So have you covered Sec 80C? Irrespective of your income bracket, the maximum deduction you can claim under this section is Rs. 1 lakh. But there are a host of options available for investment including insurance premium, PPF, NSC, ELSS, ULIPs, EPF, principal component of home loan, NABARD bonds, 5 year bank fixed deposits, full time education fees paid for up to 2 children’s education, etc. Although the investment options are several, some individuals, especially below the 35 years age group do not make full use of this section, because of carelessness.
Are you missing the other deductions available? So here are few ‘commonly ignored” deductions..
- Premium paid towards medical insurance for parents can be claimed for up to Rs. 20,000 a year
- In addition to the medical premium, you can also use Sec 80 D for preventive health care tests.
- Did you know that you can claim both HRA as well as the Sec 24B home loan interest component exemption if you have a self-occupied house in different city and you have a rental house for employment purpose in another city?
- You can also set up a Hindu Undivided Family (HUF) Trust to reduce the overall tax liability of the family.
- Does your office allow “Employer’s contribution to NPS”?
- Did you make any eligible donation under Section 80 G?
Invest well before the cut off so that evidence is easily available: Usually, all employers would require you to submit the proofs by December or January to make the necessary adjustments to your salary. Therefore you must make sure your investments are completed well before this deadline. Ideally, one has to start tax planning and making the necessary investments from April itself. In the case of EPF or Home Loan, the investments automatically take place as deduction from your salary and EMI payment respectively. Pay your insurance premium well before the due date and submit your medical bills also on time. Remember when you make the tax eligible investment decision at the last moment; it’s likely that you will end up making an unsuitable investment.
Logistics of collecting all the required tax eligible investment proofs:. Some cases like insurance premium paid can get you the premium certificate immediately. However, other proofs like home loan principal and interest exemption will require you to make specific requests to your bank to give you the required certificate. Make a list of all your investments for tax purposes, claims and other provisions under which you seek tax exemption separately in a book or excel sheet. Start your efforts of collecting the investment proofs from as early as possible but no later than October. This way, you can be sure to collect all the proofs and submit it on time, without missing anything.
We observe from our clients that the Tax Planning is often neglected. However, remember that your investment criteria should not be solely with the intention of saving taxes; rather, it should take care of your financial goals and risk profile.
Start today. Be more organized. Minimize your tax outflow!