Filling tax returns: 6 things to do before March 31
What's the story
There are two weeks left to file income tax returns for the past financial year. The deadline is March 31.
For most categories of taxpayers, there are a variety of tax-saving schemes. For example, did you know you could claim additional tax benefits if you bought your first home in 2016-17?
Here are a few options you could still use to claim deductions.
PPF
Public Provident Fund eligible for tax deductions under Section 80C
Several investment tools can help you save on taxes, like the Public Provident Fund (PPF).
PPFs have a maximum investment limit of Rs. 1,50,000 and are eligible for tax deduction under Section 80C.
This is available for both salaried and non-salaried residents with a lock-in period of 15 years, extendable by another five years.
Currently, the annual interest rate is 7.6%.
Definition
Tax-saving fixed deposits
These are like regular fixed deposits (FDs), but come with a lock-in period of five years. Investments of up to Rs. 1,50,000 are eligible for deductions under Section 80C. Interest offered by different banks range between 6.5-8.7%. Returns are assured but interest is taxable.
ELSS
Equity Linked Savings Scheme (ELSS)
With ELSS, you can claim a deduction of up to Rs. 1.5L under Section 80C. In contrast to PPF, NSC and tax-saving FDs, the lock-in period here is just three years, but returns are subject to market risks.
However, it has given returns as high as 15% in recent times.
For last-minute investments, lump-sum payment is preferable than instalments through SIP.
Groups
Schemes tailored for different groups
Then there are schemes tailored for specific groups. Those planning for retirement can go for the National Pension Scheme (NPS), which brings additional tax deductions of Rs. 50,000.
Salaried individuals can invest in the Employee Provident Fund (EPF).
Parents of girls aged below 10 can open a Sukanya Samriddhi Yojana (SSY) account, again eligible for deductions. The current annual interest is 8.1%.
Insurance
Health and life insurance
You can invest in life and health insurance to save tax as well as ensure a secure future for yourself.
Buying life insurance term policy online instead of offline will save you money and complete the process faster.
Deduction is capped at Rs. 1,50,000.
Under health insurance, you can get deductions of up to Rs. 30,000 depending on age.
However, none provides investment benefits.
Loans
Home and education loans
You can get tax benefits on loans too. The principal component of home loan EMIs is eligible for deductions under Section 80C, and interest component under Section 24.
Additionally, a first-time home-buyer in 2016-17 can get extra benefits of Rs. 50,000.
You can also claim deductions for interest paid on education loans. There's no upper limit of deduction, but interest rate is very high.