Tax Planning

Tax planning is a planning that helps in saving apart of your hard earned income in a rightful way under the guidelines of Income Tax department. There are certain deduction schemes that can be claimed to save tax while filing for income tax. These methods of deductions are specified by the government of India.

There is a tax slab according to different-different earning categories. Now question is, how to invest your saving correctly is the thing you need to keep in mind while filing tax. But, the question is how to invest a part of your income under section 80C, 80D and 80E to avoid paying more into the tax.

Before the end of financial year tax planning is extremely important. It involves the planning in order to avail all rebates, exemption, and deductions provided in Act. The income tax law itself offers various methods of tax planning, which generally provided under exemptions under section 10, 80C & 80D deduction and rebate and reliefs.  Following are the most effective methods of investments in tax planning:-

Tax saving under 80C, 80CCC and 80CCD          

Under section 80C, 80CCC & 80CD a deduction of Rs 1, 50,000/- can be claimed from your total income. A maximum of Rs 1, 50,000 can be claimed for the financial year 2017-18. This deduction is allowed to an Individual or a HUF. Another additional deduction under section 80CCD is of Rs. 50,000 has also been an investment for NPS.

 This was the same limit for the financial year 2016 – 17 also. If you have paid excess taxes, but also invested in EPF, PPF, NSC, ELSS, FD, Pension Plan, SSA, SCSS, Life insurance, NPS  then you can file your ITR and get a refund. This is a major benefit.

Deduction under Section 80E:

Section 80E is a deduction for Interest on Education Loan for Higher Studies. Here a deduction is allowed to an individual for interest on the loan is taken for pursuing higher education. This loan may have been taken for the taxpayer, spouse or children or for a student for whom the taxpayer is a legal guardian. The deduction is available for a maximum of 8 years or till the entire interest is repaid, whichever is earlier. There is no restriction on the amount that can be claimed.

Tax Planning Through Home Loan

Apply for a home loan if you want to save tax, this method is highly advisable. As deduction allowed the repayment claimed 3 main categories which resulting in huge tax saving to the taxpayer. Maximum deduction allowed in some cases is Rs. 2, 00,000 and in other cases, there is no maximum limit.

Deduction under Section 80D, 80DD & 80DDB:                  

The deduction is available up to Rs. 25,000/- to a taxpayer for insurance of self, children, spouse, and dependent. If individual or spouse is 60 or plus years old the deduction available is Rs 30,000. An additional deduction for insurance of parents is available to the extent of Rs. 25,000/– if less than 60 years old and Rs 30,000 if parents are more than 60 years old. For uninsured 80 years, super senior citizens medical expenditure incurred up to Rs 30,000 shall be allowed as a deduction under section 80D.  Therefore, the maximum deduction available under this section is to the extent of Rs. 60,000/-. Deduction under the above section is available to an individual or a HUF.

Section 80DD is a deduction for the medical treatment for a handicapped dependent. And 80DDB is for specified treatments.