Looking for last-minute tax saving investments? MUST keep these things in mind
This is that time of the year when we try to evaluate all our investment proofs to submit in order to justify our earnings. Only a few days are left for the financial year to end and many of us have still not submitted our tax savings investment.
Have you got a mail from your employer asking to submit investment proofs for tax saving? Then we have some important tips for you. It is that time of the year when we try to evaluate all our investments for the form 12BB - a statement of claims by an employee for the deduction. It is mandatory for salaried employee as they are required to submit the Form 12BB to his or her employee to claim tax benefits or rebate on investments and expenses.
Only a few days are left for the financial year to end and many of us have still not submitted our tax savings investment. Have you received an email from your accounts department asking for investment proofs? Are you panic-stricken and perplexed? What if you forget to submit your investment proof before the deadline? What if you submit the wrong details? Here's your guide for last-minute tax savings planning.
There are sections according to your salary under which you can save tax by investing your money. But, always remember that one mistake can land you in trouble. Don’t just invest last minute to show investment proofs and save tax. Invest in order to save your money and taxes both. Select the right mode of investment accordingly.
IMPORTANT THINGS TO KEEP IN MIND FOR YOUR LAST-MINUTE TAX SAVING INVESTMENT
Analyse your pay structure before investing to save tax:
Always try to analyse and review your tax saving investment before submitting the proofs. Don’t just jump over to invest on saving options. First analyse your pay structure and household expenses. After the introduction of two tax regimes, the old and the new one you might have to change the decision of making some saving options according to the selection of tax saving options. But still you can claim few of your exemptions while claiming them when you file your tax return.
Investment under Section 80C:
One can save upto 1.50 lakh rupees by investing under Section 80C of Income tax Act. One can claim ELSS investment proof, Mutual funds, PPF, NSC, NPS, Tax Savings Fixed Deposits.
Tax benefits options for your personal expenses:
Children’s tuition fee, health insurance premiums for parents along with self, interest on education loan, home loan certificates/EMI (Interest and principal repayment), medical expenses on maintenance and medical treatment of critical illness, medical treatment expenses for disabled
One can claim HRA by submitting rent receipt. One must submit the PAN details of his or her landlord if the rent is above Rs 8,500. But the amount less than 8,500 does not need PAN details.
Invest taking Insurance plans:
To save tax apart from personal expenses there are many investment options like ULIPs and traditional insurance plan. The main purpose of insurance companies is to push you to buy their products to save taxes in the last minute. It is very important to select the right insurance policy as insurance policy is to provide you adequate risk cover. So, selection of better investment which can provide you good returns is what someone should go for.
Some of the other options where one can invest to save tax are:
PPF: One of the best long-term tax saving schemes which comes under Section 80C.
Sukanya Samriddhi Scheme: The parent with girl child less than 10 years of age can invest in this scheme to avail tax. The interest under SSS is totally tax free.
ELSS: Equity linked savings schemes also offers best tax options but it is a bit risk taking investment as compared to any other investment for tax savings. It is suggested not to invest in bulk by most of the financial advisors in ELSS. It has a lock in period of 3 to 5 years. One can buy the ELSS online as well.
NPS: The best tax saving investment option for retirement is National Pension Scheme. One can avail the tax deduction for contribution as well as ones employer’s contributions under section 80CCD.
Health Insurance plans: One can invest in group health insurance to avail tax benefits. The maximum deduction that can be availed is covered up to Rs 25000 yearly. Premium paid for senior citizen above 60 years can get 50,000 rupees is covered. Also, one can avail 5000 rupees for preventive health check up under section 80D. Medical expenses for senior citizens can also be claimed under section 80D upto rupees 50,000.
Home Loan Interest payment/EMI can be claimed under section 24
Tuition fees: Parents can claim tuition fees charges of up to 1.5 lakh under section 80C
Education Loan: One can get benefit of his or her child’s education loan EMI as well
Key points to consider before considering last-minute investment
• Keep extra cash amount to invest for saving taxes
• Immediate midterm financial needs to look after because of the lock in period of 5 years
• Decide your tax savings investments aim and objective
• Compare and analyse the rate of return before investing
• Decide before the deadline, else deadline will spoil the charm of your tax saving investment
Remember, whether you are investing prior or before the deadline of your tax declaration submission. You should always consider your priority and need before going for any of the above-mentioned tax saving options. Just don’t go haywire and invest your money. Take the guidance of your tax planner and then invest. Also, if you have mentioned but fail to submit investment proofs then be prepared to pay higher taxes. So, keep yourself calm and then go for tax saving investments according to your need.