7 simple hacks to save on taxes in 2014

It’s that time of the year again when the HR department sends you an email reminding you to ‘declare your investments’ for the financial year, pronto.

Most of us just do the minimum to get over with it and hope that we aren’t squeezed again by the taxman this year.

Time to change tracks. Why? Two reasons:

  • You’re don’t want to pay more of your hard-earned money as taxes than absolutely necessary.
  • It really IS simple to save some extra bucks on taxes

How you ask? ClearTax.in brings you these 7 simple hacks:

1. Pick wisely

Just because a particular investment option is tax deductible, does NOT mean that it is the right one for you.

Before investing in various avenues take a step back and figure out your financial goals – travelling the world, buying a house, your children’s education – whatever floats your boat. Your financial goals will decide what investments are best suited for you.

2. Keep ‘em handy

Often in a hurry to beat the deadline, at the time of declaring our investments, we forget about investments that we might have made earlier.

File away your investments systematically, so that you don’t miss claiming tax deductions on any single investment made during the year.

3. Life Insurance – the right timing

It takes time and considerable research to zero in on a life insurance policy that’s just right for you. It takes even more time to buy the policy of your choice, thanks to all the paperwork involved.

If you intend to include life insurance into your investment mix for the year, do ensure that you start the process of shopping around for it well before March 2014.

Remember, your premium payment needs to be complete BEFORE 31st March 2014 for your new life insurance policy to save you any tax this financial year.

4. PPF to the rescue

Not buying a life insurance policy this financial year? The Public Provident Fund or PPF is a smart and safe option for saving on taxes.

There are 2 ways in which PPF helps.

  • One, the basic amount invested in the PPF account is tax deductible.
  • Two, the interest earned on your PPF investment is also tax exempt.

Truly a twice as nice investment option!

5. Remember your Employees’ Provident Fund

Most salaried employees participate in the EPF program at their workplace, where they contribute a fixed portion of their salaries towards a retirement fund.

Their investment is matched by the employer under Indian law. Here, the employee’s contribution to the EPF is tax deductible.

However, a fundamental error that a lot of us make is that we do not account for our EPF contributions while considering tax saving investments for the year.  This year, do not forget to account for this.

6. Pay your EMIs on time

If you have taken a housing loan, make sure that you pay each EMI on time. You are eligible for a tax deduction on the repayment of the principal amount.

The interest component on your housing loan is also tax deductible. So a missed housing loan EMI payment equals a missed chance at saving on taxes.

7. Uncommon deductions

Not many of us are well versed in the nitty-gritty of taxation laws and hence end up missing out on some not-so-common tax deductions. Here’s a quick rundown of some of them :

  • If you have purchased a new house, do not forget to avail the deduction on stamp duty paid for purchase of your property.
  • Get your health check-up and save money!
    You can claim a deduction on the amount you pay for preventive health check-ups under section 80D up to a maximum of Rs. 5000 per financial year. This can also be in cash.
  • Savings Bank Interest = Savings on Income Taxes
    Under the newly introduced Section 80TTA, your Savings Bank interest is exempt till Rs. 10,000. When you file on ClearTax.in, we already take this into account.

 

For a list of all the Tax Deductions you can avail, read ClearTax’s List of Deductions.

Once you’re ready to e-File, go ahead and e-File on ClearTax, the easiest way to e-File Income Taxes Online.

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