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Posted on April 24, 2021
We are at the fag end of yet another financial year; that time of the year when all you working professionals out there need to plan your taxable income investments. But Take it Easy; don’t let the taxes tax you up! Here are some easy tips to help you breeze through the tax gruelling err filing regime-
Did you ever play this 5 question “Kaun Banega Crorepati” game with yourself!
We are just kidding, what we mean is before you start your tax saving exercise; keep answers to the following five questions w.r.t your annual income; handy-
1) Have you calculated your tax liability correctly?
Even after years of practice, many of us may err on this simple calculation. Why? Because your Gross Total Income and Taxable Income may be different. Let’s check out how to arrive at your accurate taxable income-
After calculating your net taxable income, apply the tax slabs as per the current financial year’s tax regime!
2) Have you fully capitalized on Section 80C?
We do know that investments upto INR 1.5 Lakhs in products under section 80 C can reduce your tax considerably.
Few other investment options under Section 80C are NSC’s, ULIPS, Life Insurance Premium Payment, Children’s Tuition Fee, and Employee’s Share of PF Contribution etc.
3) Have you invested the minimum amount in these instruments yet?
If you have already invested in schemes like NPS, Sukanya Samridhi Yojna, PPF etc. then March 31st deadline is not just about tax saving. You need to invest a minimum amount to keep these accounts active every financial year.
4) Are you still buying traditional insurance plans to save tax?
The primary purpose of insurance is neither investment nor tax savings rather insurance should be viewed & used to protect your financial interests for any unforeseen exigencies. While the insurance premiums do come in with tax benefits, traditional policies yield a bare minimum of 4-5% returns.
5) Have you submitted your tax saving investment plans/proofs to your employer?
We do know that salary is subject to tax deduction at source. No Rocket Science, eh?
From the very beginning of the financial year, the Finance/Accounts departments of your companies calculate tax on your salary based on your taxable income. So, you need to submit proofs to show your investment plans to your Accounts team. Well, they won’t chase you if you don’t. Only thing is you will end up getting more amount pinched out of your salary as excess TDS. You can claim it back in your ITR if eligible later – that’s a different story though!
Hope you found this article helpful!!We will soon be back with more on how to avoid last minute tax planning mistakes!!
Until then – Keep reading Keep Trending!!