Roadmap to New Financial Year with better and smart  Tax Planning!

So the first thing you want to do after the end of Financial year is to file your income tax return and get yourself a big fat refund. But if you as a taxpayer have not done your tax planning properly, then you can either lose a big chunk out of this refund or end up paying taxes.

So in order to minimize tax/maximize refund, you will have to plan your investments at the beginning of the financial year. Being said that, the first thing you need to do is to check the outflows that qualify for deductions under section 80C:

• Education expenses: just determine the expenses you will incur on your children’s education. The deduction is allowed for the fees paid towards education of maximum of two children  for  full-time courses at a recognised institution in India.

• Home loan repayment: Principal paid towards repayment of a home loan, for a maximum of Rs. 1.5 Lacs, can be claimed as deduction under section 80C

• Life insurance premium payment: if you have paid any premiums towards a life insurance policy, than you could claim the same as deduction under section 80C

• Contribution to EPF: In case of salaried employee, any amount of forced contribution towards EPF will essentially exhaust your 80C limits as well.

Once you have exhausted all these options, you will be able to evaluate how much room do you still have to optimise your tax planning process.

Following are some of the options which you can avail depending on your investment objective and preferences.

Savings for retirement: You’ll probably find thousands of articles instructing you about how to plan for the retirement but the ultimate decision has to be taken by you. So there are essentially two questions at the bottom of this discussion:

1. When are you planning to retire?
2. What is the return you expect at the time of the retirement?

If you have these numbers clear in mind then you can easily find out how much you will have to invest per month/year in order to save for your retirement. In case you need assistance, visit Retirement Calculator.

Following are some of the options which will help you achieve your retirement goal, allowing you to take the benefit of deduction at the same time.

• NPS: You can make voluntary contributions to NPS upto Rs. 50,000 every year and also claim deduction for the same under section 80CCD

• PPF: As far as security is concerned, this is by far the safest under the umbrella. Minimum amount Rs. 500 and maximum upto Rs, 1,50,000 can be invested in PPF and the same will be allowed as deduction under section 80C.

Home sweet home: If you have taken a home loan to buy your dream home, or if you are planning to take a loan, than following are some of the benefits that you could avail and plan your finances accordingly:

1. Interest paid on Home Loan
2. Repayment of Principal Amount of Home Loan (as elaborated above)
3. Additional benefit of Rs. 50,000 on Interest paid on Home Loan if you are First Time buyer of a house costing less than Rs. 50 lakhs and the loan amount is under Rs. 35 lakhs.

There are few other options which you may consider for claiming deduction:

• Purchase of NSCs – National Savings Certificate (Section 80C)
• Children’s Tuition Fee Payment (Section 80C)
• Investment in Sukanya Samridhi account (Section 80C)
• ULIPS or Unit Linked Insurance Plan (Section 80C)
• Investment in ELSS – ELSS or Equity Linked Savings Scheme (Section 80C)
• Sum deposited in Five Year Deposit Scheme in Post Office. (Section 80C)

• Medical Premium Payment  (Section 80D)
• Rajiv Gandhi Equity Saving Scheme (Section 80CCG)
• Deductions on Loan for Higher Studies (Section 80E)
• Deductions on Interest earned on Savings Bank Account (Section 80TTA)

Refer this guide to know about all these deductions in detail.