Chartered Accountants Final & CPT Results Statistics

Financially Healthy??? Some crucial facts

We need to assess financial health to ensure the achievement of all goals. The following numbers acts as mile markers to help know if we are saving enough.

• Savings-to income ratio: If you are in your 30s, you should strive for a 1:1 ratio between liquid assets and annual income. Liquid assets include your investments and savings not home as it can't be converted to cash easily. In other words, a 35-year-old making Rs 6 lakh annually should have the same amount in savings.

    The ratio, according to standard wisdom, increases with age. For a couple aged 40, it should be     around 1.5 or higher. At 45 years, the ratio should be around 3, and at 50, it should be 4.5. The ratio   will give you a good idea if you are saving enough to reach your retirement goal.

• Years to save tax on sale of property: You can claim tax exemption under Section 54 on the long-term capital gain (LTCG) from the sale of a house if you use the entire profit to buy another house within two years. If you had already bought a second house within a year before selling the first one, you could still avail of the tax exemption.

• 3 months' expenses in an emergency fund: A contingency fund should cover eventualities such as job loss or medical issues. To many, salting away three months of living expenses seems impossible. Remember not to put this fund in your regular bank account. Stash the contingency cash in liquid funds or a separate savings account. You won't earn a high interest, but it will be easier to access when you really need it.

• 10 times the annual income is your life insurance: As a general rule, you should have life insurance that is about 10 times your annual earning. So, if your annual salary is Rs 6 lakh, you should have life insurance worth Rs 60 lakh. However, your insurance needs will vary based on other factors, such as your age, liability and debt.

• 15% Savings rate: Although this figure used to be a minimum of 10%, experts now endorse a savings rate of up to 15%. Sub-divide this into 10% for retirement and 5% for short-term saving like a vacation. The rule is also expressed as a ratio of 90:10 or 85:15, wherein you spend the first figure and save the second.

Various Forms for Income Tax Return

Various Forms for Income Tax Return

Form No.	Description
ITR - 1 (SAHAJ)	For individuals, whose total income includes chargeable under the head - ·         “Salaries” or income in the nature of family pension under section 57(iia); ·         “Income from house property”, where the assessee does not own more than one house property and does not have any brought forward loss under the head; ·         “Income from other sources”, except winnings from lottery or income from race horses.
ITR – 2	For individuals & HUFs not having income from Business or Profession.
ITR - 3	For individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship.
ITR - 4	For individuals & HUFs having income from a proprietary business or profession.
ITR - 4S (SUGAM)	For presumptive business incomecovered under section 44AD and 44AE
ITR - 5	For firms, AOPs and BOIs
ITR - 6	For Companies other than companies claiming exemption under section 11
ITR - 7	For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139 (4C) or section 139(4D). (Not available for e-Filing)
ITR - V	INDIAN INCOME TAX RETURN VERIFICATION FORM: This Form is to be used where the data of the Return of Income in Form ITR-1, ITR2, ITR3, ITR-4 and ITR-5 transmitted electronically without digital signature