Frequently Forgotten, No More!

Contributed by Harshita, with inputs from the entire team.

We all like to get gifts, don’t we? And more so because the Valentine day just passed us by, we deserve gifts. So to keep up the tradition that many a teenage hearts have begun, I will shower you with some precious gifts that will do you well in this tax season. So, unlike the gifts that you get on the 14th Feb these gifts are meaningful and precious (Haww, Did I just say that 😛). As the previous articles on this blog, we demonstrate our love for salaried people this time as well. So, here is a list of tax-saving investment options, which you need to keep in mind.

Following is an illustrative list of tax-friendly investment options:

  • Provident Fund (PPF)
  • National saving certificate s (NSC)
  • Equity linked saving schemes (ELSS)
  • Unit linked Insurance plans (ULIP)
  • Post office saving scheme

Duhh, haven’t we covered these already? Yes, most of them in great detail.

In order to break this monotony, we conducted a small research to understand the general composition of deductions. As expected, most of the participants had their 80C sorted. Seeing that, we came up with a thought of shedding some light on the frequently forgotten/unclaimed deductions (Well, you are all champions in 80C).

Remember Simpsons

So, here is a list of options that we generally overlook while filing our returns. Some of these are deductions that we forget to claim in our returns. This means that even though we have made an investment during the year, we forget to submit it as an investment to the company, or forget to show it on our IT returns. Either ways, it is a loss. Therefore, memorize these deductions like how you memorize all the significant dates in your relationship. (Asking too much!)

 

Charity can begin at home or anywhere, but should end on your returns if eligible:

Yes, the charity is appreciated by the Income Tax Act. Precisely, section 80G provides for deduction on charity. In order to ensure that you get deduction for the donations made, the institution must have been approved by the Income Tax Authorities as eligible under section 80G. In addition to that, you are required to collect the PAN number of the said institution to be able to claim he donation in your IT return. Check here to see if your institution has been approved by the authorities. I would also request you to connect with us over mail/blog in case there is any doubt with respect to deduction under section 80G.

 

*Quick Tip*: One simple way to get efficient in this manner is to maintain a physical file, where you collect all the donation receipts along with the PAN details.

 

Health is the key to all wealth:

I am pretty sure that most of us would have come across the section 80D, which covers deductions for medical insurance premium paid. The mentioned section provides benefits to individuals who pay for health insurance premiums as well as medical check-ups. Here is a brief overview of the entire section as laid out in the Act (Please note that it is highly possible that you have queries/doubts with respect to the overview. In that case we are here to help you.). There are murmurs in the media that the Budget 2015 may push for a hike in the 80D limits. Woah, that sure is a gift 😉

 

The other benefit of education:

Section 80E of income tax act recognizes the trouble you face on payment of interest on education loan and therefore, provides for its deduction. Since, interest on educational loan forms a significant chunk of our yearly disbursements, it is quite important to make a claim of the interest in your returns. However, it is also important to note that the section 80E provides deduction only for interest paid on the educational loan. As for the repayment of principal, we have to wait till our Government becomes more generous.

 

Moreover, since the tax season has also approached, so those who have sleepless nights worrying about the investments that they could have made during the year and managed to cut down tax, but didn’t, we have one for you as well.

 

National Savings Certificates If you invest Rs.100 in National Savings Certificates today, expect to get Rs, 234.35 after a decade (as per NSC IX issue), giving you a rate of interest of around 8.80%, which is a reasonable demand for a completely safe investment option. Though this option is not the best of the lot, it can be used as a last resort to take complete advantage of the hiked limit under section 80C (limit of INR 150,000). Additionally, NSCs can be kept as collateral to get loans from banks.

 

Well, that’s it. In keeping with my intent, I have communicated some unconventional yet important investment options via this post. Undoubtedly, the exercise of planning your taxes is a humungous one. Therefore, I will keep coming with similar posts, to make you aware of several important elements of financial planning.

 

Stay tuned to Fintuned!

 

Cheers

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