10-point checklist for planning your taxes
Planning for tax investment from the beginning of the year is a good practice. But, Inot dome well in advance better to start when the end of the fiscal is less than three months away. Now is the time to start planning your taxes.
The following is a ten-point checklist.
1. The most important thing to do is start compiling a list of the Tax Deduction at Source(TDS) you have paid. TDS operates like tax already paid i.e. from your final tax liability you have to pay only such amount that is over and above the tax already deducted. It is important for all taxpayers to collect the TDS certificates after the end of the fiscal year. Though these don’t have to be attached with the tax return anymore, they have to be filed and kept on record and produced before the ITO if called for.
2. If you have availed of housing finance, be sure to collect the certificate of your EMIs and the total interest paid from the housing finance company.
3. If you haven't bought Mediclaim, do so now. There is a deduction of Rs. 15,000 (Rs. 20,000 if you are a senior citizen) available under Sec. 80D.
4. It is time to make your Sec. 80C investments to claim tax rebate. PPF offers 8% tax-free. Equity linked savings schemes are the flavor of the season. Have you considered these?
5. Sec. 88 used to be unavailable to those earning above Rs. 5 lakh. However, its not so with Sec. 80C. Everyone, regardless of income level, can take advantage of the Rs. 1 lakh tax break offered by 80C.
Sec. 80C doesn’t impose sub-limits like Sec. 88 used to. For example, under 88, you could invest only up to Rs. 10,000 in ELSS. Or only Rs. 20,000 was available for housing finance. Now, 80C is extremely flexible, as the erstwhile sub-limits have been dispensed with.
The EET tax regime has yet not been notified. Therefore, all your tax saving investments for FY 07-08 will be under the old EEE system. For next year, defer your tax saving investments till such time there is clarity on the issue. The Government is expected to come out with the new tax laws anytime next year.
6. If you have made a donation, you need to submit the receipt issued by the institute (receiving the donation) to get the benefit of the deduction under Sec. 80G. If you have not collected such a receipt, do so soon.
7. If you are a female assessee under the age of 65, do not forget to take into account the special tax exemption slab of Rs 1,45,000 while arriving at your tax. And if you are above the age of 65, remember to claim the special slab exemption of Rs. 1,95,000.
8. If you are a trader, remember, Sec. 88E allows you a set-off of the Securities Transaction Tax against your trading profits. Arrive at your taxes only after claiming this set-off.
9. Last but not the least; get in order all your supporting documents of the tax planning/saving instruments that you have invested in. For employees, this directly affects the amount of TDS on your salary. If you are late, you would end up bearing a higher amount of TDS than what ought to have been deducted.
10. The last date for payment of advance tax is March 15th. However, if your advance tax payable is less than Rs. 5,000, then you can pay such tax while filing the return. Also, if you earn any income after 15th of March, pay tax on it on or before 31st and such tax would also be treated as advance tax.
Planning for tax investment from the beginning of the year is a good practice. But, Inot dome well in advance better to start when the end of the fiscal is less than three months away. Now is the time to start planning your taxes.
The following is a ten-point checklist.
1. The most important thing to do is start compiling a list of the Tax Deduction at Source(TDS) you have paid. TDS operates like tax already paid i.e. from your final tax liability you have to pay only such amount that is over and above the tax already deducted. It is important for all taxpayers to collect the TDS certificates after the end of the fiscal year. Though these don’t have to be attached with the tax return anymore, they have to be filed and kept on record and produced before the ITO if called for.
2. If you have availed of housing finance, be sure to collect the certificate of your EMIs and the total interest paid from the housing finance company.
3. If you haven't bought Mediclaim, do so now. There is a deduction of Rs. 15,000 (Rs. 20,000 if you are a senior citizen) available under Sec. 80D.
4. It is time to make your Sec. 80C investments to claim tax rebate. PPF offers 8% tax-free. Equity linked savings schemes are the flavor of the season. Have you considered these?
5. Sec. 88 used to be unavailable to those earning above Rs. 5 lakh. However, its not so with Sec. 80C. Everyone, regardless of income level, can take advantage of the Rs. 1 lakh tax break offered by 80C.
Sec. 80C doesn’t impose sub-limits like Sec. 88 used to. For example, under 88, you could invest only up to Rs. 10,000 in ELSS. Or only Rs. 20,000 was available for housing finance. Now, 80C is extremely flexible, as the erstwhile sub-limits have been dispensed with.
The EET tax regime has yet not been notified. Therefore, all your tax saving investments for FY 07-08 will be under the old EEE system. For next year, defer your tax saving investments till such time there is clarity on the issue. The Government is expected to come out with the new tax laws anytime next year.
6. If you have made a donation, you need to submit the receipt issued by the institute (receiving the donation) to get the benefit of the deduction under Sec. 80G. If you have not collected such a receipt, do so soon.
7. If you are a female assessee under the age of 65, do not forget to take into account the special tax exemption slab of Rs 1,45,000 while arriving at your tax. And if you are above the age of 65, remember to claim the special slab exemption of Rs. 1,95,000.
8. If you are a trader, remember, Sec. 88E allows you a set-off of the Securities Transaction Tax against your trading profits. Arrive at your taxes only after claiming this set-off.
9. Last but not the least; get in order all your supporting documents of the tax planning/saving instruments that you have invested in. For employees, this directly affects the amount of TDS on your salary. If you are late, you would end up bearing a higher amount of TDS than what ought to have been deducted.
10. The last date for payment of advance tax is March 15th. However, if your advance tax payable is less than Rs. 5,000, then you can pay such tax while filing the return. Also, if you earn any income after 15th of March, pay tax on it on or before 31st and such tax would also be treated as advance tax.
