Do check what your annual income and your existing commitments. The taxable income is arrived at after accounting for standard deduction and zero tax slab limit.
If you are employed with a large corporate, April is the month for submitting investment declarations for financial year 2018-19. Employee inboxes would be flooded with reminder mails in the first week of April itself. Most employees use either of these two simple approaches to handle the situation.
First, ignore the mails till the income tax deductions appear on their salary slip. Second, fill in some random numbers – like Rs 1.5 lakh under section 80C and Rs 50,000 under the health insurance option. Though human the resource department or payroll managers allow deviations between the proposed and actual investments, if you take a more calculated path, you can get a fair idea of your tax planning needs. Here are five things you must know:Know where you have invested last year
This could be the best point to start the process. Many people end up doing their tax investments in March. The memory of which is yet to have faded. So, write down past investments that may have future commitments. These include popular options such as public provident fund (PPF), life insurance, health insurance, national pension scheme (NPS), among others.
Since your life insurance premium remains the same and health insurance premium generally rises by a fraction as you age, these amounts should be mentioned in the investment declaration. Other recurring investments too should be noted down. You may choose to invest the same amount or raise it. If your financial goals have changed, you may want to keep the contributions to a minimum to avoid penalty if any.
Do check what your annual income and existing commitments are. The taxable income is arrived at after accounting for standard deduction and zero tax slab limit. Also account for statutory contribution to EPF. This is eligible for deduction under section 80C in addition to your other investments. After accounting for the estimated income and extant commitments, the shortfall you arrive at is your actual need. You should choose investment options taking into account your financial goals.Non-investment deductibles
You can claim tax deductions on account of your home loan repayment and various other expenses incurred. The more popular payments here include house rent, tuition fees of your children and donations. Please note that only tuition fees is allowed as a deductible expense. Payments made under heads such as development charges, refundable deposits are not admissible. Donations to notified charities are also exempt.Get the requirements in place
This is the tricky area. Some employers expect you to upload supporting documents or at least provide a few details. In case of house rent, keep the scanned copies of your house rent agreement or at least details of the same in hand. In case of home loan repayments, do ask for a provisional certificate from your lender. You can get it online using the web portal of the banker. It will give you the break-up of EMI - home loan principal and interest to be payable over FY19. Having these details handy will help you fill up the exact details.Know the exact sections
If you have health insurance premium payments due in the year, mention them under section 80D. In case you pay a premium for critical illness or a health cover related rider on your life insurance policy, do club this premium with the premium payable on health insurance.
Home loan interest should be mentioned under section 24, though the principal repayment falls under section 80C.
NPS falls under section 80CCD (1B). It is a separate section and does not fall under Section 80C.Finally, key in the right numbers against the right head and hit the submit button and you are done. Happy investing!