Six tips to make taxes easy for millennials

The beginning of one’s working life is always exciting. There’s the feeling of doing something meaningful with one’s life that comes with a job. The excitement of making a difference in the world is also associated with doing the kind of work one wants to do. But on the flip side, there’s taxes that is thrust upon someone who starts to work.

If you’re part of the millennial generation who has started working in the past decade, taxes are something you probably try to avoid as much as you can. But of course, income taxes are omnipresent, especially at this time of the year. Hence, it’s best to take taxes head on. Here are six tips that will make income tax easier for you.

E-file within the prescribed deadline

The Income Tax Department levies penalties on taxpayers who fail to e-file their returns within the deadline set by the government. For the current assessment year–AY2016-17–the deadline is 31st July 2016. You should make sure you e-file by then to avoid undue attention from the tax department and avoid having to pay penalties.

Make sure your details are correct

One thing that can really be time consuming is doing your tax returns more than once. This can happen if the details you fill out are incorrect and you end up getting a notice from the tax department. You would then have to reply to the notice and modify the returns. Just avoid all of this hassle by making sure your returns are perfect.

This is one thing you don’t have to worry about if you e-file on ClearTax by uploading your Form 16. We’ll automatically prepare the returns for you.

Get the tax refund that you deserve

Many people from the younger generation don’t have taxable income, especially when they start working. You don’t need to file tax returns if you don’t earn more than Rs 2.5 lakh a year. But even then, you should. There are many benefits of filing tax returns, the primary one being that you won’t be able to get a refund on the TDS deducted if you don’t file.

Start tax saving in the beginning of a financial year

Leaving your tax-saving investments till the last quarter of the financial year can be a grave mistake. When your company HR comes calling for investment and expense proofs, you will be under pressure to quickly do something in an attempt to save taxes. Consequently, a rushed decision can turn into a poor investment or a bad expense. Instead, you should plan your tax-saving endeavours and begin in the first quarter of the financial year itself.

Put money in ELSS funds

You’re young, you’ve time on hand. You have a long working life and your income is only going to grow. This is the time when you can afford to take some risks with your tax-saving investments. And the equity-related risks of ELSS funds gets mitigated with time. Over long periods of time, only equity gives returns that can beat inflation. This is why a majority of your tax-saving portfolio should be in ELSS funds.

E-file by yourself

This might seem like self-propaganda, but it really isn’t. It is not only private e-filing platforms like ClearTax, but also the Income Tax Department that is endeavoring to make e-filing returns a simplified process. The department is creating awareness on income tax and has tried to make things easier for the common taxpayer to understand and e-file his or her returns.

This article was published in Deccan Herald on 4 July 2016.

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