Most of us would have submitted the details of our tax-saving investments for the year, along with relevant proofs...
Most of us would have submitted the details of our tax-saving investments for the year, along with relevant proofs, to our employer so that the tax is adjusted appropriately. However, if you could not do so within the time-frame, you can still claim tax benefits in your return. Tax laws allow you to make these claims when you file your annual return, subject to conditions. Here are expenses against which exmpetion can be claimed:
* House rent allowance against rent paid;
* Reimbursement of medical expenses up to R15,000;
* Leave travel assistance against travel expenses incurred in India during leave;
* Interest on housing loan, up to R2 lakh;
* Tax-saving investments up to R1.5 lakh; and
* Mediclaim insurance premium, etc.
These deductions may entitle you to a refund from the authorities. Here’s more on tax-saving avenues as notified by the I-T Act:
Exhausting the R1,50,000 limit under Section 80C
The most common way to save taxes is by making investments/payments/contributions towards specified schemes up to a total annual amount of R1,50,000. To ensure that this limit is exhausted, you can invest in suitable avenues before the close of the year for maximum advantage.
Some instruments that can be considered:
* Sukanya Samriddhi Account Scheme: A new avenue for parents/legal guardians having a girl child up to 10 years of age;
* Investments in notified equity-linked savings schemes (ELSS) of mutual funds, commonly called tax-saving mutual funds;
* Contribution to a Public Provident fund (PPF) account for self or family;
* Payment of life insurance premium for self or family; and
* Investment in five-year fixed deposits with nationalised banks, etc.
Health insurance premium
Given the rising cost of medical treatment, it is advisable to avail mediclaim insurance or reconsider the existing insurance coverage under mediclaim insurance. If paid by cheque/online, such insurance premium can fetch you a deduction of up to R15,000. If you choose to insure your parents who are senior citizens (60 years or above), an additional deduction of up to R20,000 is available. This could, therefore, be a double-benefit tool — insurance to cover medical costs and tax deduction on the premium amount as well.
Romp home with charity
Donations to approved funds/institutions may entitle you to tax breaks — some carry deduction of the entire or half the amount donated, subject to 10% of gross total income in some cases. Flagship schemes of the present government, such as Swachh Bharat Kosh and Clean Ganga Fund, are also eligible for deduction now.
If the estimated annual tax payable from all sources of income, after reducing the taxes actually withheld at source, is likely to be more than R10,000, it may be advisable to pay such estimated tax in advance (advance tax) before the close of the year, if not already paid. If 90% of such advance tax is paid on or before today (March 31, 2015), you can save on the mandatory interest of 1% per month from April 1 till tax payment.
By Homi Mistry
The writer is partner, Deloitte Haskins & Sells LLP. With inputs from Manish Shah, senior manager, Deloitte Haskins & Sells LLP