Here is a quick guide for Last minute tax planning

Do you find yourself in a situation where there are just a bunch of days ahead for the deadline of submission of tax documents? Here is a quick guide to help you sort out your finances last minute!

1. Target full utilization of Section 80 C: Maximum deduction available is to the tune of Rs 100,000. Assess your income to arrive at the amount you need to invest in this section.

2. Interest on home loan: Individuals intending to buy a house should consider opting for a home loan. Interest payments up to Rs 150,000 pa are eligible for deduction under Section 24.

3. House Rent Allowance (HRA): You can take advantage of this if you are renting an accommodation. There are set guidelines determining the amount deductible. Please note that the rent agreement and rent receipts need to be submitted.

4. Health Insurance Premium: Annual deduction of Rs 15,000 is permissible for self, spouse and dependent children. Also an additional Rs 15,000 is allowed for parents.

5. Medical reimbursement: Medical treatment expenses up to Rs. 15,000 can be claimed annually as deduction from salary u/s 17(2). Actual bills need to be produced.

6. Donation to Charitable institutions: Subject to the stated limits, donations to specified funds/institutions are eligible for tax benefits under Section 80G. Receipt needs to be produced.

7. Interest paid on educational loans: Deduction can be claimed on interest paid on educational loans taken for higher education of you, your spouse and children under section (u/s) 80 E. There is no limit on the amount of deduction you can claim.

However, the loan should be taken for a graduate or post-graduate program in engineering, medicine or management or a post-graduate course in the pure or applied sciences.

Points to remember

1. Section 80 C allows deduction of tuition fees spent on children's education.

2. If you want to pay rent to your parents or relatives (kindly note this arrangement cannot be done with your spouse), you will need to treat them as landlords and request the owner of the house to declare it in his/her personal income tax return.

3. The maturity proceeds of life insurance policies are not taxable.

4. Conveyance allowance up to maximum of Rs 800 can be claimed per month as deduction from salary u/s 10(14).

5. Long term capital gains on listed shares/securities are not taxable.

6. Capital gains on sale of house property can be avoided by purchasing another house property within two years after or one year before date of sale.

7. Stamp duty charges and registration charges paid while purchasing new house is eligible for tax deduction under Section 80 C.

The first step in the direction of tax saving is to assess your tax liability. So start the process so that you can then decide on what all to opt for to save maximum taxes.

Source :ET