Just as you like making new year resolutions every first of January, you must also have financial goals for the new year! When it comes to tax and financial planning, you might have a host of doubts in your mind.
To do away with all the nail-biting, here are 6 financial resolutions that you can make this year and be at peace:
1. Be cautious with debt- Some people are unable to manage their debts and soon get caught in a vicious cycle of paying interest forever. To avoid this, plan a proper schedule for paying off any large liabilities. Every penny will count once you start tracking your expenses. This should get you in a sound financial position soon.
2. Deduct More Save More- Your taxable income can be slashed down by Rs 1,50,000 by using deductions under Section 80.
Investments- A maximum amount of Rs 1,50,000 can be invested in Public Provident Fund in a year, the interest on which is tax-free. Investing in National Savings Certificate is also quite beneficial. Though the annual interest on it is taxable, it is considered as a re-investment for the next year, and a deduction can be claimed on the interest then.
Expenses- Section 80C also covers a lot of deductions for expenses such as your child’s tuition fees, principal amount, stamp duty and registration charges paid for a housing loan, life insurance premium, etc. So even if you don’t have the funds to make investments, you can claim a deduction on your expenses.
Other deductions- Under Section 80E, you can claim the full amount of interest as a deduction for a loan taken for higher education for self or family (spouse, children or the student for whom the individual is the legal guardian). You can also claim a maximum deduction of Rs 50,000 (for below 60 years) and a maximum of Rs 1,00,000 (for above 60 years) for health insurance premium of self and family (u/s 80D).
3. First time home buyers- Under Section 24, a deduction of Rs 2,00,000 can be claimed for the interest on loan taken for self-occupied house property. If the property is given on rent, the full amount of interest is allowed as deduction. Also, deduction on stamp duty and registration charges are covered u/s 80C with a maximum limit of Rs 1,50,000.
Deduction u/s 80EE is applicable if you do not own any residential house property at the time of sanctioning of the loan. Moreover, some conditions do apply-
the loan has been sanctioned by a financial institution between 1st April 2016 and 31st March 2017
value of that house property should be less than Rs 50,00,000
amount of the housing loan should not cross Rs 35,00,000
You can claim a deduction for both home loan as well as HRA.
4. Set off or carry forward your losses- While losses are hard to digest, we’ll show you the bright side of it. You can set off losses from house property against other heads of income or carry forward them up to the next eight assessment years. Similarly, losses from short term capital assets can be set off against short & long term capital gains. The only rule for this is to file your return before the due date (31st July 2019). So keep a check on your losses and benefit from it.
5. Track your tax deducted at source (TDS) - All the tax deducted against your PAN which is deposited with the government is reflected in Form 26AS. You should review your Form 26AS to check whether all TDS details are correct and look out for missing entries.
6. Save your documents- Though saving your bills/ documents may seem like an insignificant task, you can save taxes by doing so. If your employer gives you a house rent allowance, leave travel allowance, etc. you’d surely want to keep the relevant documents to claim tax benefits.
Now that you know the six mantras for financial success, you will surely be successful in achieving your financial goals. But, this was just the tip of the iceberg! There are various other ways to save taxes and grow your wealth. For expert help with investment and tax planning, get in touch with H&R Block today!
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