A Tax Saving Guide for Financial Year 2018-19

Jul 03, 2018 | 1 year ago | Read Time: 3 minutes | By iKnowledge Team

Salaried individuals often wait until the last minute for tax planning. This often results in buying financial products that you don’t need and eventually turns into money mistakes. With April around the corner, it is the right time to start planning your tax-saving process. Why April? This is the start of the financial year and gives you enough time to focus on asset allocation and make a well-informed decision. Because tax planning is one part of meeting your financial goals and saving is just a by-product of it. The goal is to increase tax-saving through right investments. Utilise this guide and work towards tax-saving:

Calculate Your Tax Benefits

Firstly, know your tax liability by calculating your tax benefits. As per Income Tax laws, your gross total income is the sum of income received from salary income, profits of a business, income received from house property, capital gains and income received from other sources.

The next step, minus the deductions you are eligible for, such as your contributions to Voluntary Provident Fund, Employees Provident Fund (EPF) from your salary account become eligible for deduction from your gross total income. After calculating the taxable income, apply the current tax rates to know your tax liability.

Tax Breaks Offered Under Section 80 C

Section 80C offers a variety of tax breaks and you should be aware of the investments that come under this bracket. For the new financial year, you can get a tax benefit of up to Rs.1.5 lakh under 80 C of the Income Tax Act.

Public Provident Fund (PFF), National Savings Certificate, employee’s share of PF contribution, children’s tuition fee, Sukhanya Samridhi account, equity-linked saving scheme, unit-linked insurance plan, saving bank fixed deposits (FDs) are some of the popular investment in the 80C bracket.

Each instrument has unique features, choose your avenue as per your requirements and risk profiles.

Keep a Tab on Your Investments

Many are unaware that they are already investing in products that qualify for 80 C. For example, your PF contribution qualifies for 80 C. To know the exact contribution, check your payslip and optimize your tax-planning.

Starting Early Can Get You More

Most tax saving-products have a lock-in period, the sooner you invest, the sooner your lock-in period is completed. Therefore, starting early will also help you earn higher returns.

Other Tax-Saving Products

Besides 80C, get tax-saving on interest on home loans, donations and health insurance, such as iCancer, from Aegon Life to protect yourself and your family. If you are paying a home loan, provide your loan documents as it is a part of your tax exemption.

Insurance as a Tax-Saving Instrument

Insurance plans such as life insurance, pension plans, health insurance are best tax saving options. Premium paid to a maximum of Rs 1.5 lakhs come under Section 80C of the Income Tax Act. Returns on death/maturity are tax-free under Section 10(D).  Create wealth over a period of years with the help of a unit-linked insurance plan (ULIP) such as iMaximize from Aegon Life and experience tax benefits as well.

Submit Your Tax-Saving Proofs to Your Employer

As per the Income Tax Act, salaries are usually subjected to TDS. When the financial year begins, the accounts department in organizations starts calculating taxes on employees’ salaries based on their estimated taxable income.

 If you have made any tax-saving investments during the financial year on any investments/expenditures that qualify for deduction from your gross total income, then you need to submit the documentary evidence to your employer. This is essential as your employer will then deduct TDS on your estimated income minus deductions. Failing to do so will lead to TDS deduction on full salary. But you are still eligible to get a refund by disclosing the required documents for the given financial year.

To summarise

In order to use your finances efficiently and save money at the end of the financial year tax planning is important. It is also equally important to plan your future finances and identify the avenues for tax investments in the coming year.

To know about AegonLife’s life insurance products like term insurance plans, visit our home page.

To know about AegonLife’s life insurance products, visit our home page.

Advt. no.: IA/Jun 2018/4139

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