Investment School: How to plan tax early?

How to plan tax early?

Most of the tax payers prepare tax planning only at the eleventh hour when the taxman blows his whistle,but it can be easily avoided by starting your tax planning early.The following steps are involved for planning your tax early

1. Estimate your tax after deducting all tax exemptions from your gross salary.

2. Declare your 80(c) and 80(d) tax exemptions details with your employer during the start of the financial year.

3. Collect all bills for medical bill reimbursement upto 15000 and get it remibursed as n when you get bills.

4. Pay yours n your dependent's medical insurance premium and get exempted upto 20,000 under section 80(d).

5. Get all the bills/receipts for investments under 80(c).

6. Get your rental agreement and rent receipts ready.

7.If you had opted for ELSS, go for SIP and have your SIP statements ready.

8. For home loan borrowers, get the interest and principal breakdown of your EMI payment from your bank.

9. Figure your if there are any capital losses for the financial year and it can be deducted from tax.

10. Include all interest gained from bank fixed deposits in the taxable income.

11. In May, when you get form 16, file the tax by e-filing or with your auditor.

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BRS said...

Good information, thanks for sharing.

>> 10. Include all interest gained from bank deposits in the taxable income.

Is interest accrued from money lying idle in savings account taxable? Is there is limit to this amount? My understanding was it is not taxable, but during recent filing of returns, i heard conflicting opinions. Kindly clarify.

Subramanian said...

Interest on savings account is not taxable. Interest on fixed deposit account only is taxable.

BRS said...

Thanks for the info.

However, here is a conflicting opinion.

In the Aug 28, 2008 edition, under the article '6 Top Income Tax
Fallacies Disproved', it is mentioned:


>> 3. Interest from bank deposits.
>> Regardless of the balance in the savings account in a bank,
>> some amount of interest will always accrue in the account.
>> Since there is no basic exemption for the interest earned,
>> one needs to pay some amount as tax on this earning from interest.

So, I am still confused whether savings account interest is taxable or not. :-(

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