Financial year 2017-18 is going to close on 31st March 2018 and Income Tax return filing of individuals and HUFs needs to be done on or before 31st July 2018. Accordingly, still there is some time left in month of March 2018 to do some planning and save tax before efiling Income tax return in July.
Some tips for saving tax for FY 2017-18 are given as under:
- To start with, salary structure needs to be analyzed to see whether there is any scope for reduction of tax. Some components of salary can be claimed as tax exemptions like HRA, LTA, Uniform allowance, Books and periodicals, telephone reimbursements etc in case you declare documentary proof to your employers. In case any company has policy to accept proofs in earlier month like January, the same may be claimed as exemption at the time of Income tax filing.
- In case some investments are not reflected in form 16, still same can be claimed as exemption at time of filing Income Tax return. Some of them are like tuition fees of children, Life insurance premiums, Helath insurance premiums, interest on education loan, Home loans installments etc
- Under section 80 C there are lot of investment opportunities available upto Rs 1.5 lac tax deduction like mutual funds ELSS, NSC, Senior Citizen Savings Scheme, 5 year post office deposits, principal of home loan installments, 5 year saving bank fixed deposits. Investment in NPS will provide you an added advantage of savings upto additional Rs 50,000. However at time of maturity some portion will be taxable.
- Repayment of education loan also provides tax deduction. Further, there is no upper limit on this deduction. It can be claimed on education loan for self, spouse and children. Also, it can be claimed for 8 assessment years.
- Tax deductions are also available in case of donations made to NGOs, political parties and research institutions to the tune of 50% and 100% depending upon types of donations provided you receive certificate of donation u/s 80 G from donee. Further, donation in cash cannot be made for an amount exceeding Rs 2000.
- Health insurance premiums upto Rs 25000 is eligible for tax deductions over and above limit of Rs 1.5 lac as mentioned in section 80 C. Therefore, everybody shall make investment in health insurance.
It may be noted that for salaried employees, there are no benefit of claiming business expenses as done by businessmen, therefore it is advisable for all salaried employees to make use of maximum permissible deductions which are allowable under various sections of Income tax in order to save tax. Under section 80 C, maximum Rs 1.5 lac can be claimed as deduction. Further, Rs 50,000 can be claimed by making investment in NPS. Then there is option to pay health insurance premium and claim deduction upto Rs 25000. Another option is to make donation and claim 50% or 100% of same depending upon types of donation.