We’ve got some tips to help you boost and maximize your tax refund and deductions for some expenses that are related to earning your income. Nowadays, in the era of price, it’s challenging to save taxes and that too difficult for a young newly recruited employee.
The widest option to save income tax is section 80C of income tax Act.
A taxpayer can claim maximum tax deductions of Rs 1.5 lakh for a particular financial year (FY) from his/her taxable income through investments made by him/her under section 80C of the Income Tax Act, 1961.
For example, if your gross total earnings say, for a financial year is Rs 10.5 lakh and if you invest Rs 1.5 lakh in notified schemes which allows you to claim this tax benefit, then your net taxable income will come down to Rs 9 lakh and you would have to pay tax on this amount. This would bring down tax liability to Rs. 46,350.
An individual or a Hindu Undivided Family (HUF) is allowed for claiming tax deduction u/s 80C.
Investments/expenditures under section 80C cannot be claimed as a deduction from the capital gains portion, if any, of your income. This means that if your income comprises only of capital gains then you cannot use Section 80C to save tax on that income.
If a person’s income is already below the minimum reduction limit, currently at Rs 2.5 lakh for individuals below 60 years of age, then he/she would not be saving any tax via investments/expenditures under section 80C as his income is not liable for any tax.
To reach Rs. 1.5 lakh limit without investments, claim these deductions and get a refund of excess tax:
1. Check your PF balance. Your provident fund contribution accumulated over the years itself might add up to a sizeable amount. This is covered under the Rs.1.5 lakh limit.
2. If you buy a house then expenses related to stamp duty and registration charges can be deducted under Section 80C.
3. If you paying off home loan then check your home loan interest certificate for EMI payment details. Your interest payments and principal repayment for this year can be claimed as a deduction.
4. If you have children who go to school or college then get their tuition fee receipts and add it. (This also includes playschool, preschool).
5. If you making life insurance premium payments then claim the premium payments too. The only condition is the premium must be less than 10% of the sum assured.
Add it all up.
Rs.1,50,000 – (1+2+3+4+5)[Above points] = Amount left for investments under Section 80C
If you have paid excess taxes, but have invested in LIC, PPF, Mediclaim, NSC incurred towards tuition fees and above-mentioned points then you can file your Income Tax Return.
That’s all. Now you can begin thinking about investing your money in products that suit your risk profile.
Follow these tips and maximize your tax refund and get the best tax advice from Our Tax Advisors at Investelite Research
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