As the new Assessment Year approaches, all tax payers need to start focusing upon tax planning. Section 80 of the IT Act of India has been serving as a boon for the tax payers. This section offers numerous forms of deductions which a tax payer can claim while filing his return for a particular AY.
Listed below are some of the best ways to minimize your payable tax and create a pool of savings for yourself. The top 10 tax planning tips which will help to gain in AY 2016-17 are:
Consider deductions Under 80C
The section 80C mainly deals in offering deductions to tax payers who invest in sectors like Fixed Deposits (5 years), PFF, Pension plans, EPF, etc. The scope of this deduction will allow the tax payers to claim deductions upto INR 1, 50, 000 for the AY 2016-17.
Use NPS Under 80CC
The term NPS represents New Pension Scheme. The Government of India has recently introduced this scheme with a view to create better saving habits amongst tax payers. Investing in the NPS will allow the tax payers to claim a deduction of INR 1, 50, 000 in the AY 2016-17. However, if a tax payer withdraws from such investment plan, then the same will become taxable.
Medical Insurance Under 80D
Your concern for health can increase your wealth! The IT Department offers a deduction of INR 25, 000 for tax payers who invest in Medical Insurance. If you are a senior citizen, then this benefit is extended to INR 30, 000.
Help Disabled Dependents Under 80DDB
Taking care of a disabled person at home can become a burden. However, the Government of India is offering an assistance to you by allowing you to claim a deduction of INR 80, 000 per AY in respect of the expenditure borne for taking care of the disabled person.
Repay Higher Education Loans Under 80E
Are you still carrying the burden of your higher education loan? Under the Section 80E, the IT Department allows you to claim a deduction upto INR 1, 00, 000 towards loan repayment in respect of higher education.
Charity Under 80G
Charity can be a good area for you to claim deductions. Various charitable organizations accept donations from common men and donating money to one of such organizations can allow you to claim 100% deduction. All that you are required to do is maintain a proof of your donation.
Note: Deduction u/s 80G up to 100% for donation to Swachh Bharat Kosh, Clean Ganga Fund and National Fund for Control of Drug Abuse.
Payment of Interest for House Building Loans Under 24B
The significance of this section is mammoth! Under this section, a tax payer is eligible to claim a deduction of INR 2, 00, 000 as interest on house loan. Additionally, the purview of section 80C can also be combined here, which offers an additional deduction of INR 1, 50, 000 for House Building Loan’s principal amount. In total, you can claim a deduction of INR 2, 50, 000 for the purpose meeting your house acquisition costs.
Transportation Allowance Under 10
One of the lesser known areas of deduction is Section 10. Under this section, a tax payer can easily claim a deduction of INR 19, 200 as his transportation charges. If a person is physically disabled, then the benefit of this amount increases to INE 38, 400.
Know your taxable income
Apart from searching deductions and making adjustments in your expense column, you should also plan to compute your right taxable income. Collect all your revenue and expenditure sources and figure out the correct tax amount which you will be paying for AY 2016-17. In case you need help, feel free to contact an expert.
Pay your taxes on time
Last, but not the least, pay your taxes on time. It is important to pay your taxes before the due date as it helps you to get refunds faster. If you are not paying your taxes on time, then issues such as interest on refunds and penalties may increase your tax liabilities.