Income tax planning for the 2021-22 financial year: The first quarter of fiscal year 2021-22 is over, and if you haven’t done your income tax planning, it’s not too late as there are eight and a half months left for it. According to tax and investment experts, income tax planning for employees is an important financial event and must be taken seriously because a penny saved is a penny earned. Experts added that when planning income tax, one should start with ₹1.5 lakh annual limit according to Section 80C and then additionally ₹50,000 allowed under Section 80 CCD (1B) on one’s own investment in the national pension system or the NPS system. However, this is not enough as various other aspects such as Mediclaim benefits, tax efficiency of one’s own investment, etc. also require special attention from the taxpayer.
On income tax planning for white-collar workers, Balwant Jain, a Mumbai-based tax and investment expert, said, “The taxpayer should first try to reach his limit under Section 80C of ₹1.5 lakh per year. After that, he or she should move on to Section 80 CCD (1B) where an additional ₹50,000 annual benefits are provided through NPS system investments. ”Jain said Section 80C said options such as PF deductions, life insurance premiums, child school fees, etc.
What Comes Next in Income Tax Planning After Exhausting the Limits of Section 80C and Section 80CCD (1B) Kartik Jhaveri, Director – Wealth Management at Transcend Consultants said, “Once the boundaries of Section 80C and Section 80CCD (1B) are exhausted, he needs Income tax payers see Section 80D and Section 80G of the Income Tax Act Section 80D of the Income Tax Act grants an employed individual an exemption from income tax if they are entitled to ₹25,000 for yourself and others ₹25,000 for his dependent parents. If the dependent parents are seniors, the sickness benefit entitlement is up to ₹50,000 for parents paid by the employed person is exempt from income tax. If a deserving person has made a charitable cause or a donation, 50 percent of the Section 80G donation is exempt from income tax, provided the recipient has a Certificate of Section 80G issued by the Government of India.
Advice to taxpayers on examining the tax efficiency of their own investment in income tax planning; SEBI registered tax and investment expert Jitendra Solanki said: “You have to look at the tax efficiency of your investment like FD (fixed deposit) ₹10,000 in a fiscal year, then you can shift some FD amounts into Debt Investment Funds (MFs) with a time horizon of 2-3 years, whereby short-term debt MFs can give way by 6.0 to 6.5 percent per year and the income will be added to the annual net income as LTCG is only applicable to mutual funds if the investment period is 3 years or more. “
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