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If you are making a New Year resolution to plan your taxes better, then you better start as soon as possible. Tax planning is something that should be considered at the beginning of the financial year and not towards the end. However, in order to plan your taxes judiciously you need to know about the several tax saving options that are available.
As per the Income Tax Act, 1961, there are various sections under which tax deductions can be claimed in order to reduce an individual's overall tax outgo. An ideal way to minimise your tax liability is by claiming all the deductions and exemptions that you are eligible for. Some of the popular ones are discussed below.
Section 80C is one of the popular section in the Income Tax Act, 1961. Investments upto INR 1,50,000 made in the instruments and avenues specified under section 80C of the Income Tax Act, 1961 are allowed as a deduction from gross income while calculating net taxable income. Some of the investment instruments that fall under the purview of this section include:
Additionally, you can also claim deductions for payments made towards children's school tuition fee and home loan principal repayment under Section 80C. It is important to note that the lock-in period, rate of return and tax treatment of returns will differ from one option to the other.Investors are requested to consult their tax advisor in this regard.
Individuals who live in rented accommodation can avail exemption on the rent paid by them under HRA exemption. In order to claim this exemption, the tax payer needs to comply with certain provisions and also furnish the rent receipts issued by their landlord. The amount of exemption will be the least of the following:
Under this section, premium paid towards health insurance policies for self, spouse, parent and children are allowed as a deduction from total income. The taxpayer can claim the following amounts as deductions under Section 80D:
Taxpayers who have availed educational loans can make use of the provisions of Section 80E to save on taxes. Interest paid on the education loan can be claimed as a deduction for a period of 8 years starting from the year in which you start repaying the loan. It is important to note that the deductible amount under this section does not have a capping limit. However, the education loan should be taken from a recognised bank or non-banking financial institution and all the paperwork should be in order.
In addition to the deductions mentioned above, there are several other deductions and exemptions that an individual tax payer can avail of in order to reduce his/her overall tax liability. While tax planning might seem a bit challenging, it really is not. All you need to do is be aware of the various deductions and exemptions and start planning at the beginning of the financial year. Investors are requested to consult their tax advisor in this regard.
It is mandatory for all mutual fund investors to undergo a one-time KYC (Know Your Customer) process. For more info on KYC specifically on: the procedure for completing KYC, for changing address details.
For changing contact details, for changing bank details, visit bnpparibasmf.in/investor-centre/information-on-kyc.
For more info on submitting a complaint or a grievance, visit https://www.bnpparibasmf.in/contact-us
Further, investors should ensure that they transact ONLY with SEBI Registered Mutual Funds listed under Intermediaries/Market Infrastructure Institutions on the SEBI website https://www.sebi.gov.in/intermediaries.html.
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