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Saturday 6 May 2017

Plan your Income Tax early in the financial year

Income Tax should be plan early in the financial year. We are already in second month of FY17-18. We should complete our tax planning and start acting on our plan. If we plan now we can use it for rest of the year. Most of us might receive mail form our employer for tax saving declaration in Form12BB for the current financial year so that they can deduct the tax accordingly from our monthly salary. They are also asking only our plan not the actual supporting documents. We need to submit actual proofs till the end of the financial year. As I said it is the plan we can change it anytime and we can increase or decrease during the year.

Form 12BB applies to all salaried taxpayers. Form 12BB does not have to be submitted to the tax department. It has to be submitted to your employer. Employees have to submit a declaration of deductions and exemptions that they want to claim. The employer will deduct TDS on the employee’s salary on the basis of these declarations. These investments are generally required to be made on the employer’s HR portal.

 Here I will try to help to understand the ways in which we can save our tax. We can claim tax rebate under various section. The main sections everyone should take advantage are 80C, HRA, NPS. We can invest Rs. 1,50,000 under and 80C and additional Rs. 50,000 under NPS.

In the last I just want to say this is the time to plan your investment not in March i.e. last month of the financial year. This is time when you need to think and start acting on below item if not done yet.
  • Buying term plan
  • Buying health cover
  • Starting SIP’s
  • Surrender junk policies

I personally use Nithya's tax calculator for my tax liabilities calculations. This Tax Calculator can be used to compute tax liabilities for salaried individuals only.

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