Jul 16 • 4 mins read
15 Last Minute Tips To Save Tax
Have you been a little busy and maybe a little wary of all things related to finance and tax?
If income tax slabs in India, Section 80D deduction, tax saving plans, tax saving options, all seem Greek and Latin to you, then you can use these 15 last minute tips to save tax.
Invest in ELSS (Section 80C)
The ELSS or the Equity Linked Savings Scheme is by far the easiest of the last minute tax saving options.
One does not need to pay in the coming years if the fund does not suit you. Identify the fund you want to invest in, register on the site, select a scheme and pay. All of this can be done from the comfort of your home via online portals.
Remember to save the acknowledgment as this will be required as proof of investment.
Buy Online Term Policies (Section 80C)
Online term policies have a few key advantages like:
They offer an extensive cover at a minimal cost.
They are much cheaper as compared to physical term products.
The process of buying these policies in very simple and takes less than an hour to buy.
No agent required and no commissions to be paid.
You can visit the insurance company’s portal, provide the details requested, choose a nominee and fill in the relevant details. Unless you require medical tests, the process can be completed in less than an hour. Pay the premium due, and you are done. Again, remember to save the premium receipt to claim the tax deductions.
Before buying term policies, it is a good idea to check the insurer’s claim settlement record.
Tax Saver Deposits (Section 80C)
Tax saver deposits are another option to help in saving tax at the last moment. All that is required is for you to open a five-year tax saver fixed deposit. If you have the facility of online banking enabled, you can transfer funds and open the FD online.
But do check with your bank as some banks do not have the online option available, even if the customers are registered for online banking.
PPF (Section 80C)
If investing in the market scares you and you have a low-risk appetite, then PPF may be best suited to save tax. The application form and KYC details have to be submitted in person at the bank. After the account is opened, you can transfer funds online from any savings bank account that you have linked.
NPS (Section 80C)
To open an NPS account, you have to visit the points of presence authorized by the Pension Funds Regulatory and Development Authority. This process does seem cumbersome to many as the paperwork involved takes time to finish.
Remember that while the PPF is exempt from maturity, you will have to pay taxes on income from the NPS.
Tuition Fees (80C)
Not many people know about this, but this is one of the best ways of saving tax at the last minute!
If you have been paying the tuition fees for your children the entire year, all you need to do is gather the fee receipts, and you can save a huge chunk of your gross income immediately!
Home/Education Loan Repayment (80C)
If you are paying EMIs for your education and/or home loans, then the EMI amount is allowed as a deduction under the section 80C.
Home loans are one of the most popular tax-saving option available.
Senior Citizen Savings Scheme (80C)
If you are a senior citizen and securing your future by investing in the SCSS, then the amount you pay under the scheme is deductible under this section. And, it gives excellent interest rates also, almost as high as 9.20% per annum.
Please remember that the interest received is taxable.
Medical Insurance Policies (80D Deductions)
Did you know medical insurance can also help to save tax? You can save up to Rs. 15,000 immediately if you have any existing medical insurance or if you apply for one soon.
Medical Treatment for Certain Illness (80DDB Investments)
A deduction of almost Rs. 40,000 is available if you are being treated for some specific diseases listed under the Section 80DDB.
Interest Paid on Education Loan (80E Investments)
People are usually unaware that they can also claim deductions and save tax on the interest paid on the education loan, apart from the deductions claimed on EMIs (under 80C).
Interest paid For Home Loans (80EE Deductions)
Just like deductions for interest on education loan, you can also claim deductions on interest on home loans under Section 80EE.
Donations (80G Investment)
Any donations that you might have made to charitable institutes are deductible under the 80G. It can either be 50% or 100%. However, as per the new budget ’17, if it is more than 10,000 INR in cash, then this is not applicable.
This is a great last-minute way of saving tax, as you will be contributing towards social causes while saving yourself some tax.
House Rent Paid (80GG Deductions)
The lead of the house rent paid minus the ten percent of your gross income; or the HRA allowance; or 25% of your total income is allowed under these deductions.
Physical Disability (80U)
If you are physically disabled, and the disability is between 40% to 80%, then you get deductions up to Rs. 75,000 and if it is greater than 80% then it is Rs. 1,25,000.
The pointers and options given above are to help you save tax in 2018 at the last minute. It is most likely that if you are reading this article and looking at last minute tax savings option, you will not be allowed to submit investment proof to your employers at this late stage. Most employers seek proof of investment in the months of January and February. However, you can claim a refund on the excess tax paid by you by filing returns in the month of July.
For the next financial year, be prepared, invest wisely and save on taxes.