Tax Planning | Plan Properly and Save on Your Tax

Tax Planning Tips with Expert’s Advice

Most of us would spend time and think to save the tax only during the last 3 months. There are people who would end up bad investment plans to save tax as they plan things out in hurry during the last months. To avoid these negatives it is better to plan on your tax from the beginning itself.

Advice on Tax Savings

How to Save Your Tax?

During the current financial year, do calculate how much are you spending on provident fund, children’s educational expenses, house loan’s repayment on principle amount (if you had taken housing loan), total amount that you are paying for insurance premium etc. If additions of all these goes beyond Rs. 1,00,000 then you don’t have to think about any new investment. If all the above expenses are within the amount of Rs. 1,00,000 then you can invest the remaining amount in an useful way and here are the plans.

Investing your money in voluntary PF is the best option. You will have tax exemption at three stages – first is for the money that you invest in this Voluntary PF, second the income that you get out of this investment and third is the maturity amount. If you are ready for minimum risk but expecting a low lock in period, then you can go for share market related mutual fund – ELSS plans are appropriate.

Self-employed and business doing people can save in PPF accounts for your future expenses. For this now the interest rate is 8.8% and the tax exemption investment level has been raised to Rs. 1,00,000 from Rs. 70,000. Senior citizens can invest in the tax savings plans at post office.

While tax planning, what are the important points to be considered? Here are those lists of points –

  • It is important that life insurances should have the coverage amount 10 times more than the annual premium amount.
  • When investing in ELSS through SIP, it is important that you choose it only for one year as it is unsure whether the new income tax law would still have the tax exemption for this investment.
  • Mediclaim policy has tax exemption from the premium amount of Rs. 15,000 for a family and for Rs. 15,000 for parents (it is Rs. 20,000 if the parents are senior citizens). Now government has announced that the prevention diagnosis has got tax exemption up to Rs. 5,000.
  • This year, under 80 CCF there is no tax exemption for investments made in infra funds up to Rs. 20,000.
  • Central government has announced tax exemption for the first time investors in the share market of Rs. 50,000 during 2012-13 will have tax exemption for Rs. 25,000. This money cannot be withdrawn for 3 years.
  • Hindu United Families (HUF), now doesn’t have permission to invest in PPF plans for tax exemption. They can avail tax exemption through fixed deposits in banks.

    If you notice the above lists of points carefully and follow them you can pay tax without any hassle or problem. It is every citizen’s responsibility to pay tax. Make your tax planning today itself.