Every individual, having a salary above the respective exemption limits, income tax return filing process is mandatory. The income tax department has specified the tax deductions according to the income slabs of the individuals. Depending upon your income, the taxes you are liable to pay could be massive. To avoid people’s aversion to paying a large amount of taxes, the government has made provision for availing tax refunds as well. You can claim these refunds while filing the ITR.
To avail the maximized benefits, follow these seven little changes. It will make a big difference with your Income Tax Return as well as allow you to plan your financial security.
1. Plan Your Tax and Savings Early
As you already know your total income, you must calculate the amount of tax you are liable to pay. It will help you to divide the taxable amount equally across the year. You will also be able to plan your investments wisely as you do not have to juggle between paying or saving tax during the last 2-3 months.
2. Know Your Salary Components
Our salary is the primary source of income for most of us. Thus, knowing the various parts or the structure of the salary is essential. It will help us to identify the elements which can earn you a maximum rebate from the income tax. You can also determine the taxable components and save taxes on them through proper investment.
3. Pay Your Taxes Regularly
After proper planning of your tax liability according to your salary, pay the dues on a regular basis. It will help you to keep your expenditures and savings under control. Moreover, it will spare you the last minute hurrying in the final months of tax payments. Paying the taxes on time would also help you to optimize your income without any backlogs or liabilities.
4. Calculate the Investment
Every individual is allowed to claim exemptions against the investment made up to Rs. 1.5 lakhs. You can invest your money in the 80C section such as PPF, ELSS, ULIP, NSC, and fixed deposits for up to five years. The provident fund deducted from your salary falls under the 80C section of the income tax act and is exempted from any income tax too.
5. Donate Wisely
Donation to charitable trusts and some other schemes can get you up to 100% rebate. While completing the income tax return filing process, mention the total amount of money paid by you. You must also submit proof of such donations during filing ITR.
6. Insure your Life and Health
Another method that maximizes your income tax return is your life insurance and health insurance premium. These premiums, as well as the benefits earned, are exempted from the taxable income. Life insurance and health insurance are also helpful in providing stability in case of any future calamity.
7. Home Loans and Children’s Education Fees can be Handy
While completing your income tax return filing process, you can claim tax exemptions from home loans too. The home loan principal paid during the year is tax-free, and submitting the record would allow you to claim a refund. You are also eligible to save taxes if you provide the details of the fees paid for your children’s education.
Things to Remember
Paying your income tax is as essential as knowing the components that offer tax-free incentives. It is critical in planning your financial health as well as the future security that you and your family need. The points mentioned above will help you to earn a maximum tax rebate and help you to invest wisely.