Following are the 8 Must Read tax saving tips which should definitely help you for your tax planning
1. More assesses in the family
Increase the number of Income tax return filing from your home. Each and every member of family filing return helps in avoiding clubbing provisions. Also, tax slabs are individually applicable on each member. The gifts and loans received by your wife will definitely help you for this. However, in case of wife, she may accept gift from any relative other than her husband. Loan may be taken from/by any member with a reasonable rate of interest from anyone including the husband. Same concept of gifting may also be adopted for your major children and start having separate Income-tax Filing for your major children.
2. Hindu Undivided Family
If you are a Hindu, then you may file separate Income-tax File of your Hindu Undivided Family (HUF). The HUF not only avails the basic income-tax exemption of Rs. 2,00,000 but also enjoy tax deduction in terms of section 80C as well as deduction for interest on housing loans. HUF may come into existence whether you have son or daughter or still planning to have one.
3. Investments
Investments in Tax Saving Mutual funds with lock in period, PPF, NSC, Saving bank interest upto 10000, Zero coupon bonds, New Pension schemes and many such more investment avenues may help you in saving your tax. {Also see PPF or NSC – which is better}
4.Trust for Minor children
Clubbing of Income and wealth in the name of Minor may be avoided. You may create a independent hundred per cent “Specific Beneficiary Trust” in the name of your minor child. This should be done as per the principles enunciated by the various courts including Supreme Court of India. As such the income of the minor child with special terms and conditions mentioned in the Trust Deed is not required to be clubbed with the income of the parents.
5. Buying a home
Principal and Interest payment are eligible for deduction subject to maximum of 150,000 of principal and 200,000 of interest in a financial year. Even co-owner of the property will enjoy a separate deduction of interest on housing loan up to Rs. 200,000 per annum and would also enjoy deduction in respect of repayment of the housing loan subject to the total amount clubbed of assesses not exceeding the total amount actually paid. { Also read Tax benefit on different types of loan}
6. Tax Planning relating to Capital Gain
Holding you stocks for more than year makes your gains as Long term capital gains. The capital gains in stock market investments is zero as against 15% tax in short term capital gains. In real estate also, Long-term Capital Gain and is eligible to various concessions and deductions however in this case it requires for more than thirty six months holding of your assets.
7. Insurance Policies for your family
Premium paid towards life and health Insurance policies are eligible for tax deduction. As such is not only helps in prepared for unforeseen situations but also cut the tax payments. Please note other type of insurance like motor insurance, general insurance are not eligible for tax benefits.
8. Rajiv Gandhi Equity Savings Scheme
It’s the right time to enter stock markets. For all new stock market investors, tax incentive is being made available in the Income-tax Law in terms of the provision contained in section 80CCG whereby first time investors in the stock market can go in for making investment up to Rs. 50,000 and enjoy a tax deduction equal to 50 per cent of such investment. Thus, tax saving can be made by taking an exposure to Rajiv Gandhi Equity Investment Scheme and thereby cutting down your tax payment by Rs. 2,500 to Rs. 5,000.
Few more provisions for FY 2015-15 (AY 2016-17) as per budget 2015
- Additional deduction up to Rs 50,000 by investing in New Pension Scheme.
- The tax deduction limit for health insurance is also increased from 15,000 to 25,000. For the senior citizen this limit is now Rs 30,000.
- Senior citizens with more than 80 years of age can claim tax deduction on medical expense of Rs 30,000 provided they don’t have any health insurance.
- Transport Allowance exemption limit is increased to 1,600/month. Earlier it was Rs 800/month.
Update
In Jan 2015, Sunkanya Samriddhi Scheme was announced followed by various tax benefit announcement in budget 2015. This scheme is primarily meant for higher education and marriage of girl child and may be opted by her parents before she attains the age of 10. It allows investment of 1.50 lacs per financial year which is exempt under section 80C. Also the interest earned and maturity is also exempt from varios taxes.
Also Read about Sukanya Samriddhi Scheme, its Tax benefits and Comparison with PPF
