sum received ,it generates a
monthly pension for the rest of the life.
c. Whole Life Insurance
Whole Life Policies have no fixed end date for the policy; only the death benefit exists and
is paid to the named beneficiary. In whole life insurance plan the risk is covered for the
entire life of the policyholder, irrespective of when it happens that is the reason they are
called whole life policies. The policy holder is not entitled to any money during his or her
own lifetime, i.e., there is no survival benefit. This plan is ideal in the case of leaving behind
an estate. Primary advantages of Whole Life Insurance are guaranteed death benefits,
guaranteed cash values, and fixed and known annual premiums.
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This policy, however, fails to address the additional needs of the insured during his post-
retirement years. It doesn't take into account a person's increasing needs either. While the
insured buys the policy at a young age, his requirements increase over time. By the time he
dies, the value of the sum assured is too low to meet his family's needs. As a result of these
drawbacks, insurance firms now offer either a modified Whole Life Policy or combine in
with another type of policy.
d. Money-Back Plan
Money back policies are quite similar to endowment insurance plans where the survival
benefits are payable only at the end of the term period, plus the added benefit of money
back policies is that they provide for periodic payments of partial survival benefits during
the term of the policy so long as the policy holder is alive. An additional and important
feature of money back policies is that in the event of death at any time during the term of
the policy, the death claim comprises full sum assured without deducting any of the
survival benefit amounts. The insurance premium of Money Back Policies is higher than
Term Insurance Policy because in Term Insurance there is no survival benefit after the
expiry of the insurance period. Money Back Policies are good for people who want to
insure their life and also want to some return from their investment's at a later date.
These policies are structured to provide sums required as anticipated expenses (marriage,
education, etc) over a stipulated period of time. With inflation becoming a big issue,
companies have realized that sometimes the money value of the policy is eroded. That is
why with-profit policies are also being introduced to offset some of the losses incurred on
account of inflation.
Money-Back plans are ideal for those who are looking for a product that provides both -
insurance cover and savings. It creates a long-term savings opportunity with a reasonable
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rate of return, especially since the payout is considered exempt from tax except under
specified situations.
e. ULIP
Unit linked insurance plan (ULIP) is life insurance solution that provides for the benefits
of risk protection and flexibility in investment. The investment is denoted as units and is
represented by the value that it has attained called as Net Asset Value (NAV). The policy
value at anytime varies according to the value of the underlying assets at the time.
In a ULIP, the invested amount of the premiums after deducting for all the charges and
premium for risk cover under all policies in a particular fund as chosen by the policy
holders are pooled together to form a Unit fund. A Unit is the component of the Fund in a
Unit Linked Insurance Policy
The returns in a ULIP depend upon the performance of the fund in the capital market.
ULIP investors have the option of investing across various schemes, i.e, diversified equity
funds, balanced funds, debt funds etc. It is important to remember that in a ULIP, the
investment risk is generally borne by theinvestor.
In a ULIP, investors have the choice of investing in a lump sum (single premium) or making
premium payments on an annual, half-yearly, quarterly or monthly basis. Investors also
have the flexibility to alter the premium amounts during the policy's tenure. For example,
if an individual has surplus funds, he can enhance the contribution in ULIP. Conversely
an individual faced with a liquidity crunch has the option of paying a lower amount (the
difference being adjusted in the accumulated value of his ULIP). ULIP investors can shift
their investments across various plans/asset classes (diversified equity funds, balanced
funds, debt funds) either at a nominal or no cost.
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Expenses Charged in a ULIP
Premium Allocation Charge: A percentage of the premium is appropriated towards charges

initial and renewal expenses apart from commission expenses before allocating the units
under the policy.
Mortality Charges: These are charges for the cost of insurance coverage and depend on
number of factors such as age, amount of coverage, state of health etc.
Fund Management Fees: Fees levied for management of the fund and is deducted before
arriving at the NAV.
Administration Charges: This is the charge for administration of the plan and is levied by
cancellation of units.
Surrender Charges: Deducted for premature partial or full encashment of units.
Fund Switching Charge: Usually a limited number of fund switches are allowed each year
without charge, with subsequent switches, subject to a charge.
Service Tax Deductions: Service tax is deducted from the risk portion of the premium.
f. Annuities and Pension
Insurance companies offer two kinds of pension plans - endowment and unit linked.
Endowment plans invest in fixed income products, so the rates of return are very low.
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A pension plan or an annuity is an investment that is made either in a single lump sum
payment or through installments paid over a certain number of years, in return for a
specific sum that is received every year, every half-year or every month, either for life or
for a fixed number of years. Annuities differ from all the other forms of life insurance in
that an annuity does not provide any life insurance cover but, instead, offers a guaranteed
income either for life or a certain period. Typically annuities are bought to generate income
during one's retired life, which is why they are also called pension plans. By buying an
annuity or a pension plan the annuitant receives guaranteed income throughout his life.
He also receives lump sum benefits for the annuitant's estate in addition to the payments
during the annuitant's lifetime. Pension plans are perfect investment instrument for a
person whoafter retiring from service has received a large sum as superannuation benefit.
He can invest the proceeds in a pension plan as it is safest way of secured income for the
rest of his life. One can pay for a pension plan either through an annuity or through
installments that are annual in most cases.
Types of Annuities / Pension Plans
Life Annuity: Guarantees a specified amount of income for lifetime. After death, the
amount invested is refunded to nominee.
Guaranteed Period Annuity: Provides specified income for lifetime and guarantees that
nominee will receive payments for a certain minimum number of years, even if person
should die earlier. In case person lives longer than the specified minimum number of years,
they are entitled to receive annuity payments for lifetime.
Annuity Certain: Under this plan, the stipulated annuity is paid for a fixed number of years.
The annuity payments stop at the end of that period, irrespective of how much longer
person may live.
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Deferred Annuities: The premiums paid into such plans may be deducted from one‘s
taxable income at the time of payment. In addition, the interest earned on the annuities is
not taxed immediately. But the proceeds of the annuity will be taxable when they are paid
to person.
1. EQUITIES
Equities are a type of security that represents the ownership in a company. Equities are
traded (bought and sold) in stock markets. Alternatively, they can be purchased via the
Initial Public Offering (IPO) route, i.e. directly from the company. Investing in equities is
a good long-term investment option as the returns on equities over a long time horizon are
generally higher than most other investment avenues. However, along with the possibility
of greater returns comes greater risk.
Share Price Determination
At any given moment, equity‘s price is strictly a result of supply and demand. The supply
is the number of shares offered for sale at any one moment. The demand is the number of
shares investors wish to buy at exactly that same time. The price of the stock moves in
order to achieve and maintain equilibrium.
When prospective buyers outnumber sellers, the price rises. Eventually, sellers attracted
to the high selling price enter the market and/or buyers leave, achieving equilibrium
between buyers and sellers. When sellers outnumber buyers, the price falls. Eventually
buyers enter and/or sellers leave, again achieving equilibrium.
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Thus, the value of a share of a company at any given moment is determined by all investors
voting with their money. If more investors want a stock and are willing to pay more, the
price will go up. If more investors are selling a stock and there aren't enough buyers, the
price will go down.
Of course, that does not explain how people decide the maximum price at which they are
willing to buy or the minimum at which they are willing to sell. In professional investment
circles the efficient market hypothesis (EMH) continues to be popular, although this theory
is widely discredited in academic and professional circles
.
Briefly, EMH says that investing is overall (weighted by a Stdev) rational; that the price
of a stock at any given moment represents a rational evaluation of the known information
that might bear on the future value of the company; and that share prices of equities are
priced efficiently, which is to say that they represent accurately the expected value of the
stock, as best it can be known at a given moment. In other words, prices are the result of
discounting expected future cash flows.
Another theory of share price determination comes from the field of Behavioral Finance.
According to Behavioral Finance, humans often make irrational decisions— particularly,
related to the buying and selling of securities—based upon fears and misperceptions of
outcomes. The irrational trading of securities can often create securities prices which vary
formational, fundamental price valuations.
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Stock market investments= Economics + Mathematics/Statistics +

Psychology
Economics Deals with fundamentals of company. Statistics deals with study of companies‘
financial statement and it past performance in stock market. Psychology dealswith market
sentiments (Herd mentality) which are most crucial as it can lead in wrong direction.
Invest in Blue Chip Stocks
Stock of a well-established and financially sound company that has demonstrated its ability
to pay dividends in both good and bad times and is a leading player in its. These stocks are
usually less risky than other stocks.
Features of Blue ChipStocks
There are no specific criteria for blue chip stocks. The most common characteristics of
such stocks include:
I. Revenues: Companies with revenues higher than that generated by industrypeers.

II. Earnings: Companies that have been generating healthy earnings on a consistent
basis.
III. Dividends: Companies that pay regular dividends to common stockholders, even
if their performance has been unsatisfactory in a particular period. Moreover, the
dividend payout is raised at regularintervals.
IV. Balance Sheet: The balance sheets are robust and their debt liabilities are not
extensive.
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V. Credit Rating: Their credit ratings in the bond and unsecured debt markets are
high.
VI. Size: The market capitalization of these companies is higher than that of other
companies in the same industry.
VII. Product Portfolio: They have extensive and diversified product lines. They also
have a wide global presence.
VIII. Competition: They are cost efficient, with high distribution control and excellent
franchise value, all of which contribute towards their competitive advantage.
MUTUAL FUNDS
A Mutual Fund allows a group of people to pool their money together and have it
professionally managed, in keeping with a predetermined investment objective. This
investment avenue is popular because of its cost-efficiency, risk-diversification,
professional management and sound regulation. Person can invest as little as Rs. 1,000 per
month in a Mutual Fund. There are various general and thematic Mutual Funds to choose
from and the risk and return possibilities vary accordingly.
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned through
these investments and the capital appreciation realized are shared by its unit holders in
proportion to the number of units owned bythem. Thus a Mutual Fund is the most suitable
investment for the common man as it offers an opportunity to invest in a diversified,
professionally managed basket of securities at a relatively low cost. The flow chart below
describes broadly the working of a mutual fund:
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Types of Mutual Funds Scheme in India
Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial
position, risk tolerance and return expectations etc. The table below gives an overview
into the existing types of schemes in the Industry.
By Structure
o Open - Ended Schemes
o Close - Ended Schemes
By Investment Objective
o Growth Schemes
o Income Schemes
o Balanced Schemes
o Money Market Schemes
Other Schemes
o Tax Saving Schemes
o Special Schemes
o Index Schemes
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o Sector Specific Schemes
Structural Description of Mutual Fund
Most mutual funds are open-end. The reason why these funds are called "open-end" is
because there is no limit to the number of new shares that they can issue. New and existing
shareholders may add as much money to the fund as they want and the fund will simply
issue new shares to them. Open-end funds also redeem, or buy back, shares from
shareholders. In order to determine the value of a share in an open-end fund at any time, a
number called the Net Asset Value is used. Investor can purchase shares in open-end
mutual funds from the mutual fund itself or one of its agents; they are not traded on
exchanges.
Closed-end funds behave more like stock than open-end funds; that is to say, closed-end
funds issue a fixed number of shares to the public in an initial public offering, after which
time shares in the fund are bought and sold on a stock exchange. Unlike open-end funds,
closed-end funds are not obligated to issue new shares or redeem outstanding shares. The
price of a share in a closed-end fund is determined entirely by market demand, so shares
can either trade below their net asset value ("at a discount") or above it ("at a premium").
Since one must take into consideration not only the fund's net asset value but also the
discount or premium at which the fund is trading, closed-end funds are considered to be
more suitable for experienced investors. Investor can purchase shares in a closed-end fund
through a broker, just as one would purchase a share of stock.
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BROAD MUTUAL FUND TYPE / CLASSIFICATION OF MUTUAL FUND
EQUITY FUNDS
Equity funds are considered to be the more risky funds as compared to other fund types,
but theyalso provide higher returns than other funds. It is advisable that an investor looking
to invest in an equity fund should invest for long term i.e. for 3 years or more. There are
different types of equity funds each falling into different risk bracket. In the order of
decreasing risk level, there are following types of equity funds:
Aggressive Growth Funds - In Aggressive Growth Funds, fund managers aspire for
maximum capital appreciation and invest in less researched shares of speculative nature.
Because of these speculative investments Aggressive Growth Funds become more volatile
and thus, are prone to higher risk than other equity funds.
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Growth Funds - Growth Funds also invest for capital appreciation (with time horizon
of 3 to 5 years) but theyare different from Aggressive Growth Funds in the sense that they
invest in companies that are expected to outperform the market in the future. Without
entirely adopting speculative strategies, Growth Funds invest in those companies that are
expected to post above average earnings in the future.
Speciality Funds - Specialty Funds have stated criteria for investments and their
portfolio comprises of only those companies that meet their criteria. Criteria for some
speciality funds could be to invest/not to invest in particular regions/companies. Speciality
funds are concentrated and thus, are comparatively riskier than diversified funds.. There
are following types of speciality funds:
Sector Funds: Equity funds that invest in a particular sector/industry of the market are
known as Sector Funds. The exposure of these funds is limited to a particular sector (say
Information Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer
Goods) which is why they are more riskythan equity funds that invest in multiple sectors.
Foreign Securities Funds: Foreign Securities Equity Funds have the option to invest
in one or more foreign companies. Foreign securities funds achieve international
diversification and hence they are less risky than sector funds. However, foreign securities
funds are exposed to foreign exchange rate risk and countryrisk.
Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower market
capitalization than large capitalization companies are called Mid-Cap or Small- Cap Funds.
Market capitalization of Mid-Cap companies is less than that of big, blue chip companies
(less than Rs. 2500 crores but more than Rs. 500 crores) and Small-Cap companies have
market capitalization of less than Rs. 500 crores. Market Capitalization of a company can
be calculated by multiplying the market price of the company's share
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bythe total number of its outstanding shares in the market. The shares of Mid-Cap or Small-
Cap Companies are not as liquid as of Large-Cap Companies which gives rise to volatility
in share prices of these companies and consequently, investment gets risky.
Certificate of Deposits
Certificate of deposit was introduced in India in 1991. It is a scheme of raising funds by

commercial banks, except rural banks and is a negotiable receipt of funds. Due to their
negotiable nature, they are also called Negotiable Certificate of Deposit (NCD). It may be
in a registered form or a bearer form. The later is more popular as it can be transacted more
readily in secondary markets. Unlike Treasury bills, this carries an explicit rate of interest.
Subscribers to the Certificate of Deposits are Individuals, Corporations, Companies, Trusts,
Funds and Associations etc.
The conventional deposits though have a fixed maturity, the depositors can withdraw
them prematurely, where as in case of Certificate of Deposits the investors have to
wait till they mature. Though interest on certificate of deposits is taxed, it is still a
popular form of short-term investments for companies due to followingreasons:
These certificates are fairly liquid.

They are generally risk free.
They offer a higher yield as compared to conventional deposits.
PUBLIC PROVIDENT FUND (PPF)

PPF is considered safe investment avenue. The current interest rate on PPF is 8% per
annum. Again like EPF the rate of interest is not fixed. The government modifies the same
from time to time. The best part of PPF is that the interest thereon is exempt from tax
under section 10(11) of the Income Tax Act. Tax deduction can be claimed on
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contribution made by an individual into his own PPF account or into the PPF account of
his spouse or children.
PPF account can be opened in a nationalized bank or a post office. It is a

15-year account.
The entire amount including accumulated interest can be withdrawn after
15 years.
Partial withdrawals (which are also tax free) are allowed from the 7th year. The minimum
investment amount is Rs 500 per financial year and the maximum is Rs 70,000 per financial
year. The amount of investment one can make may vary every year giving person a lot of
flexibility in planning their investments.
Many may not like to invest in PPF due to its very long tenure (15 years). However, one
may open an account and contribute only small sums initially; after all minimum annual
contribution is just Rs 500. In later years, contributions can be increased.
REAL ESTATE INVESTMENT

Real Estate Investment is now treated as a major case of capital budgeting by using state-
of-the-art investment analysis which incorporates the future stream of income it may
generate and the associated risk adjustments. It has been the highlight of the investment
literature since the 1970‘s when investment theorists extended techniques such as
probability, time value of money and utility into its analysis.
Real estate is basically defined as immovable property such as land and everything
permanently attached to it like buildings. Real property as opposed to personal ormovable
property is characterized by the right to transfer the title to the land whereas title to
personal property can be retained. The investment in real estate essentially depends on the
risks associated with it, that is to say, even if the venture succeeds when the future stream
of income will accrue to the investor and the alternative investment opportunities. Real
estate investment can be attractive if viewed as a business opportunity; it can
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Generate rental income, using it as collateral to secure a loan for a business venture, to
offset otherwise taxable income through cash savings on tax-deductible interest rate losses,
or simply from the profits garnered from its resale. Notable, in this context is the gains
reaped by real estate speculators who trade in real estate futures (by buying and selling
purchase options).
Common examples of real estate investment are individuals owning multiple pieces of real
estate‘s one of which is his primary residence and others are occupied by tenants from
where the rental income accrues. Real estate investment is also associated with appreciation
in the value of property thereby having the potential for capital gains. Tax implications
differ for real estate investment and residential real estates. Real estate investment is long
term in nature and investment professionals routinely maintain that one‘s investment
portfolio should have at least 5%- 20% invested in realestate
GOLD
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The love for gold in India is legendary. There has always been a good demand for gold in
India making it the largest consumer of gold in the world. The consumption of gold is
mostly in form of jewellery. But as investment an investors generally buy gold as a hedge
or safe haven against any economic, political, social or currency-based crises. These crises
include investment market declines, inflation, war and social unrest.
Gold can be bought in various forms, one can either buy it in the form of physical gold --
bars, biscuits and or coins or even in a dematerialised form. Gold jewellery is not a good
investment as it is not as liquid as bars or gold fund. The disadvantage is that a huge amount
is to be paid as making charges or design charges which is discounted while selling it. The
second disadvantage is most jewellers do not give cash in lieu of gold. Instead they allow
to exchange it for gold jewellery or in a bar or coin form.
Gold Exchange-Traded Fund or Gold ETF is the new investment option of recent origin.
This open-ended mutual fund collects money from the investors to invest in standard gold
bullion. Instead of physical holding the gold, the investors will be assigned units of the
gold ETF. Gold ETF are listed in the stock exchanges of their respective countries. Gold
ETFs give the same advantages of holding gold in the physical form without the hassles
associated with keeping gold in physical form. With gold ETFs, person need not worry
about the safe storage, liquidity and purity of physical gold. The fund house that issues the
gold ETF takes over the responsibility of storage and insurance of this gold.
Since gold ETFs are registered with stock exchanges, they confirm with the norms and
regulations of the regulating authorities. The transparency of operation of these funds
ensures that the quality of gold that the fund is investing in confirms to global standards
of purity. There is complete transparency in the Net Asset Value or NAV of the funds and
the market prices at which they are traded. The ease of investing in small denominations
in Gold ETFs makes it easy for retail investors to participate in the schemes. By investing
in gold ETFs, one can accumulate a sizeable amount of gold over
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a long period of time. Retail investors could invest even in one unit of the fund, which is
equivalent to one or ½ gram of gold, every month.
Gold ETFs are also tax efficient unlike physical gold. While physical gold is considered a
long-term investment, only if it is hold for three years, gold ETFs acquire this status after
one year. In short, selling gold within three years of purchase will attract capital gains tax.
Moreover , holding large quantities of physical gold can attract wealth tax, while gold in
demat form does not. This apart, the spread between the buy and sell prices pertaining to
gold ETFs is less than that of physical gold.
Gold Price is determined by demand and supply equilibrium. It has an effect of global
demand on its pricing. The demand for gold has been steadily rising, while the supply has
remained relatively inelastic, leading to a rise in the prices. Gold prices are also inversely
related to dollar price. Though
Gold is a safe asset. Especially during recessionary economic situations, when equity prices
plummet, price of gold remains stable even in an unstable economic environment. Gold is
always a good hedge against inflation and is therefore a safe investment option. Including
gold in investment portfolio provides the proper diversification of assets. A good portfolio
is one where prices of all assets do not move up and down at the same time and at the same
rate. Although, the long-term return from gold might not be as huge as return from the
equity market, but nonetheless, they are the safest custodian of hard- earned money.
INVESTMENT IN BANK
Bank investment can be said as the most common or primary investment avenues. Not
many people recognize this sector as an investment avenue. Banks are the most common
and many a times people first investment experience. Few investments in bank can be in
following form:
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1. Fixed Deposit
A fixed deposit is meant for those investors who want to deposit a lump sum of money for
a fixed period; say for a minimum period of 15 days to five years and above, thereby
earning a higher rate of interest in return. Investor gets a lump sum (principal + interest)
at the maturity of thedeposit.
Bank fixed deposits are one of the most common savings scheme open to an average
investor. Fixed deposits also give a higher rate of interest than a savings bank account. The
facilities vary from bank to bank. Some of the facilities offered by banks are overdraft
(loan) facility on the amount deposited, premature withdrawal before maturity period
(which involves a loss of interest) etc. Bank deposits are fairly safer because banksare
subject to control of the Reserve Bank of India.
The banks are free to offer varying interests in fixed deposits of different
maturities.
Interest is compounded once a quarter, leading to a somewhat higher effective
rate.
The minimum deposit amount varies with each bank. It can range from as low as Rs. 100
to an unlimited amount with some banks. Deposits can be made in multiples of Rs. 100/-.
The thing to consider before investing in an FD is the rate of interest and the inflation rate.
A high inflation rate can simply chip away real returns. The rate of interest for Bank Fixed
Deposits varies between 4 and 11 per cent, depending on the maturity period (duration) of
the FD and the amount invested. Interest rate also varies between each bank.A Bank FD
does not provide regular interest income, but a lump-sum amount on its maturity. Some
banks have facility to pay interest every quarter or every month, but the interest paid may
be at a discounted rate in case of monthly interest.
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With effect from A.Y. 1998-99, investment on bank deposits, along with other specified
incomes, is exempt from income tax up to a limit of Rs.12, 000/- under Section 80L. Also,
from A.Y. 1993-94, bank deposits are totally exempt from wealth tax. The 1995 Finance
Bill Proposals introduced tax deduction at source (TDS) on fixed deposits on interest
incomes of Rs.5000/- and above per annum.
2. Recurring Deposit
The Recurring deposit in Bank is meant for someone who wants to invest a specific sum
of money on a monthly basis for a fixed rate of return. At the end, person will get the
principal sum as well as the interest earned during that period. The scheme, a systematic
way for long term savings, is one of the best investment option for the low income groups.
The minimum investment of Recurring Deposit varies from bank to bank but usually it
begins from Rs 100/-. There is no upper limit in investing. The rate of interest varies
between 7 and 11 percent depending on the maturity period and amount invested. The
interest is calculated quarterly or as specified by the bank. The period of maturity ranging
from 6 months to 10 years.
The deposit shall be paid as monthly installments and each subsequent monthly installment
shall be made before the end of the calendar month and shall be equal to the first deposit.
Since a recurring deposit offers a fixed rate of return, it cannot guard against inflation if it
is more than the rate of return offered by the bank. Worse, lower the gap between the
interest rate on a recurring deposit and inflation, lower real rate of return. Premature
withdrawal is also possible but it demands a loss of interest.
The rate of interest varies between 7 and 11 percent depending on the maturity period and
amount invested. The interest is calculated quarterly or as specified by the bank. Some
Page 67

Nationalized banks are giving more facilities to their customer, State Bank of India give
Free Roaming Recurring Deposit facility to their customers. They can transfer their account
to any branch of SBI free. Tax benefit on the interest earned on Recurring Deposit up to
Rs 12000 Tax Deductible at source if the interest paid on deposit exceeds Rs 5000/- per
customer, per year, per branch.
3. Savings Bank Account
A Saving Bank account (SB account) is meant to promote the habit of saving among the
people. It also facilitates safekeeping of money. In this scheme fund is allowed to be
withdrawn whenever required, without any condition. Hence a savings account is a safe,
convenient and affordable way to save money. Bank deposits are fairly safe because banks
are subject to control of the Reserve Bank of India with regard to several policy and
operational parameters. Bank also pays a minimal interest for keeping money with them.
The interest rate of savings bank account in India varies between 2.5% and 4%. In Savings
Bank account, bank follows the simple interest method. The rate of interest may change
from time to time according to the rules of Reserve Bank of India.
It's much safer to keep money at a bank than to keep a large amount of cash in home. Bank
deposits are fairly safe because banks are subject to control of the Reserve Bank of India
with regard to several policy and operational parameters. The federal Government insures
deposited money. Saving Bank account does not have any fixed period for deposit. The
depositor can take money from his account by writing a cheque to somebody else or
submitting a cheque directly. Now most of the banks offer various facilities such as ATM
card, credit card etc. Through debit/ATM card one can take money from any of the ATM
centres of the particular bank which will be open 24 hours a day. Through credit card one
can avail shopping facilities from any shop which accept the credit card.
Page 68

And many of the banks also give internet banking facility through with one do the
transactions like withdrawals, deposits, statement of account etc.
INVESTMENT THROUGH POST OFFICE
Share of Post office investment has also a major part in Indian Household investment,
which is mostly due to its all India presence of service network. Various avenues for post
office investment are as follows:
1. Post office Recurring Deposit Account (RDA)

A Post-Office Recurring Deposit Account (RDA) is a banking service offered by
Department of post, Government of India at all post office counters in the country. The
scheme is meant for investors who want to deposit a fixed amount every month, in order to
get a lump sum after five years. The scheme, a systematic way for long term savings, is
one of the best investment option for the low income groups.
The minimum investment in a post-office RDA is Rs 10 and then in multiples of Rs. 5/- for
a period of 5 years. There is no prescribed upper limit oninvestment.
The deposit shall be paid as monthly installments and each subsequent monthly installment
shall be made before the end of the calendar month and shall be equal to the first deposit.
One withdrawal is allowed after one year of opening a post-office RDA on meeting certain
conditions. Person can withdraw up to half the balance lying to their credit at an interest
charged at 15%. The withdrawal or the loan may be repaid in one lump or in equal monthly
installments.
Premature closure is allowed on completion of three years from the date of opening and
in such case, interest is payable as per the rate applicable for the Post Office Savings
Bank Account.
Page 69

After maturity of the account, it can be continued for a further period of 5 years with or
without further deposits. During this extended period, the account can be closed at any
time.
The post-office recurring deposit offers a fixed rate of interest, currently at 7.5 per cent per
annum compounded quarterly. The post office offers a fixed rate of interest unlike banks
which constantly change their recurring deposit interest rates depending on their demand
supply position. As the post office is a department of the government of India, it is a safe
investment. The principal amount in the Recurring Deposit Account is assured. Moreover
Interest earned on this account is exempted from tax as per Section 80L of Income Tax
Act.
2. Time Deposit
A Post-Office Time Deposit Account is a banking service similar to a Bank Fixed Deposit
offered by Department of post, Government of India at all post office counters in the
country. The scheme is meant for those investors who want to deposit a lump sum of money
for a fixed period; say for a minimum period of one year to two years, three years and a
maximum period of five years. Investor gets a lump sum (principal + interest) at the
maturity of the deposit. Time Deposits scheme return a lower, but safer, growth in
investment.
Time Deposits can be made for the periods of 1 year, 2 years, 3 years and 5 years. The
minimum investment in a post-office Time deposit is Rs 200 and then its multiples and
there is no prescribed upper limit on investment.
Page 70

CHAPTER NO. 5
DATA ANALYSIS AND INTERPRETATION
1. Age distributionof the respondent

Table No. 1
Age group of respondent No. of Respondent Percentage

21-30 17 34%
30-45 18 36%
45-60 11 22%
Above 60 4 8%
Total 50 100%
Chart No. 1
Age distribution of the

2 respondent
0
1
5
Age distribution of
the
1
respondent
05
0
21- 30- 45- Above
30 45 60 60
INTERPRETATION :
Almost 70% of respondent was from age group 21yrs to 45yrs this is considered to be
most active age group. During this age, life of an individual changes very drastically. The career is in
growing stage in starting few years and there are hardly any responsibilities, at this time there is a lot of
funds available for disposal. It is this age where maximum
Page 71

risk can be taken and a greater period can be given to grow the amount invested. As a person enter
into their 30‘s they have increased family responsibility and gradually the risktaking ability reduces
with the age. With a greater portion of such population included in data collection a greater degree of
understanding can be gained how financial planning is done by young India.
2. Income distribution of respondent

Table No. 2
Income No. of Respondent Percentage

upto 2,00,000 18 36%
2,00,000 - 3,00,000 13 26%
3,00,000 - 4,00,000 9 18%
4,00,000 - 5,00,000 6 12%
Above 6,00,000 4 8%
Total 50 100%
Chart No. 2
Income distribution of
respondent
20
15
10
upto 2,00,000 2,00,000 - 3,00,000 3,00,000 - 4,00,000 4,00,000 - 5,00,000 Above

6,00,000
Page 73

INTERPRETATION
Financial planning is about assessing our present cash flows; estimating the required cash
flow after a certain period of time and to determine the steps required to achieve this over
a period. The amount of disposable income at hand determines various investment
decisions. It also helps in making tax plans so that maxim benefit can be gained through
various tax exemptions. So it is necessary to know the income inflow of an individual. The
above graph shows that a major portion of respondent are in income slab of upto
Rs.2,00,000 p.a.; this indicates that the persons may be in the beginning stage of career.
With increasing income slab the no of respondent are reduced.
3. Investment made by the respondent in various avenues

Table No. 3
Avenue Respondent Percentage
Life Insurance 5 10%

Fixed Deposit 10 20%
Mutual Fund 5 10%
Equity Market 10 20%
Gold 10 20%
PPF 5 10%
Post Office Deposit 5 10%
Total 50 100%
Page 74

Chart No. 3
Responde
12 nt
10
Life Fixed Mutual Equity Gold PPF Post

Office
Insuranc Deposi Fund Market Deposit
e t
INTERPRETATION:
A fair idea of asset allocation of individuals in various asset class can be observed through
this. It was observed that the all respondent had a life cover policy. This shows that the
basics of financial planning were achieved. The next major portion was Provided Fund due
to it being more secure investment and also tax exemption offered. Major investments were
also made in Bank Fixed Deposits and Post Office Deposits. Equity was not a preferred
investment among many due to its volatile nature but many used it as a long term
investment by investing in large companies. Investment in gold was more in form of
jewelry which is not a good option as investment. Very few invested in gold coins/bars and
Gold ETFs.
Page 75

4. Satisfaction of investors on their previous investment

Table No. 4
Satisfaction Respondents Percentage
Yes 15 30
No 28 56
Neutral 7 14
Total 50 100
Page 76

Chart No. 4
Satisfaction of investors on their

previous
investment
14
% 30 Yes
%
No
Neutra
56 l
%
INTERPRETATION:
A major portion of respondent was unsatisfied with the returns they got on their
investment. This reflects that investment decision was not taken properly. Few common
reasons cited were:
Inadequate knowledge about the instrument in which investment was made

Misguided by the agent of financial company
Charges applicable were not disclosed initially
Unplanned investment
Also a major portion of investment was in assets which has a low risk – low returns
category. This also was a major reason of respondent unsatisfied with current returns.
Page 77

5. Various sources of information/reference for investor which

influence investment decision.
Table No. 5
Source of information Respondent Percentage
News paper, Publications & Media 10 20%
Professionals 15 30%
Agents/Broker 15 30%
Friends, Peer group, etc. 10 20%
Total 50 100%
Page 78

Chart No. 5
Chart
12 Title
10
Life Fixed Mutual Equity

Insurance Deposit Fund Market
Responde Percentag
nt e
INTERPRETATION:
We find that major respondent have taken investment decision on the bases of information
provided by Agents & Broker of different financial company. The next major information
source is News papers, publication and media which are considered to be highly
authenticated data. Help of professionals in investment decision is taken not by many, due
the fees charged by various professional for their service. There is less number of
respondents taking their investment decision on information provided by friends. Mostly
the information provide by such people is based on their experience which may not be true
for others. That is the reason; such source of information is considered less organized and
reliable.
Page 79

6. Investment Objectives of Individuals

Table No.
Investment Objective Respondent Percentage
Principle Safety 9
18%
Maintain Standard of living 17 34%
Meet future expenses 18

36%
Safeguard against contingencies 6

12%
Total 50 100%
Page 80

Chart No. 6
Responde
nt
Principle Safety Maintain Standard of living

Meet future Safeguard against
expenses contingencies
Total
INTERPRETATION:
Investment objective to a greater extend determine the investment tenure and the avenue.
Different investment objectives have different investment avenues to meet them. By
determining the objective we can easily determine the investment vehicle for individuals.
The persons looking for principal safety can investment in Post office schemes,
government securities, banks and PPF. Investment in Equity and Mutual funds can give
greater returns which can beat high inflation rate. Term deposits are useful when money
is needed after a fixed period of time.
Page 81

7. Respondent frequency of investment

Table No. 7
Preferred Frequency of
Investment Respondent Percentage
Monthly 21 42
Quarterly 4 8
Half Yearly 5 10
Annually 11 22
Single/One time 9 18
Total 50 100
Page 82

Chart No. 7
Respondent frequency
ofinvestment
Single/One
time
Annuall
y
Half
Yearly
Quarterl
y
Monthly
0 20 40 60 80 100
% % % % % %
Single/On
Monthly Quarterly Half Annuall
e time
Yearly y
Respondent frequency
21 4 5 11 9
of investment
INTERPRETATION:
A good number of investors prefer to invest regularly on monthly basis, thanks to
Systematic Investment Plan. Monthly investment helps to invest in small denominations
with benefits of Rupee cost averaging. Monthly investment was largely found in Mutual
Funds. To a surprise many prefer to invest in single or one time installment without
knowing the risk attached to it. One time investment is a good option only for physical
assets life real estate and gold.
Page 83

8. Financial Literacy of respondent

Table No. 8
Financial Literacy Respondent Percentage

Very Good 17 34%
Good 12 24%
Average 15 30%
Poor 6 12%
Total 50 100%
Chart No. 8
Financial Literacy of
1 respondent
7
1
5
1
2
Very Goo Averag Poo

Good d e r
INTERPRETATION:
Page 84

The purpose behind knowing the financial literacy is to get to know how better the
respondent can take investment decision individually. A large portion of respondent stated
they have a good knowledge of investment avenues but their investment portfolio
contradicted. Thus it states that many are not ready to acknowledge that they do not
possess the required knowledge. This keeps them into darkness and may lead to wrong
investment decisions, which are hard to correct.
9. Do respondent have enough time to manage their investment

affairs
Table No. 9
Time Available Respondents Percentage
Yes 18 36
No 32 64
Total 50 100%
Page 85

Chart No. 9
Do respondent have enough time to

Manage their investment affairs
36%
Ye
s
No
64%
INTERPRETATION:
It reflects that not many have time to do financial planning. In such cases it is mostly
observed that the investment decision was influenced by people around.
Page 86

CHAPTER NO. 6
FINDINGS:
1. Most of salaried individuals prefer to invest in private sector.

2. Most of individuals often discuss with their family friends before making an
investment decision.
3. Majority of the salaried individuals prefer midterm to invest.
4. Most of the individuals are aware about different taxbenefits.
5. Most ofthe individuals are aware about investment avenues like life insurance,
FD, gold, real state etc.
6. Majority of the individuals consider FD, Gold/silver, saving account, post office
savings as a safe and low investment options.
SUGGESTIONS:
1. Study reveals that individuals spend long time watching T.vs, Therefore it is
recommended that financial advisor or financial institution should use T.V. as a
marketing media.
2. Investments in government sector shouldincrease.
3. Investor who wants to avoid risk should invest in saving account, FD, provident
funds, National saving certificate, post office saving, life insurance etc.
4. Investments avenues like share market, mutual funds need more awareness among
salaried individuals so that more individuals can be attracted.
Page 87

CONCLUSION:
This report is a reflection of the awareness and factors considering, risk taking ability of the
various categories of salaried individuals. Selection of the perfect investment avenue is a difficult
task to an individual. An effort is made to identity the taste and preference of a sample of individuals
selected by connivance and snowball sampling. Despite of many limitations to the study it was
successful in identifying some investments patterns there is some commonness in these individuals.
This report concentrated in identifying the factors considered individuals before

investment, awareness level of salaried individuals towards various investment avenues are
identified based on their occupations, investors risk in selecting a particular avenue.
The presents study has important implication for investment manager as it has come out
with certain interesting facets of salaried individual. The individual investor still prefers
to invest in financial products which give risk free returns. This confirms that individuals
even if they are of high income, well educated, independent are conservative individual
prefer to play safe. The investments product designer can design products which can cater
to the individuals, who are low risk tolerant, tax savings and use T.V. as a marketing
media as they seem to spend long time watching T.vs. The study also draws an important
conclusion from study that the individuals are keen to invest in midterm products.
LIMITATIONS
Lack of response from sample: It is also said as access to resource of information.

As the method adopted was cold calling the respondent were not easily available for
discussion.
Page 88

Unwilling to reveal financial position: In technical term it can be said as access
to information. Many of are not comfortable to disclose our financial affairs openly. In
such a situation researcher had to convince the respondent a lot more times. Also many a
time‘s only generaldiscussion would take place.
Time: Due to lack of time availability of respondent and the period which can be used to
collect data was short the research could not be conducted on a large sample size.
Using organization (company) name: Many a time to get access to respondent

researcher had to revel the organization identity. People thought that it was for thepurpose
of sales of promotional activity, which lead to negative response from manypeople.
Lack of expertise: On the side of the researcher the there was lack of in-depth
information on the topic.
Page 89

BIBLIOGRAPHY:
Reference from Books:
H.C.MEHROTORA and S.P. GOYAL Income Tax Law and Practice 2018-2019
Dr.VINOTH.K.SINGHANIA Tax Mann’s Direct Taxes Law And Practice 2018-19
V.P.GAUR and D.B.NARANG Income Tax Law And Practice
WEB REFERENCE:
http://www.businessdictionary.com/definition/savings.html
http://www.studymode.com
http://www.economist.com/topics/indian-economy
www.taxindia.com
Page 90

QUESTIONNAIRE
1. Age distribution of the respondent
Age group of respondent No. of Respondent Percentage
21-30 17 34%
30-45 18 36%
45-60 11 22%
Above 60 04 08%
Total 50 100%
2. Income distribution of respondent

Income No. of Respondent Percentage
upto 2,00,000 18 36%
2,00,000 - 3,00,000 13 26%
3,00,000 - 4,00,000 09 18%
4,00,000 - 5,00,000 06 12%
Above 6,00,000 04 08%
Total 50 100%
3. Investment made by the respondent in various avenues

Avenue Respondent Percentage
Life Insurance 5 10%
Fixed Deposit 10 20%
Mutual Fund 5 10%
Equity Market 10 20%
Gold 10 20%
PPF 5 10%
PO 5 10
Page 91

3. Satisfaction of investors on their previousinvestment
Satisfaction Respondents Percentage

Yes 15 30%
No 28 56%
Neutral 07 14%
Total 50 100%
4. Various sources of information/reference for investor which

influence investment decision.
Source of information Respondent
News paper, Publications & Media 10

Professionals 15
Agents/Broker 15
Friends, Peer group, etc. 10
5. Investment Objectives of Individuals

Investment Objective Respondent
Principle Safety 09
Maintain Standard of living 17
Meet future expenses 18
Safeguard against contingencies 06
Total 50
Page 92

6. Respondent frequency of investment
Preferred Frequency of Investment Respondent Percentage

Monthly 21 42%
Quarterly 04 08%
Half Yearly 05 10%
Annually 11 22%
Single/One time 09 18%
Total 50 100%
7. Financial Literacy of respondent
Financial Literacy Respondent

Very Good 17
Good 12
Average 15
Poor 06
Total 50
8. Do respondent have enough time to manage

their investment affairs
Time Available Respondents Percentage

Yes 18 36%
No 32 64%
Total 50 100%
Page 93

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A project Report Titled "A Study on Financial

Planning for Salaried Employees and Strategies

Post graduation degree of Master of commerce in

BENGALURU NORTH UNIVERSITY

Under the guidance of

CHOWDAPPA.CB M.A, M.Phil,Med,

S.E.A COLLEGE K.R PURAM

This is to certify that VARALAKSHMI K. a bona fide student of final year

This is to certify that VARALAKSHMI.K student of final year M.COM of S.E.A

Place: PROJECT GUIDE

report, A STUDY ON " FINANCIAL PLANNING FOR SALARIED

EMPLOYEES AND STRATEGIES FOR TAX SAVINGS”, Is a record of

CHOWDAPPA.CB M.A,M.Phil,MED,LLB,KSET,(Phd).dept of economics.

I would like to express my deep sense of gratitude to Bengaluru North

I would like to thank CHOWDAPPA.C B M.A,M.PHIL,M.ED,LLB,KSET (Phd)

Ialsoexpressmygratitudetoalllecturersand my friendsandallotherswho directlyor

CHAPTER. CONCEPTS PAGE NO.

6 CONCLUSION , FINDINGS , SUMMURY , 87

2 Income distribution of respondent 73

3 Investment made by the respondent in various avenues 74

4 Satisfaction of investors on their previous investment 76

5 Various sources of information/reference for investor 78

which influence investment decision.

7 Respondent frequency of investment 82

8 Financial Literacy of respondent 84

9 Do respondent have enough time to manage their 85

2 Income distribution of respondent 73

3 Investment made by the respondent in various avenues 75

4 Satisfaction of investors on their previous investment 77

5 Various sources of information/reference for investor 79

which influence investment decision.

7 Respondent frequency of investment 83

8 Financial Literacy of respondent 84

9 Do respondent have enough time to manage their 85

1.1 INTRODUCTION TO FINANCIAL PLANNING

S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

problems and opportunities, determining recommendations and alternative solutions,

S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

Retirement Planning is also an important aspect of financial planning. To a greater extend

1.1.1 Theoretical background

S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

maximize earning potential. The two main advantage of investment are:

You can save money for your future.

S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

Non financial instruments

S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

1.2 CONCEPT OF TAX

S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

1.2.1 INTRODUCTION FOR TAX SLABS

Such tax slabs tend to undergo a change during every budget.

There are three categories of individual taxpayers:

Income Tax Slabs Tax Rate Health and Education Cess

S.E.A COLLEGE OF SCIENCE COMMERCE & ARTS K R

Income Tax Slabs Tax Rate Health and Education Cess

Income Tax Slabs Tax Rate Health and Education Cess