Although there’s always a full year before to plan taxes, the bells for some (or rather most) of us doesn’t start ringing until December of the said year, when there’s only a quarter left. Now, although one cannot save a lot of their money from going into the taxman’s treasure chest, but with careful planning, a respectable chunk could still be saved.
In the light of this, we’ve designed a last minute tax saving guide to help you ease your tax burdens. Let’s have a look at what they’re.
Step 1 – Estimating tax liability
Step 2 – List down sections under which you can claim deductions easily such as Rs 1.5 lakhs under section 80C.
Step 3 – Check out additional tax-saving options that were not availed previously or can be availed in addition.
November and December are good months to review your investments in order to double check your eligibility for the tax deduction. Let us remind you that you will be eligible for benefits of National Pension Scheme (NPS), Public Provident Fund (PPF), and other instruments only if the investments in such instruments are done on or before March 31st of that financial year.
Further, if you have sold an asset such as property or any mutual funds, you will be entitled to short-term or long-term capital gain tax as well. Thus, apart from salary as regular income, capital gains should be ideally considered as well under other income.
Allow us to share some quick easy-to-do steps that can help you achieve tax saving goal before the financial year ends.
Set aside Rs 10,000 per month for the next 3-4 months as it would help you accumulate a sizeable amount which may be needed for any last-minute investments for tax saving purpose
Avoid eating out or cut down on unnecessary expenses. This not only helps you improve your health but will also help you save additional 10-15 grands which can be utilised for tax saving purpose. These expenses can be done again once the financial year is over but tax planning if not done will not return with another chance.
In a nutshell, plan early and save more. Browse through our easy to use investment app to help you plan your tax more efficiently.
Reviewing and Planning your Tax Saving Investments
From the last minute tax saving perspective, December, we believe, is a good month to review not only salary earned till date but also to estimate projected income for the three months period until March. This will help you estimate income and accordingly consider potential sources of additional income thereby providing you with a fair idea of tax liability.
After you assess your taxable income, we suggest you flip through the following ideas that will help you save tax as, we believe, every rupee saved is every rupee earned.
Review 80C- Section 80C is most basic section under Income tax act which provides tax benefits of upto Rs 1.5 lakhs which is by far one of the largest component of tax saving. We believe, reviewing 80C investments helps you ensure that you have not missed on claiming this easiest and important tax benefit component. Section 80C investments include PPF, NPS, Life Insurance Policies, Long-term Fixed Deposits; Equity oriented mutual funds, National Savings Certificate and few other instruments.
Review health insurance – Review your health insurance premium payment is important as if can fetch you upto savings of Rs 25,000 from your taxable income u/s 80D of Income Tax Act.
Exploring tax-saving options: Explore tax-saving options that were not available in previous years. For instance: individuals making voluntary contributions to New Pension Scheme are not eligible for additional savings of Rs 50,000. Thus, utilizing this for tax saving purpose could be another good option.
First time home-buyers: Individuals who have bought their first home by borrowing less than Rs 35 lakhs can now claim additional deduction of Rs 50,000 on the interest payment. This will help you plan EMI payment of home loan properly.
Equity linked savings scheme – One of the instruments which provides tax saving and also fetches you higher returns. We believe this should always form part of your investments under a systematic investment route as it would certainly help you accumulate sizeable corpus gradually and will also offer tax benefits along with good returns.
Thus, it is always advisable to plan your tax and accordingly make investment adjustments to avoid any last minute rush. For more information on how you can save up to Rs 45,000 on Income Tax in a few minutes, click here to read more.
And there you go, quick and easy tax saving. We hope that you found our last minute tax saving guide useful enough.
Tell us if you have any other query and we’ll be more than happy to help you out! Drop a comment down below, or mail us at firstname.lastname@example.org.