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Tax Planning for New Financial year

April, this is the time, when we need to declare the Tax Declarations which we would be doing in the coming year. Some of us declare few investments and only hope to do them sometime in the year. But not all are able to meet that commitment. Here are a few advices, which I would suggest to use as a guiding tool, rather than for planning.

Lets look at the Simple Tax Investments which we can use.

  1. Upto 2 Lakhs under Section 80 ccc.  In this 2 Lakhs, 50,000/- is only meant to be invested in NPS(National Pension Scheme). 
  2. The Remaining 150,000/- can be invested in Insurance Plans, Mutual Funds , NSC.
  3. From this 150,000, since you would also have been paying PF from the company itself, it would be also considered as an investment. You will need to do it and you dont have a choice. 
  4. If you have a home loan, the Principal from the home loan, will also be considered as a contribution towards the 1.5 Lakhs. 
  5. After subtracting the PF amount which you are paying and the House Loan Principal component, the remaining amount will need to be invested, in other instruments like Term Insurance, ULIP Policies, Tax Savings Mutual Funds, NSC etc.
  6. If you dont have any Insurance Policies, its a good time to start. Maybe smaller amounts is a good start. 
  7. If you dont want to invest in a hurry, then plan to invest in Mutual Funds. So that, that commitment doesnt become a recurring one every year. But make sure, you dont leave any room for saving taxes.
The other Tax Savings, which most of the folks dont do, is the Medical Insurance. You get deduction upto 25,000/- per year under section 80D. Its always good to have your Medical Insurance plan of your own, even if your company provides you with one.

NPS is something, one should start investing, as those in the private sector will not get any pension during their retirement life. Its only your own investments and the PF's which will come to your rescue during your retirement life. 
Out of the 2Lakhs under 80ccc, 50,000/- should be from NPS only. Though you can and should try to invest more. 

House Loan Interest
The principal component of the house loan, will be considered as an investment under section 80ccc, while the Interest  component will be getting full tax exemption upto 2 Lakhs.
Also, those having second homes and given on rent, from April 2017 onwards, the maximum loss one can claim from the house loan interest is also limited to 2 Lakhs, which didnt have any limits until the last year. 

Another exercise one needs to do, at this time of the year is also to get the Home Loan Interest Certificates from your respective banks, as you might need to submit them , while filing your returns, if there is a difference in the amounts, in the Provisional Tax Document and the Tax Certificate. 

If you have any queries, kindly put them in the comments section below.


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