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Income Tax Basics

FAQs on Income Tax Basics                                                                


Income Tax Documents


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10 Things to do Before March 31.....!!! 

1.    Submit your investments proofs

To get tax relief for your investments, you have to submit the proof of investments to your employer. There are a variety of investments that offers tax relief under section 80Csuch as;
  • Receipt of Insurance Premium
  • Deposits made in your public provident fund (PPF) account
  • Investment made in equity-linked savings schemes (ELSS)
  • Purchase of National Savings Certificate (NSC)
  • Children’s tuition fees paid, etc.
Your employer would need the details and the documentary proof of your investments to provide the deduction under Section 80C ofIncome Tax Act. This will help you to save tax upto Rs. 100000.

2.    Submit proof for HRA (House Rent Allowance) & travel receipts

You can claim income tax deduction under HRA & travel receipts, if you intent to claim deduction for house rent allowance or travel receipts, please make sure that your rent and travel receipts have been submitted to your employer. Following are the necessary proofs for this deduction;
  • Rent receipt
  • Travel receipts
  • Lease deed, etc, 
3.   3. Collect TDS certificates

To ensure the right amount of Tax Deduction, you need to collect all your TDS (Tax Deducted at Source) certificates from banks (Account statements) and your previous employer.  
TDS certificates and Bank statements will help you to figure out the interest income on bank deposits and pay balance taxes, if any.
If you have changed the job during the course of the financial year, then you need to collect your TDS certificate (Form 16) from your former employer, and this should be submitted to your new employer so that you can ensure that the right amount of tax deductions are being accounted for in your salary. Following are the sources from where you have to collect TDS certificate;
  • TDS certificate from Banks
  • TDS certificate from former employer
4.    Collect Principal and interest repayment certificates of home loan

Repayment of home loan interest/principal will also help you to reduce the tax burden. If you have a running home loan, you must ensure that you collect the appropriate principal and interest repayment certificate from the lender for the amount paid during the financial year.
You are also required to provide a computation to your employer specifying the income/loss under the head ‘House Property’ along with the proof of interest and principal repayment, to claim the deduction.

5.    Obtain valid receipts for donations

You can avail tax deduction under donations made also, but make sure that the donee trust/institution is registered under section 80G, to claim tax deduction they should be registered under Sec 80G. Your employer can provide the deduction of this donation in computing your taxes if you have made the donations to any of the specified charitable institutions. Always ensure that you get a receipt for the donation amount.

6.    Collect receipt for Health Insurance Premium

You can claim tax deduction for the premium paid on health insurance. You have to make sure that you have obtained receipt for the premium paid. You can avail deduction for the premium for self and family.
Deductions under under section 80D
  • Rs. 15,000 on premium paid for insurance on the health of the assessee and his family.
  • Rs. 15,000 is admissible if the medical insurance is taken for parents of the assessee.
  • If the insured is a senior citizen, the above mentioned limit will become Rs. 20,000.
 7.    Keep necessary records for interest on education loan

You can claim deduction for interest paid on educational loan, but make sure that you have the necessary records to authenticate the same.

8.    Telephone, medical and other bills:

If your employer is offering you any reimbursements towards telephone charges, medical expenses, etc., then you must submit the relevant receipts to your employer. This will reduce your cash in hand.

9.    Compute the capital gains

If you have sold or transferred any capital asset like house property, shares, mutual funds etc. during the financial year, you need to compute capital gains/losses on these transactions. The tax rates are different for long-term and short-term capital gains. Your taxability will be determined depending upon the classification and the type of asset.

10. Compute your tax

Once if you finish the above mentioned steps start computing your tax for the year and assess whether you are required to pay any tax. The same can be paid as self assessment tax after March 31. To avoid the last minute rush of collecting the necessary documents all should be ready with all the above mentioned documents.



Regards
Shrivasthav Dhanwanthary

2 comments:

Anonymous,  January 19, 2011 at 11:49 AM  

I’ve recently started a blog, the information you provide on this site has helped me tremendously. Thank you for all of your time & work.

Anonymous,  January 23, 2011 at 9:23 PM  

nice post. thanks.

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