This is a saying by former US President Richard Nixon. "Make sure you pay your taxes; otherwise you can get in a lot of trouble." Yes, you have to pay taxes to the Government, but why pay more than what is required under the Income Tax laws?
Being ignorant of tax laws or just plain laziness can cost you when it comes to taxes. Awareness of tax rules and sound tax planning makes sure you don’t pay too much in tax.
Take a look at these tips to avoid paying more income tax. Want to know more on Income Tax? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.
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Identify all your income so that you pay the right taxes. You need to go through the bank statements and make a note of all the money that goes into your bank account.
You need to identify all taxable income and then understand tax exemptions and tax deductions to save on taxes. You need to download Form 26AS from the income tax departments website. Form 26AS gives details of TDS deducted from salary, banks and so on. You need to keep an eye on all financial investments you make. The Income Tax Department with the help of Big Data and Data Mining can easily detect unreported income and catch tax evaders.
Any mismatch in income between the ITR filed and Form 26AS could result in an income tax notice.
Tax laws keep changing and you need to keep yourself updated on the latest tax rules. In the last budget, the Government introduced a standard deduction of Rs 40,000 a year, which would take effect from Financial Year 2018-19.
You will no longer be able to avail the medical reimbursement exemptions of Rs 15,000 a year and the conveyance allowance of Rs 1,600 a month. The standard deduction replaces these tax allowances and exemptions.
If you suffer a loss on house/property, this loss can be set-off against any other income you make, up to Rs 2 Lakhs a year which is effective from Financial Year 2017-18. The balance if any from a house property loss can be carried forward for 8 years and this loss can be set off against future house property income.
If you make profits/gains on your investments, these gains are called capital gains. Understand the tax implications of these long term and short term capital gains. LTCG on equity oriented mutual funds and shares was tax-free if held for a year or more, but after the latest Union Budget, gains in excess of Rs 1 Lakh are taxed from Financial Year 2018-19.
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Your employer is authorized to consider tax deductions and tax exemptions, before calculating the taxable salary. You have to submit the related investment proofs which enjoy tax exemptions/deductions on time, to claim these tax deductions and exemptions.
If you don’t submit the investment proofs on time, you will be able to claim refunds only when you file ITR.
You might be familiar with Section 80C tax deductions. But, there are a lot of other tax deductions say on the premiums paid on health insurance plans for yourself + spouse+ kids, under Section 80D up to Rs 25,000 a year or Rs 30,000 a year, if you are a senior citizen.
Understand the Chapter V1A tax deductions, (Section 80C up to Section 80U), and other tax deductions and exemptions for efficient tax planning.
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