Expenses that you must know before Tax Planning for FY 18-19
Tue Dec 11 2018 / By: Nupur SharmaHave you been tax planning lately? Keep these critical expenses in mind first.
It goes without saying how important tax planning is. It is only wise to find out good tax saving options for yourself as no one likes hurting their own pockets. We are here to tell you that tax planning isn’t that tough. In order to save better you need to find the right places where you can invest. This means that you need to look for the right investment schemes for yourself.
To reduce tax benefit, the govt has introduced some ways to do that. There are anomer of rebates, deductions and exemptions that they have provided under Income Tax Act. It is important for you to know about these to help you plan efficiently and lessen the load of tax. Two ways in which you can save tax are:
- Through investment
- Disclosing your expenses
Before the process to tax planning starts, you must get aware of certain expenses that are exempted from tax. Identifying these expenses helps you to know how much you should invest. Here is a list that will help you:
Housing Loan (Principal and Interest Payment): Section 24, 80C and 80EE:
Under section 24 and 80 C of Income Tax, there is tax deduction on the interest (Rs. 2 lakhs) and principal (Rs. 1.5 lakhs) of a home loan. If the tax payer sells his house, the tax benefit is reversed. (Section 80C)
Medical Insurance: Section 80D:Under section 80D of the Income Tax Act, a premium payment on Health Insurance policy (uptoRs. 15,000 for individual, age less than 60 years) is exempted from tax. Paying for parents also in health insurance will save another Rs. 15,000. (in cases where age of parents is more than 65, the deduction will be Rs. 20,000 instead.) A preventive health check-up (forself, spouse, children and parents) can have deductions around Rs. 5,000.
Education Loan: Section 80E
If you’re planning to take an Education loan, you tax exemption for the whole interest. (Section 80 E). The only thing to remember is that this exemption
Treatment of Disabilities: Section 80DD and 80DDB
Spending on medical care expenses will give you an exemption ( for treatment of specific disabilities, According to Section 80 DD). Rs. 50,000 has been fixed as the limit for deduction + 1 Lakh for severe disability.
Donations: Section 80G
Under 80G of Income Tax Act- donations made out to approved charitable institutions/organisations/trusts are eligible for deduction. Most donations are completely exempted from tax while others are 50%. The max limit is usually fixed at 10% of gross annual income.
Children Tuition Fees: Section 80C
On the off chance that you are paying any educational cost expenses for your youngster's instruction in any school, college, school or some other instructive foundation inside India, you can get an assessment exclusion under Section 80C. This can be up to Rs. 1 lakh in a year. A couple has a different limit of two kids. So each parent can guarantee for two kids each. This is eligible for full-time courses and not for private educational costs or training classes. The exception is Rs. 100 every month for each kid as instruction stipend and Rs. 300 every month for each youngster for lodging use costs.
Life Insurance Premium: Section 80C: This is a good option if you want to take care of your family incise you are not there plus it also saves tax. Exemption uptoRs. 1,50,000 under Section 80 C of Income Tax Act.
If you have covered all these expenses, then your tax planning job is almost done!