Plan Your Taxes- Individual Tax Payers

We all know that the goal of tax planning is to arrange the financial affairs so that one can save their tax burden but before making planning for reducing the tax burden one should know the concept of tax planning which is as under: Tax Planning means arranging the financial activities in such a way that maximum tax benefits are enjoyed by making use of all beneficial provisions in the tax laws which entitle the assessee to get certain rebates and reliefs. This is permitted and not frowned upon by law. Thus, tax planning would imply compliance with the taxation provisions in such a manner that full advantage is taken of all tax exemptions, deductions, concessions, rebates and reliefs permissible under the Income Tax Act so that the incidence of tax is the least. It has generally been observed that individuals (often salaried ones) end up paying more taxes than they are obligated to. Tax-planning tips that can assist salaried people to reduce their tax accountability (a) By making full use of the entire Section 80C deduction – The maximum reduction available in Section 80C is Rs 100,000 and salaried citizens whose gross salary is Rs 250,000 or more are entitled to use the full Rs 100,000 limit. Following investments/contributions meet the criteria for Section 80C reduction: • Public Provident Fund • Accrued interest on National Saving Certificate • Life Insurance Premium • National Saving Certificate • Tuition fees paid for children’s education (maximum 2 children) • Principal component of home loan repayment • 5-Year fixed deposits with banks and Post Office • Equity Linked Savings Schemes (ELSS) (b) Reduction of tax liability by making investments other than Section 80C deductions – If one’s salary surpasses Rs 250,000 pa and the reductions under Section 80C are not enough to minimize the general tax liability then one should consider the following: • Home loan: Interest payments of upto Rs 150,000 pa are entitled for reduction under Section 24. • Medical insurance: A deduction of upto Rs 15,000 pa under section 80D is available under this. • Donations: Tax advantages under Section 80G entitle the donations to particular funds/institutions. (c) Asserting tax advantages on house rent paid – If HRA is not included in the salary structure then the salaried individuals can take advantage of rent paid by them for residential lodging. This benefit can be availed under Section 80GG and is smallest amount of the following: • 25% of the total earnings or, • Rs 2,000 every month or, • Surplus of housing charge paid over 10% of total salary Tax planning may, therefore, be regarded as a method of intelligent application of expert knowledge of planning corporate affairs with a view to securing consciously provided tax benefits on the basis of the national priorities in consonance with the interest of the State and the public. Tax Returns for Financial Year 2010 -11 (March 2011) has started. Request you to please visit or mail us Form16/ Salary Certificate and details of other income, at . We would take it from there to file your return of income. provides complete online taxation solutions for individuals ( Tax Returns + Tax Support + Tax Planning ) – please see this – Services Offered. Providing Complete Online Tax Solutions for Individuals, Not Just Returns.

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