Year End Individual Tax Planning Tips

The deadline for Tax-Saving Investments for FY 2022-23 ends on March 31, 2023. That leaves barely a couple of weeks for all those late risers.

Here are a few tips you should keep in mind.

• Check your total income like salary or other source of income if any.
  
  
• Calculate your total investment already done during the year eligible for deductions under Income Tax Act like 80C,80D.
  
  
• Determine which tax regime is best for you based on the amount of investment you have already made or intend to make in the future, as well as the scope of maximum exemption limits.
  
  
• Contributions up to Rs 1.5 lakh in a given financial year to approved avenues such as Employees’ Provident Fund (EPF), Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS), life insurance premium, National Saving Certificate (NSC), tuition fee, Sukanya Samriddhi Yojana (a savings scheme focused on girls), National Pension Scheme (NPS), equity-linked saving scheme (ELSS) and home loan principal repayment are deductible from the income of the individual.
  
  
• If there is a shortfall, you should first look at your existing commitments. These include PPF and Sukanya Samriddhi Yojana (SSY) accounts opened in earlier years. You should be contributing at least the minimum amount of Rs 500 and Rs 250, respectively, to these. If they are catering to your financial goals—say, retirement planning or a child’s higher education—you should contribute to these in line with the permissible limit of Rs 1.5 lakh per year.
  
  
• If you have exhausted Section 80C, look at Section 80CCD1B that offers an additional Rs 50,000 tax deduction if you invest money in NPS. This is over and above the tax deduction availed under Section 80C.
  
  
• Don’t forget to buy insurance (Section 80D) Payment of health insurance premium up to Rs 25,000 towards health insurance for yourself, your spouse and children can be claimed under Section 80D. If you are buying health insurance for your parents, an additional Rs 25,000 can be claimed in a year. In case the insured persons are senior citizens, double the amount (Rs 50,000) for self and family and parents per year can be claimed.
  
  
• If you have a home loan running, ask for the provisional statement of loan repayment for the year from your housing finance company. This will give you an idea of how much money you have already invested in permissible avenues under Section 80C of the Income-tax Act.
  
  
• Look for any unexpected income that has not yet been taxed. In that case, advance tax must be paid in order to avoid interest. Last date for advance tax payment is March 15, 2023; calculate it and pay it before the due date.
  
  
• If any property is sold during the fiscal year, check If there is a capital gain, look for ways to save taxes, such as investing in another residential property, and make sure that the investment is completed within the time frame specified.

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