Financial Tax Planning for 2018 will be tricky. It is because of the reason that in the Union Budget 2018, Finance Minister Arun Jaitley has proposed a number of revisions that will affect your financial tax planning for 2018 and onwards. Especially the income tax you pay, and long-term capital gains on investment in stocks as well as equity mutual funds to change in cess on income tax. You’ll need to get expert advisory for financial tax help from 2018 onwards.
So here is the Financial Tax Planning for 2018 mantra from team Financial Tax Help!
The most important tax for any taxpayer is the Income-tax, an unfortunate certainty for everyone. If it was up to us, we wouldn’t pay tax on the income we earn. But we have to as the income tax is an essential source of revenue for the government. As citizens of India, we are also consumers of the nation’s infrastructure and facilities. For consistent improvement in these facilities and infrastructure, we are duty-bound to contribute towards building and sustaining it. paying tax is, therefore, a noble cause.
While the government insists you to pay income tax, it also permits you to legitimately save on income tax. This means we can seek ways to decrease the burden on us without stepping out of legal spectrum. A person doesn’t have to pay income tax if he/she earns less than Rs 2.5 lakh per annum. Income more than that is taxed as per various slabs, with the tax rates moving up with an accretion in income. No matter how much taxable income you earn, there are several exemptions and deductions permitted to all individual and HUF taxpayers that can be utilized to minimise income tax and save wealth.
Financial Tax help for 2018
The banalest tax-saving alternative available to individuals and Hindu Undivided Families (HUFs) in India is under Section 80C of the Income Tax Act 1956. Section 80C covers numerous investments and expenses that can be utilized to claim deductions. The Section 80C limit is Rs 1.5 lakh in a financial year, which means that an individual or HUF can use this entire sum to reduce the taxable income imposed on them.
Financial Tax help to save tax other than Section 80C provisions
Apart from the deductions possible under Section 80C, there are many additional Section 80 deductions that can also be claimed to save on income tax and add to your earnings. These reductions constitute health insurance premiums, tax benefits on home loans et Cetera.
Another method to save tax is by creating a HUF. A HUF can be created by espoused Hindu citizens. A HUF would include Karta- the creator, and his or her family members. The benefit of a HUF is that you can divide your income among two entities–yourself as an individual taxpayer and the HUF as a wholly. This way, you can avail synonymous tax-saving reductions twice.
How to plan your investments for the year
The best time to begin planning tax-saving investments in the first month of the financial year. Most taxpayers delay it until the final quarter of the year and end up taking hurried decisions. Preferably, if you plan at the beginning of the year, you can make investments that can also assist you to fulfil your long-term goals. Tax-saving investments should be employed to generate wealth as well, not only to just save tax.
Use the following tips for you financial tax planning in 2018
- Review the tax-saving expenditure that you’re already making on which you can claim. This constitutes expenses such as insurance premium, children’s tuition fees, etc.
- Deduct this sum from ₹1.5 lakh to figure out how much to spend. The entire amount isn’t needed to be invested if expenses are satisfying it.
- Choose tax-saving investments on the premise of your objectives and profile. ELSS funds, PPF, NPS and fixed deposits are some of the common alternatives.
Through this method, you can figure out how much you require to invest to save taxes. It is best to start investing in the first quarter of the financial year so that you can expand the investments over the whole year. Doing this won’t hinder you at the end of the year and will also enable you to make informed investment judgments.