Tax Planning

You can save tax up to a maximum of Rs. 1.5 lakh a year through investments eligible under Section 80C.

Tax evasion may be a crime, minimization isn’t. First-time taxpayers who notice it troublesome in half ways that with their hard-earned cash will take facilitate of assorted government allowed exemptions and provisions to scale back their liabilities. If your financial gain is a smaller amount than Rs. 10 lakh, your tax payment might cut back to zero through investments.

Investments under Section 80C:

You can save tax up to a most of Rs. 1.5 100000 a year through investments eligible under Section 80C. Some such investments area unit premiums paid towards life assurance set up, reimbursement of the principal part of consumer credit, investments created towards PPF, NSC, ELSS, NPS, Tax saver FD, five-year post workplace time deposits, senior voters savings theme and Sukanya Samriddhi theme.

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Health Insurance Premiums:

The premiums you pay on insurance plans for yourself and family qualify for deductions under Section 80D.

You can get a deduction of up to Rs. 25,000 a year on insurance premiums acquired yourself and family. If you pay a premium for insurance of dependent folks, you get an extra Rs. 25,000. If your folk’s area unit senior voters, the number goes up to Rs. 30,000 a year. Thus, you’ll be able to claim a complete exemption of Rs. 55,000 a year if you pay a premium for self and fogeys World Health Organization area unit senior voters.

You get an extra tax exemption if you invest within the National Pension theme popularly referred to as NPS.  You relish the most deduction up to Rs. 1.5 Lakhs a year under Section 80C.

You also get AN exemption over and higher than this below Section 80CCD(1B) up to Rs. 50,000 a year.

Rebate under Section 87A:

You get the most rebate of Rs. 2,500 a year under Section 87A. You get this rebate as long as your total financial gain, less all deductions below Section eighty is capable or but Rs. 3,50,000.

Home Loan Interest reimbursement:

Interest payment on a consumer credit is eligible for deduction under Section twenty-four if the property is employed for a residential purpose. you’ll be able to claim exemption up to a most of Rs. a pair of 100000 a year.

First-time home patrons will claim an extra deduction of up to Rs. 50,000 a year on consumer credit interest under Section 80EE, subject to bound conditions. Therefore, the whole deduction will go up to Rs. 2.5 100000 a year on consumer credit interest payments if you’re a primary time vendee.

Tax edges On Donations:

Apart from these investments, you’ll be able to conjointly save tax through charitable activities. Donations to specific relief funds and charitable establishments area unit eligible for deduction under Section 80G. you’ll be able to claim up to 100% on the number given to specific relief funds, with or with none higher limit.

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Leave Travel allowance:

You can claim expenses of journeys for two years in an exceedingly block of four years together with your family. The exemption on the fare is restricted to going anyplace in the Asian nation. However, journey ought to be the shortest route. link (Tax profit on LTA- nine,270/-)

Although future one contributes lesser quantity to the exemption price from nonexempt financial gain, however, it’s price if it’s saving your tax.

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Indian financial year runs from 1 April to 31 March. Accordingly, the Income-Tax Return is to be prepared and filed for the relevant financial year.

Indian financial year runs from 1 April to 31 March. Accordingly, the Income-Tax Return is to be prepared and filed for the relevant financial year. 

31st March is an important date as it marks the end of a financial year. The last few weeks are when we rush for the documents/investment proofs, based on which we compute our tax liability. 

Submit your investments proofs:

To get tax relief for your investments, you have to submit the proof of investments to your employer. There are a variety of investments that offer tax relief under section 80Csuch as ;

  • Receipt of insurance premium
  • Deposits made in your public provident fund (PPF) account
  • Investment made in equity-linked savings schemes (ELSS)
  • Purchase of National savings certificates (NSC)
  • Children’s tuition fees paid, etc. Your employer would need the details and the documentary proof of your investments to provide the deduction under Section 80C of Income Tax Act. This will help you to save tax up to Rs. 100000

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Submit proof of HRA (House Rent Allowance) & travel receipts:

You can claim income tax deduction under HRA & travel receipts, if you intend to claim a deduction for house rent allowance or travel receipts, please make sure that your rent and travel receipts have been submitted to your employer. Following are the necessary proofs for this deduction;

  • Rent receipt
  • Travel receipts
  • Lease deed, etc,

Collect TDS certificates:

To ensure the right amount of Tax deduction, you need to collect all your TDS (Tax Deducted at Source) certificates from banks (Account statements) and your previous employer. TDS certificates and Bank statements will help you to figure out the interest income on bank deposits and pay balance taxes if any. 

If you have changed the job during the course of the financial year, then you need to collect your TDS certificate (Form 16) from your former employer, and this should be submitted to your new employer so that you can ensure that the right amount of tax deductions are being accounted for in your salary. Following are the sources from where you have to collect TDS certificate ;

  • TDS certificate from Banks
  • TDS certificate from former employer

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Collect Principal and interest repayment certificates of home loan:

Repayment of home loan interest/principal will also help you to reduce the tax burden. If you have a running home loan, you must ensure that you collect the appropriate principal and interest repayment certificate from the lender for the amount paid during the financial year. You are also required to provide a computation to your employer specifying the income/loss under the head ‘House Property’ along with the proof of interest and principal repayment, to claim the deduction.

Obtain valid receipts for donations:

You can avail tax deduction under donations made also, but make sure that the donee trust/institution is registered under section 80G, to claim tax deduction they should be registered under Sec 80G. Your employer can provide the deduction for this donation in computing your taxes if you have made the donations to any of the specified charitable institutions. Always ensure that you get a receipt for the donation amount.

Collect receipt of health insurance premium

You can claim a tax deduction for the premium paid on health insurance. You have to make sure that you have obtained a receipt for the premium paid. You can avail deduction for the premium for self and family. 

Deductions under section 80D:

  • Rs. 15,000 on premium paid for insurance on the health of the assessee and his family.
  • TRs. 15,000 is admissible if the medical insurance is taken for parents of the assessee.
  • If the insured is a senior citizen, the above-mentioned limit will become Rs. 20,000.

Keep necessary records for interest on educational loan

You can claim a deduction for interest paid on the educational loan, but make sure that you have the necessary records to authenticate the same.

Telephone, medical and other bills:

If your employer is offering you any reimbursements towards telephone charges, medical expenses, etc., then you must submit the relevant receipts to your employer. This will reduce your cash in hand.

Compute the capital gains:

If you have sold or transferred any capital asset like house property, shares, mutual funds etc. during the financial year, you need to compute capital gains/losses on these transactions. The tax rates are different for long-term and short-term capital gains. Your taxability will be determined depending upon the classification and the type of asset.

Compute your tax:

Once if you finish the above-mentioned steps start computing your tax for the year and assess whether you are required to pay any tax. The same can be paid as self-assessment tax after March 31. To avoid the last minute rush of collecting the necessary documents all should be ready with all the above-mentioned documents.

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