A Gift For Yourself Before 31st March


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So let us have a look at what a beginner must do to get started with their stock market investments. Here is some steps guide to help you out.

It is 9.30 pm in the night. There are 12 missed calls on her mobile from home. Reena is still searching for tax-saving tips online on the office computer. The mad rush for saving taxes is in full swing as the financial year-end i.e. March 31 approaches like a speeding freight train. If you have been lazy, your employer would have given you the bad news that tax deduction at source (TDS) from your salary will be bigger. Do not worry. Even if you did not plan taxes, here are a few sure-shot tips to save taxes.

Money invested in tax saved:

First check if you have used all the tax saving investments under Section 80C. We are talking beyond insurance ULIPs. You can invest up to Rs 1.5 lakh in a financial year and save over Rs 40,000 on taxes alone if you fall in the highest income-tax slab.

There are many options like PPF or public provident fund (15 years lock-in), equity linked saving scheme (3 years lock-in), national saving certificate or NSC and tax saving bank deposit (both have 5 year lock-in). If you are extremely traditional, you can also invest up to Rs 1.5 lakh in employee provident fund (EPF). Like ELSS and PPF, the EPF amount at maturity is tax-free.

In case of NSC and tax-saving FD, interest is taxable. If you have a girl child, you can save tax by opening a Sukanya Samriddhi Yojana account where the maturity proceeds are not taxed.

Beyond section 80C:

If you have extinguished the section 80C limit, no need to worry.
The NPS or National Pension System can help you save tax over and above the 80C window. Your contribution in the scheme is deducted from income tax up to a maximum of Rs.50,000. 37-year old Suhair had exhausted the Rs 1.5 lakh savings limit in Section 80C. When he found out about additional NPS sops, it took him less than a week to use the window.

Medical insurance is also an area where you can save tax. This is not an unnecessary expense even if you have employer insurance. Ask Suhair who was left with any medical cover when he change his job. The transition period was not covered by Suhair’s previous employer nor his new company. Section 80D allows him to get an individual cover and save taxes, Individuals can save up to Rs 60,000 deduction if they take care of the sub-limits.

If you have a disabled person in close family, the tax authorities up to Rs 75,000 per annum deduction under section 80DD. You can claim this deduction during filing of tax return.

Lastly, if you are a self-employed person paying rent or a salaried employee who does not get House Rental Allowance (HRA), then under section 80GG you can claim the lowest among 25% of the total income, Rs 2000 per month or excess of rent paid over 10% of total income. Do note you can take advantage only if you, your spouse or child does not own any residential accommodation in India or abroad.

For more information and queries, contact Moneymindz, the best online financial advice.

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