- Date : 20/12/2021
- Read: 5 mins
Want the financial year to end on a good note? Here are some things you must look into to help you save more and manage your money better.
While the new year is just around the corner, the financial year will soon be coming to an end as well, and this calls for tax planning
Before the financial year ends you should keep your checklist ready which will help you plan better and hence save more.You may be wondering, ‘Why do I need a checklist when there isn’t much to remember?’. Well, believe it or not, tax planning does indeed involve actual planning. There are plenty of minute details that tend to slip out at the very last minute, and this can prove fatal. While it is a process that requires careful organisation and attention, it doesn’t necessarily have to be complicated. Think of it as important notes that you go back to, from time to time - a little something to jog your memory and keep you from making errors.
Here’s a handy guide for you that you must keep in check while planning your taxes.You’ll thank yourself for it later.
1. File pending returns before 31 December 2021
Before the end of the financial year 2021-22, make sure you file any pending returns.
If you did not file your returns for 2020-21, which earlier were due on 31st July 2021, and later extended to 30th September 2021, make sure you file it before December 2021.
If you have also missed filing your returns for 2019-20, these must also be filed before 31st December 2021, after which you will not be able to file it all.
2. Submit your investment details to your employer
Your employer has to deduct TDS from your salary. To ensure that the correct amount is deducted, you need to submit proof of your investments that shall be incorporated while calculating your tax liability.
For instance, you are eligible for deductions if you have taken a house loan in your name. In this case, you must provide the house loan certificate (which includes the repayment and interest details) to your employer to help them arrive at your actual tax liability after deductions.
While you can always file for a TDS refund later, it is better to plan in advance so that your money doesn’t get blocked unnecessarily.
3. Make eligible investments for deduction of Rs. 150000 u/s 80C
Various expenses and investments are eligible for deduction under 80C, which can reduce your tax liability by up to Rs. 1.5 lakh.
Expenses that you can claim as deduction under 80C include:
- Payment of tuition fees for your child's school or college courses
- Repayment of principal amount paid on house loan
- Payment of Life Insurance Premium
If you have not made any of these expenses you can invest in the following instruments to claim a deduction of Rs. 1.5 lakh.
- Term deposit for at least 5 years with any scheduled bank
- Investment in Public Provident Fund
- Investment in National Savings Certificate
- Investment in tax saving mutual funds
4. Invest in NPS account for additional Rs. 50,000 deduction
Apart from the deduction available under section 80C, you can get an additional deduction of upto Rs. 50,000 if you invest in the National Pension Scheme of the Government.
Apart from the added advantage of tax deduction, it also helps in retirement planning.
5. Check for deduction u/s 80D, 80DD and 80DDB
If you have any expenses towards securing the health of yourself or your family, then you can claim deduction under this section.
Whether this payment has been made towards health insurance premium or actual expenses paid for treatment of any of the specified diseases, this amount can be claimed.
A deduction of Rs. 5000 is also available if you or your family have undergone a health check-up.
6. Collect donation receipts eligible for exemption
If you have made any donations during the year to any charitable institution, collect the receipts of the same as they are eligible for tax exemption.
Whether it is eligible for 100% or 50% exemption depends on the type of donation and the type of registration of the individual/ organisation rece.
7. Pay the minimum balance to ensure continuity of various accounts
If you have invested in Provident Fund, National Pension Scheme (NPS) or any other tax saving scheme then you need to check whether you have deposited the minimum amount required to keep it active.
The minimum amount to keep your PPF active is Rs. 500 and a yearly contribution of Rs. 1000 in NPS.
The minimum amount is only to keep your account active, although it is advised that you plan your investments beforehand, and invest according to your long-term investment goals
"Karan Batra is a Chartered Accountant specialising in Income Tax and GST. He is the founder and CEO of charteredclub.com which is one of India's largest content platforms for Tax related resources. He is also a visiting faculty at the Institute of Chartered Accountants of India and has also authored 2 books on Capital Gains Tax and Presumptive Tax.
His articles and opinions are regularly published in print media like The Financial Express, The Hindu Business Line etc and also in TV Media like NDTV."
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or insurance or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.