Income Tax News: Paying taxes is a necessary part of being a citizen, but that doesn’t mean you have to hand over more than you owe. By taking advantage of deductions and exemptions, you can significantly reduce your tax liability. Here are some common mistakes to avoid while filing your taxes:
Missing Out on Section 80C Deductions
Section 80C of the Income Tax Act is a goldmine for tax savings. It allows you to invest up to Rs. 1.5 lakh annually in various schemes and claim a deduction on that amount. Popular options include:
- Public Provident Fund (PPF): A safe, long-term investment with attractive interest rates.
- Equity Linked Savings Scheme (ELSS): Invest in the stock market with potential for higher returns.
- National Savings Certificate (NSC): A fixed-income investment with guaranteed returns.
- Employee Provident Fund (EPF): A retirement savings scheme for salaried individuals (already deducted from your salary).
Forgetting About House Rent Allowance (HRA):
Salaried individuals who pay rent can claim an exemption on the rent paid subject to certain conditions. Make sure you submit the required documents, such as rent receipts, to your employer to avoid missing out on these savings.
Not Claiming Health Insurance Premiums:
The premiums you pay for health insurance for yourself, spouse, children, and parents are deductible under Section 80D. Taking advantage of this deduction can significantly reduce your tax burden.
Ignoring National Pension System (NPS)
Contributions made to NPS not only help you save for retirement but also qualify for an additional tax deduction under Section 80CCD(1B), on top of the Section 80C limit. Don’t miss out on this opportunity to save even more on taxes.
Last-Minute Tax Planning
Procrastinating on tax planning can cost you money. Don’t wait until the last minute to make tax-saving investments. By investing early in the financial year, you can earn additional tax-free interest on your investments.
Maximising tax savings requires careful planning and attention to detail. By avoiding these common mistakes and making informed decisions, you can keep more of your hard-earned money in your pocket.
