By ET Bureau
You don't have to be an expert to save tax. Even someone with basic knowledge of arithmetic and tax rules can do it.
There are several reasons why salaried taxpayers end up paying more tax than they should. They usually crunch their tax planning into the last few months of the financial year. Last year's budget had raised the deduction under Section 80C to Rs 1.5 lakh a year. Even in the mid-income 20% tax bracket, this can cut tax by Rs 30,600. However, many taxpayers, especially the younger generation, who earn well but blow it all away, find it difficult to take full advantage of this deduction.
Besides Section 80C, there are other ways to save tax as well. A home loan is a very effective tax-saving tool. Even if one is availing of tax exemption for house rent allowance, one can claim deduction for the interest paid on the home loan. Last year's budget had hiked the home loan deduction limit to Rs 2 lakh a year. If the house is given out on rent, there is no limit to the tax deduction that can be claimed.
Then, some companies allow their employees to customise their compensation structure. If you belong to this lucky set, restructure your salary in a way that it becomes more tax friendly. Pack in more tax free allowances and opt for perks instead of cash payments.
If you messed it up this year, resolve to be a smart tax planner in the next financial year. Set up a target for investing in tax saving options from April itself. That way, you will not be burdened with a huge tax saving target at the end of the year. And, maybe, you will be able to afford that diamond ring next year.
There are several reasons why salaried taxpayers end up paying more tax than they should. They usually crunch their tax planning into the last few months of the financial year. Last year's budget had raised the deduction under Section 80C to Rs 1.5 lakh a year. Even in the mid-income 20% tax bracket, this can cut tax by Rs 30,600. However, many taxpayers, especially the younger generation, who earn well but blow it all away, find it difficult to take full advantage of this deduction.
Besides Section 80C, there are other ways to save tax as well. A home loan is a very effective tax-saving tool. Even if one is availing of tax exemption for house rent allowance, one can claim deduction for the interest paid on the home loan. Last year's budget had hiked the home loan deduction limit to Rs 2 lakh a year. If the house is given out on rent, there is no limit to the tax deduction that can be claimed.
Then, some companies allow their employees to customise their compensation structure. If you belong to this lucky set, restructure your salary in a way that it becomes more tax friendly. Pack in more tax free allowances and opt for perks instead of cash payments.
If you messed it up this year, resolve to be a smart tax planner in the next financial year. Set up a target for investing in tax saving options from April itself. That way, you will not be burdened with a huge tax saving target at the end of the year. And, maybe, you will be able to afford that diamond ring next year.
Source:-The Economic Times
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