Sunday September 22, 2019
Home Business Important Inc...

Important Income Tax-Saving Tips to Save Income Tax in 2019

Save on your income tax every year by tax planning

0
//
income-tax
Tax exemption can be claimed on medical insurance premiums under section 80D. A person is eligible for a tax deduction of up to 25,000 for insurance of self, spouse, dependent children. Pixabay

Income tax, two small words can bring tension for those who have to pay it. We think of saving tax every day whether we go for lunch or win a lottery. We pay so many taxes in different forms to the government for the nation’s development. Now, we cannot control how the government spends our money but, what we can control is how much tax to pay to the government. Income tax saving and tax planning is a smart idea as it is also legal while, tax avoidance or not paying the required amount of tax is illegal. There are some smart ways to save on your income tax legally. Let’s discuss those tips.

Income Tax Saving Under Section 80C

Section 80C is perhaps the most common term that is heard while it comes to saving tax There are various investment options that fall under section 80C of the Income Tax Act, 1961. Let’s discuss the most popular ones.

  • Life Insurance

Purchasing a life insurance policy is perhaps the most secure and efficient income tax saving method that is a must purchase for everyone as life is simply unpredictable. All types of life insurance policies are eligible for tax deduction under section 80C. This tax deduction is eligible for policy premiums paid for the taxpayer himself, spouse, dependent children or any other member HUF (Hindu Undivided Family). Under this section, the maximum tax exemption rate is 20% of the sum of the annual premium if the policy was purchased on or prior to March 31, 2012. The tax exemption rate is 10% of the sum of the annual premium if the policy was purchased before April 1, 2012. 

  • Public Provident Fund (PPF)

PPF investors can claim for tax deduction under section 80C. The minimum deposit limit to a PPF account is 1,50,000 /year. So, all the deposits you make to your PPF account are eligible for exemption. But, it is a locked-in process. Hence, you cannot withdraw your money for 15 years from the time of investment. However, partial withdrawals are available only after the completion of 7 years.

Income tax
Section 80C is perhaps the most common term that is heard while it comes to saving tax. Pixabay
  • Equity Linked Saving Scheme

As the name suggests, ELSS is an equity scheme. So, this is perfect for financial wealth building as well as income tax saving. Investing in ELSS is a wise idea as it is a tax saver under section 80C. However, they have a requirement of locking-in the money for 3 years from the date of investment. Invest for long term in this scheme for high returns.

  • Senior Citizens Savings Scheme

Senior citizens can invest in this scheme to save on income tax. An individual of at least 60 years of age can invest in this scheme for 5 years. Voluntary retirement scheme investors can choose this after the age of 55.

  • Home Loan

For all the home loan payers, here’s good news that the income tax department gives you a relief by providing you tax exemptions on the principal amount under Section 80C. The maximum limit is 1,50,000 for claiming tax exemption. Under Section 24, you can also save taxes on the interest amount. The maximum limit for exemption is 2,00,000 under section 24. 

income tax
Tax planning is a smart idea as it is also legal while, tax avoidance or not paying the required amount of tax is illegal. Pixabay

Income Tax Saving Under Section 80D

Tax exemption can be claimed on medical insurance premiums under section 80D. A person is eligible for a tax deduction of up to 25,000 for insurance of self, spouse, dependent children. If the individual purchases insurance for his/her parents then tax deduction amount will extend to 25,000 more for parents whose age is less than 60years and 50,000 for parents aged above 60 years.

Income Tax Saving Under Section 80E 

Education is quite expensive nowadays. Education loan for higher education after 12th standard can save a lot of tax under 80E. The tenure of tax exemption on an education loan is the maximum of 8 years. But, if the repayment of the loan finishes in 5 years, then the tax exemption tenure will be 5 years only. 

Income Tax Saving Under 10(13A) and Section 80GG

HRA or House Rent Allowance is given to an employee by an employer to meet the expenses if the employee is living in rented accommodation. People who get HRA as a component in their salary can claim for tax deduction under Section 10(13A). 

An individual who is self-employed or an employee who does not have HRA as a component in their salary but they have expenses regarding accommodation can claim for tax deduction under Section 80GG. The maximum deduction permitted under this section is 60,000.

Income Tax Refund

An income tax refund can be issued when the taxpayer pays an excess amount of tax than the amount the taxpayer owes to the government. This miscalculation happens when n an advance tax, self-assessment tax paid or TDS deduction is higher than the taxpayer’s tax liability. In this case, income tax refund should be filed in the Assessment Year (AY) for the extra amount paid/deducted in the Financial Year (FY).

Also Read: Posting Selfies Seen as People Being Insecure & Less Likeable

Save on your income tax every year by tax planning. Spending the money and investing the money in a certain way can prove to be beneficial. Use the ways of saving income tax provided by the government in a smart and legal way. 

Next Story

Income Tax Officers Announce 17-point Checklist to Track Unaccounted Cash During Demonetisation

I-T Dept issues 17-point checklist to trace unaccounted DeMO cash

0
income tax
Examination will take place of cash deposits from period April 2015 to November 8, 2016. Pixabay

In a bid to seize illegal cash, the Income Tax Department has issued a 17-point checklist to tax commissioners across the country to track those who deposited unaccounted cash during demonetisation.

In a directive to the Principal Chief Commissioners of Income Tax and Principal Director Generals of Income Tax, the Central Board of Direct Taxes (CBDT) said that in continuation of the handling of cases related to demonetisation, a verification checklist of cash deposits has been prepared to assist the assessing officers so that deviant cases can be taken up for further study.

The CBDT move is aimed at spreading the department’s net wide and deep to catch those who deposited unaccounted cash during demonetisation.

In this latest directive to tax officers, a 17-point checklist has been created, which has to be updated on the department’s server for further action. All unaccounted cash deposits made between November 9, 2016, and December 31, 2016, will be examined as part of this plan.

The checklist also says that if a taxpayer disputes the amount, the correct amount has to be mentioned after checking with the bank.

The particulars in the checklist are — return filing compliance, the total income of the taxpayer in 2016-17, gross total income (including exempt income) of the taxpayer in FY 2016-17 and percentage of cash deposit to gross total income (including exempt income).

IT Officers
This move is aimed to catch those who deposited unaccounted cash during demonetisation. Pixabay

The assessing officers will have to check on the checklist with regard to the nature of deposit on assessment of the explanation provided by the taxpayer and the quantum of unaccounted deposits as determined by the assessing officers.

On the response side, they have to file if the explanation was acceptable, partially acceptable or not acceptable. The nature of the deposit option could be sale or advance for sale of land or any other capital asset, gift, repayment of loan and cash in hand.

Some other verification checkpoints are whether the quarterly VAT return is revised in the post-demonetisation period, if small part of the cash is deposited in or withdrawn from the bank despite having huge cash in hand, if there are large changes in the purchase and sales figures between the original and the revised VAT returns and if the changes are for genuine reasons.

The assessment procedures as per the checklist are — if the books of the accounts have been rejected, if additions have been made u/s 68 to 69D and if tax is calculated as per section 115BBE and if penalty u/s 271AAC has been levied.

income-tax
On November 8, 2016, the Government of India had announced demonetisation of all Rs 500 and Rs 1,000 banknotes. Pixabay

The examination of monthly cash sales and cash deposits lists the period from April 2015 to November 8, 2016.

Also Read: Gold Price May Increase to Rs 40,000 per 10 Gram by Diwali

On November 8, 2016, the Government of India had announced demonetisation of all Rs 500 and Rs 1,000 banknotes. It also announced the issuance of new Rs 500 and Rs 2,000 banknotes. (IANS)