10 simple things to do before March 31st for saving money on your taxes.
Yahoo! Finance did a great slideshow feature on an article we wrote for them recently. These are things to pay attention to before March 31st for tax savings and tax planning.
March 31st is almost here and you need to ring out the financial year in style. By style, we mean saving on taxes and getting a higher tax refund this year! We’ve compiled a list of 10 points using which you can ensure that you don’t miss anything out.
- Everyone rejoice! The exemption limit has been raised to Rs. 2 lakhs from Rs. 1.8 lakh.
The 30% tax slab now starts from 10 lakh rather than 8 lakh earlier. Men and women now have the same tax slab. No gender bias!
- The Basics: Get a deduction of upto Rs. 1 Lakh on your Taxable Income under section 80C
Under this section, a deduction of upto Rs. 1 Lakh is available for investments made in specified financial instruments. Avail of this deduction by making the investments by March 31, if not already done, to reduce your tax liability.
- Get your annual health checkup before 31st March and get a deduction of Rs. 5000!
Within the existing limit for deduction allowed for health insurance (under Section 80D), a 5000 Rupee deduction for preventive health checkup is allowed.
This means if you are not availing the full exemption limit under Section 80D, you can get your health checkup done and claim the expense under Section 80D.
- Get a deduction of upto Rs. 10,000 for interest from savings bank accounts under a new section 80TTA
This is a fantastic new tax deduction that you can claim this year from interest income that you earn from your Savings Bank Accounts.
Note that interest income from fixed deposit is not deductible under Section 80TTA, so remember to declare it separately. Read more about Section 80TTA here.
- Rajiv Gandhi Equity Savings scheme (Section 80CCG)
This new scheme provides an income tax deduction of 50% for those who first time invest up to Rs.50,000 directly into equities and whose annual income is less than Rs.10 lakh, subject to a three -year lock in.
Exchange-traded funds (ETFs) and mutual funds listed on stock exchange and invested only in BSE 100, CNX 100 and blue chip public sector stocks are also allowed tax deduction under the scheme. Therefore, avail of this tax deduction by investing in the Scheme before the 31st of March 2013.
Basically, Invest Rs. 50,000 in the RGESS and avail a deduction of Rs. 25,000 on your Taxable Income. Read more about Section 80CCG here.
- Donating over Rs. 10,000 to charities? Make sure you use cheques!
Remember, the Section 80G deduction is not applicable in case your donations are made in cash for amounts over Rs 10,000. This step was taken by the Government to avoid tax evasion and black money.
So, make your large contributions to charitable organizations via cheque and avoid tax filing hassles!
- Good News for Senior Citizens
For senior citizens between 60 and 80 years, (those born between April 1, 1933 and March 31, 1953) there is a higher exemption limit of Rs. 2,50,000.
For super citizens who are of 80 years or more, (those born before April 1, 1933), the exemption limit is of Rs. 5 lakhs.
- No more Section 80CCF
Remember, the 80CCF deduction for infrastructure bonds is not available anymore. Tax payers were allowed to invest upto Rs. 20,000 in infrastructure bonds upto last year. However from this year, you may have to think about Rajiv Gandhi Equity Savings scheme as a tax savings measure.
- Pay Advance Tax now (Last date is March 15th)
If you have any tax due to the tax department, remember to pay this tax to avoid paying interest on tax due (under Section 234B and 234C).
However, senior citizens who do not have any income from business or profession, are exempted from payment of advance tax. This makes compliance easier for senior citizens.
Now they only have to work out their tax liability at the time of filing the income tax return and pay the self assessment tax.
- Did not file Tax Returns for Financial Year 2011-12?
For the Financial Year 2011-12, if your income is above the exemption limit, file your income tax return by March 31, 2013 even if you do not have any tax liability after deduction of TDS, Advance Tax etc. This is because under section 271F, there is a penalty of Rs. 5000 for failure to file the return of income by March 31.
Read more on whether it is compulsory for you to file your Income Tax Return.
Looking to e-file your Income Tax Return? Use ClearTax for Individuals and ClearTax Business edition for complete peace of mind and expert help.