Financial year (FY) 2011-12 beckons as the last year for the Income Tax Act, 1961 as the Direct Tax Code (DTC) would come into effect from the next year (April 1, 2012). As the new financial year starts, the taxpayers should keep in mind following things, this will help them to plan their tax investment as to maximize their returns and minimise taxes.
Tax Slab for the Financial Year 2011-12
For the Financial Year 2011-12, male assessees will get additional basic exemption limit of Rs. 20,000 i.e. the limit extends from Rs. 160,000 to Rs. 180,000. Limit for Female assesses remains same as in the last year i.e. Rs. 190,000. Limit for senior citizen has been raised from Rs. 240,000 to Rs. 250,000. Moreover, the age limit for senior citizen is reduced to 60years. Further, there will be a new category of tax payers from the Financial Year 2011-12; â€˜very senior citizenâ€™ having age of 80 years or more will enjoy tax exemption upto Rs. 500,000.
Do these things in the financial year 2011-12 â€“ Will Save Taxes and Secure Future
Open a Public Provident Fund (PPF) Account:
PPF is one of the most popular investments in the country, due to security of the fund and an 8 per cent compounded annual return. Further, investment in the PPF has tax benefits under Section 80C, which effectively makes the return higher than 8 per cent.
The investment can be made upto a maximum of Rs 70,000 per annum in the PPF, minimum of Rs 500, in instalments or in one go, depending on the cash scenario.
Get Additional Tax Benefit under section 80CCF
The limit for deduction from taxable income is Rs. 100,000, if you invest in tax saving investments like tax saving fixed deposits, or tax saving mutual funds, Public Provident Fund and others.
Section 80CCF allows you to invest an additional Rs. 20,000 in infrastructure bonds, and have that reduced from your taxable income in addition to the Rs. 100,000 deduction you get from the other instruments.
One thing to note here is, that the tax benefit is there only in the first year, which means that if you buy bonds worth Rs. 20,000 in this year â€“ Rs. 20,000 will be deducted from your taxable income while calculating tax this year. There is no tax benefit from next year onwards. While there may be no TDS on the interest on these bonds, they are taxable, and the interest will be added to your income, and it will be taxable.
Take housing loan and own your dream house
Indian Tax laws provide incentives for those who buy residential property. The interest paid on a housing loan taken to buy or construct a house is deductible from the total income of an income tax assessee. The deduction is available for both let out and self-occupied property during the previous year.
The main condition is that the assessee should borrow the money and the interest should be payable on borrowed capital for acquisition of property, construction of property and not for Repair of property or Reconstruction of property. The maximum amount of deduction available is Rs 1.50 lakhs out of interest paid or payable, provided some conditions are satisfied. Whereas, the principal element can be claimed under section 80C.
In case a property has been acquired or constructed with borrowed capital, the interest payable on the amount borrowed for the period prior to the previous year in which the property has been acquired or constructed is also eligible for deduction. The interest is deductible in five equal installments commencing from the previous year in which the house has been acquired or constructed.
Opt for Post Office Schemes
Post office scheme over the period of time have become the popular tax saving plan and investment plan for retired individuals for their post retirement life. Investment avenues under the post office schemes include National Savings Certificate (NSC), Senior Citizen Savings Scheme (SCSS) and the Post Office five-year time deposits. The best part about these schemes is that they have uniform presence and their interest rates do not vary frequently in comparison with banks/other deposits schemes.
These were few of tax saving tools, one can opt for to save taxes and secure future.
File your Return of Income/ Tax return at the Earliest
We hope that you would have filed your return of income/ Online return filing/ tax returns for Financial Year 2009-10, in case you missed to file the same, you can still file the same. The last date for the return filing for 2009-10 is 31st March 2012, however the assessing officer can levy penalty for late filing of the same.
Further, even though the last date for the filing of return of income/ tax return for the Financial Year 2010-11 is 31st July 2011, still we recommend that you should file the return of income at the earliest to avoid the last minute rush. Further, you should arrange all the documents, like Form 16 from your employers, TDS certificates from the Banks and other investment proofs.
We at taxmantra.com have the expertise to handle most complicated individual taxation issues. We request you to please contact us at the earliest; we are here to help you in solving all your tax issues.