Tax planning for the working salaried employees is a manner in which they can maintain the dicipline as well as plan their lifestyle .
Planning involves decision making at the start of the financial year in April and discipline comes after planning,It is the way in which the planning is implemented!!
There are certain tax saving tips for employees that will hold them in good state.
The following tips are geared to reduce tax and help fulfill their financial goals.
# One should Take a good look at Section 80C
When it comes to taxation of salaried employees, indeed no section is a larger ally than Section 80C.Firstly take a good look at Section 80C to have maximum social security benefit take-home salary, legally ‘reduce’ income and lower tax payout.
Section 80C has a broad range of options to help individuals lower tax liability.
It also offers as much as Rs 150,000 in terms of tax benefit, which tells you how important it is!!
# Start with Rs 150,000
Your starting point should be 150k. Work backwards by considering the most suitable options like insurance, PPF (public provident fund), tax–paying mutual funds, NSC (National Savings Certificate),etc.The investment plans and allocations depend basically on your financial goals, risk profile and income levels. Your financial planner help over here. He can guide you to choose the right option!
# Begin with the most important options
Under Section 80C benefits, go for options that you would take anyway, even if there was no tax benefit. Typically this would include life insurance, employee provident fund (EPF) – should your employer qualify for the same, tuition fees,etc. Deduct all these from the Rs 150,000 starting point.
# Move to the second rung options
Next its time to take a close look at the second rung. This would include tax-saving mutual funds and ULIPs (unit-linked insurance plans) if you are the risk-taking type or PPF and NSC if you prefer low risk options.
If you want to invest in a pension plan, then the good news is that premium payment on pension plans,under Section 80CCC – a sub-section of Section 80C – also qualify for tax benefits.Same token, contribution to New Pension Scheme (NPS)!
#Have you taken a home loan?
If you have availed a home loan, you can claim tax benefits under Section 80C by providing proof of principal re-payment.Under Section 24 towards interest payment on the home loan.
# Don’t forget the other sections
When it comes to tax-planning there are other sections that can save a bundle on taxes.
We have listed down Some meaningful the documents individuals need to submit to avail of tax benefits under the sections:
*Rent receipts to claim HRA tax benefit
*Medical bills to claim tax-free medical allowance
*Proof of travel to claim leave travel allowance (LTA) tax benefit – usually twice in a block of four years
*Proof of conveyance, if required by company guidelines, to claim conveyance allowance
*Premium receipt of health insurance/mediclaim, including premium paid on parents’ health insurance – Section 80D
*Statement of education loan with details of the interest component – Section 80E
*Proof of donation to a recognized charity under Section 80G