The last financial year ended a fortnight ago, and its right time for individual taxpayers to plan their Income and give the final touches to their tax planning and savings.

There are many sections defined under the Income Tax Act that enable individuals to save tax by investing in various qualified instruments. Since your employer must have asked you to submit your investment declaration by now, It’s best time to plan your investments in tax-saving instruments and look at possibilities to save maximum possible tax in the current financial year.

These are some of the major sections that enable you to reduce your income tax liability:

Section 80C – of the Income Tax Act allows income tax exemptions to individuals on investments in certain instruments. The maximum limit to claim deduction under this Section is Rs 1 lakh. You can invest Rs 1 lakh in one or more of these instruments to avail tax rebate under Section 80C.

  • Employee Provident Fund and Public Provident Fund
  • Life insurance (term insurance as well as endowment plans)
  • Pension plans
  • Equity-linked savings schemes (ELSS) of mutual funds
  • Specified government infrastructure bonds
  • Principal repayment of housing loans
  • National Savings Certificates (NSC) and interest accruals on previous years’ NSCs can also be added to the Section 80C limit

Home loan benefits

Housing loans provide tax relief. The principal repayment of a housing loan attracts rebate under Section 80C up to Rs 1 lakh and the interest payment attracts a rebate of Rs 1.5 lakhs.

Medical Insurance

In addition to Section 80C, there is Section 80D that enables an individual to claim rebate on mediclaim policies. Payment of premium for medical insurance (mediclaim) is eligible for tax exemption up to Rs 15,000. You can avail this deduction on medical insurance premium paid for yourself, spouse, parents and children.

Other deductions for salaried taxpayers

If your employer provides medical allowance, you can available an income tax deduction of up to Rs 15,000 per year by offering proof of the relevant expenses.

If the employer gives leave travel allowance as a part of your salary, you can avail income tax deduction on travel expenses (family travel expenses can also be covered if family travels along with the taxpayer). Leave travel allowance can be availed twice in a block of four calendar years. Presently, the block applicable is from 2010 to 2013. Leave travel allowance can only be availed on the expenses incurred on domestic travel. However, the travel mode can be anything (taxi, bus, train or air).

Time to review saving

As we mentioned earlier, it is the best time to plan for your investments to submit investment declaration to your employer, these are some factors you should keep in mind while taking decisions on saving tax:

First of all, try to exhaust the quota for Section 80C. You can look at various options to invest and save tax under Section 80C

Salaried people can also look at saving tax by planning the expenditures under medical allowance, child education allowance and conveyance allowance.

Investing in a medical insurance policy is another option to save tax, if your Section 80C limit is already exhausted. However, it is not advisable to take another medical policy just for the sake of saving tax, if you already have one.

XPERT COMMENTS

Readers should exercise their fine judgment while interpreting this article and this newsletter should not be considered as an advice to anybody to plan or otherwise design their investment pattern.

Author- XPERT Consulting – Tax Consultants, E: contact@xpertconsulting.biz, www.xpertconsulting.biz)

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0 responses to “Time to plan your Income and Taxes for 2014-15”

  1. KANGANE R R says:

    In case of Home loan benefits the tax relief on principal repayment of a housing loan under 80C and interest payment rebate is restricted to how may houses of govt.servant? Please explain.

  2. gulshan thakur says:

    Pl correct the deduction: It is maximum of 25,000.00

  3. gulshan thakur says:

    It is correctly stated by Tapas that Section 80CCF is discontinued by AY 2013-14. Accordingly, Sectino 80CCG is introduced in which as assessee can avail deduction up to 50,000.00 under Rajiv Gandhi Equity Saving Scheme. As per Section 80CCG, an assessee can avail 50% of total amount invested in scheme. Ultimately, if you want to avail Rs. 50,000.00 deduction, you need to invest Rs.100,000.00.

  4. Mukesh Chhabra says:

    Pls inform the section in which salaried person can avail extra income tax deduction of upto Rs 15000/- on offering proof of expense against medical allowance in addition to Sec 80D for Medical insurance upto Rs 15000/-.

  5. Satish says:

    I am planning to purchase a house in this financial year 2014-2015 and would like to avail a home loan for the same. As this process may take some time can I declare a tax exemption with my employer now (i.e. April 2014) towards house loan (for both principle and interest) and submit the relevant proofs at the end of year say Dec 2014/Jan 2015. I am okay with the additional taxes to be deducted by the employer in subsequent months in case of failure to buy a house or produce the documents. Please advice.

    Regards,
    Satish

  6. Ganesh says:

    You are right Mr.Bilal. Except for Deduction w.r.t. Capital gain investments, the time period for Tax planning already ended by 31.03.2014

  7. bilal says:

    For the A.Y. 14-15 the tax planning investment should be done up to which date? Whether it is 31-3-2014
    Kindly reply me.

  8. Venkata Srinivas says:

    Dear Sir/Madam

    Since the e-quarterly returns for the 4th quarter of F.Y.2013-14 is to be filed before 15.05.2014 (for Govt Deductors), i have some doubts in preparing the quarterly returns as per the RPU Ver.3.8 of the NSDL.

    As per the Finance Act – 2013, every individual whose total income is upto Rs.5.00 lakh is eligible for a rebate of Rs.2,000/- u/s.87A. Now, as per the RPU of NSDL, i could not find under which column shall i show the rebate amount. Whether i need to reduce the amount of Rs.2,000/- from the total income or whether they would be any updation in the software by the NSDL incorporating such aspects.

    Kindly suggest.

  9. CA Mayank Agarwal says:

    Authors are requested to please check for correctness of data before getting this uploaded online. Many instances of wrong advise have been seen, for example, deduction for Infrastructure Bonds (Section 80CCF) are no longer available since FY 2013-14.

  10. Tapas says:

    I believe the deduction of Rs. 20000 in infrastructure bonds (over and above the limit of 80C) was only for 2 years and has been discontinued from AY 2013-14.

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