Right from January to March end, many of us are busy doing one common thing — figuring out the best way to save on tax. In our hurry to complete the tax-saving exercise before the end of the financial year, we end up making mistakes (many times rather expensive ones). These include investing in products without weighing the pros and cons properly, and not making full use of the various deductions and exemptions.
However, don’t worry, here is a handy guide that can lead you on the right track this tax-saving season. You will find here stories to help manage your taxes efficiently, these include making proper use of the various sections of the income-tax Act, stories on financial products and expenditures that can help you save the most tax, and how to go about using your office reimbursements.
So, bookmark this page as we will be updating it with stories regularly.
Have you done your tax-saving right?
While completing your tax-saving exercise you have to make sure that you have done it properly, especially if you are doing it at the last minute. To help you, here are five questions you should answer to check if you are on the right track. If you are not, remember that you still have a couple of months left to take corrective measures.
These new tax laws allow you to save more tax
Budget 2018 introduced certain changes in tax laws that allow you to save more tax than you could in previous years. Here’s a look at these new rules and how much tax you would be able to save this financial year due to them.
Best tax saving options for FY 2018-19
ET Wealth has assessed 10 tax-saving instruments on eight key parameters—returns, safety, flexibility, liquidity, costs, transparency, ease of investment and taxability of income. Each parameter is given equal weightage and the composite scores of the various tax-saving options determine their place in the ranking.
Tax saving options other than section 80C
The most popular deduction that comes to mind when you think about tax-saving investments is section 80C. There are other deductions as well which may be available to you, but you might miss out on them due to lack of awareness. Here’s a list of deductions that you can claim under different sections of Income Tax Act. Make the most of it and reduce your taxable income as much as possible.
Submitting fake bills to lower your tax liability? Tax department has ways to catch you
Those who do not have bills/receipts of sufficient value to claim the full amount they are entitled to (as per their company policy) as exempt from tax may be tempted to claim the reimbursements by submitting fake bills/rent receipts to their companies. But this is not a good idea. This is because if fake bills are submitted for reimbursement then you are yourself liable even if the employer accepts the bills and reimburses you for them.
Tax-saving for young earners simplified
If you are a young earner who wants to save on tax without locking away your money in a long-term investment and don’t want to put a dent in your wallet, here are a few tax-saving investments and tax breaks you can use.
How to save tax on House Rent Allowance
For most employees House Rent Allowance (HRA) is a part of their salary structure. Although it is a part of your salary, HRA, unlike basic salary, is not fully taxable. Subject to certain conditions, a part of HRA is exempted under Section 10 (13A) of the Income-tax Act, 1961. The amount of HRA exemption is deductible from the total income before arriving at a taxable income. This helps an employee to save tax.
Don’t forget to claim your LTA tax exemption this year: Here is how
Employees who are eligible for Leave Travel Allowance (LTA), as part of their cost-to-company (CTC), can claim reimbursement of expenses incurred on travel. Subject to certain limits and conditions, this reimbursement is not included in one’s taxable income.
Medical expenses that can be claimed as tax break under section 80DDB
This section of the Income Tax Act allows you to claim a tax-break if the expenditure is done on the certain specified diseases. This expenditure can be claimed by the individual for the expenditure on himself/herself or for the dependant as mentioned in the Act. The amount of deduction that can be claimed as deduction depends on the age of the person.
Benefits of investing in tax saving fixed deposits
If you have not made any tax-saving investments yet and are looking for a safe and easy bet for saving tax, then a tax-saving fixed deposit could be an option. In this tax saving instrument, one can invest to save tax under section 80C of the Income Tax Act. This can be done easily by visiting a bank, filling the form and giving a cheque.