Tax Planning Tips To Maximise Your Return

Every year taxpayers look for various ways to save maximum taxes. The Income Tax Department offers the flexibility to save tax through various investment avenues. Read further, to know tax planning tips to save more.

What is tax planning?

It is a process of analysing a financial plan or a situation from a tax perspective. Income tax planning allows individuals to put various benefits, deductions and exemptions to the best use, in order to reduce their tax liability during a financial year. It helps you save money, while at the same time confirming to the legal obligations and requirements of the Income Tax Act (IT), 1961.

One of the advantages of Tax Planning is that the returns generated can be directed towards investments. It enables you to plan your finances and taxes at the beginning of the fiscal year instead of making last-minute tax-saving decisions.

Understanding Tax Planning:

Tax Planning plays an important role in the financial growth of every individual. A plan will help to streamline your tax payments so that you will receive returns over a specific period of time with minimum risks. The Tax Planning Strategy can be classified into the following:

• Purposive Tax Planning allows you to plan with a specific objective

• Permissive Tax Planning that falls under the framework of law

• Long/Short Range Tax Planning that you can execute at the beginning and end of the fiscal year.

Below are some of the tips to help you get started with Tax Planning:

• The first step is to take your total income into consideration. This will help you know how much your taxable income is and analyse tax deductions accordingly

• Maintain the receipts of investments that you can claim for Tax Deduction

• Salaried individuals are eligible for Tax Deduction of up to Rs 1.5 lakh under Section 80C of the IT Act. ICICI Bank offers some of the best tax saving investment plans such as NPS account, life insurance, home loan or Equity Linked Savings Scheme (ELSS), 5-year tax saver FD, and others.

• The premiums you pay for a Health Insurance Policy are also eligible for Tax Deduction under Section 80D

• Housing Rent Allowance (HRA), which is often part of the income component of salaried individuals can be claimed for Tax Deduction under Section 10(13A)

• If you have taken a Home Loan you will be eligible to claim the principal component of the loan for Tax Deduction under Section 80C of the IT Act. Similarly, you can also get a tax benefit on the interest component under Section 24

• File returns on time with the help of e-filing of ITR offered by ICICI Bank.

The above Tax Planning tips are some of the ways to adopt tax saving measures and maximise your return. It is the duty and responsibility of every citizen to carry out prudent Tax Planning and it is considered to be completely legal if performed under the framework defined by the tax authorities. There are several options that will help to reduce your tax liability under Sections 80C to 80U and eligible taxpayers can claim the same.

CALCULATE YOUR INCOME TAX

“The user needs to verify all the facts, law and contents with the text of the prevailing statutes and seek appropriate professional advise before acting on the basis of any information contained herein, as the taxation implications may vary depending upon the facts in each case/interpretation by tax authorities and the Tax Laws are subject to change from time to time. ICICI Bank Limited expressly disclaims any liability to any person, with respect to anything done or omitted, to be done by any such person, by placing reliance upon the contents of this write-up.”