Annual Tax Saving Tips : Especially for salaried employees

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Ideally everyone should plan their tax saving from April onwards but often people tend to forget this matter after submission of their investment declarations to their employers.

Often, they only get activated in the month of January to March, when they are actually required to submit the actual investment proof. But till that time the market gets flooded with investment options asking for a sum of 50-60 thousand with temptation of “Tax saving” & more often than not, we follow one of them without going into much detail, because due to short of time our mind often listens to one phrase i.e “tax saver”. Here are some useful tips that can be followed :

Tip 1 : The best would be a Systematic Investment Plan (SIP). But if we don’t follow SIP, then we should have at least two savings account. One operative & the other silent. We should try to put a regular monthly amount into the silent account so that when it actually matters, i.e. the months on January-March, when we are actually required to submit the investment proofs to our employer, we don’t run out of money, resulting revised declaration & paying un-wanted tax.

Tip 2 : If we are not able to understand any option then go for 5 year tax saver bank Fixed Deposit or National Savings Certificate.

Tip 3 : If we have FDs lying in bank, we should not only look for the maturity or interest income. We must ensure to get the TDS form 16A every year from bank so that we can get benefit from the TDS deducted by the bank, at the time of Income Tax Return.

Tip 4 : House Rent Allowance Tax benefit can be availed even if we pay rent to our parents, if the house is in their name.

Tip 5 : Home loan benefit under joint ownership with spouse. Tax benefit for interest paid on such joint home loan can be Rs. 150000/- each for both.

Often we have multiple credit cards & we are using it often for EMI payment or purchases.

Tip 6 : We should ensure that the usage of one Credit Card should not increase Rs. 2Lacs per financial year. We can plan our usage in other Credit cards. Often it leads to IT notices based on the report submitted by Credit Card Agencies’ AIR return & we will feel harassed in actual disposal of these notices.