Best Tax Saving Options & Plans | Tax Saving Investments

Best Tax Saving Options & Plans | Tax Saving Investments

ELSS Tax Saving Mutual Funds

ELSS (Equity Linked Saving Scheme) is a kind of equity-linked mutual fund. The ELSS enjoys tax benefit under section 80C of the income tax act. ELSS funds have a lock-in period of 3 years, the lowest amongst the options available. You can invest up to Rs 150,000 in ELSS funds either as a lump sum or through SIP.

Public Provident Fund (PPF)

PPF (Public Provident Fund) is a good option if you are looking for an option with certain returns. Currently, PPF investments earn interest at the rate of 7.10%. The PPF matures in 15 years which is extendable by 5 years at a time. You can also partially withdraw from the PPF balance from the sixth year of deposit. You can invest in PPF through a bank or Post Office.

Also read: Things you should know about PPF account

Employee Provident Fund (EPF)

EPF (Employee Provident Fund) is a retirement saving instrument. For salaried employees, this is a forced saving which is eligible for deduction under section 80C. It is typically deducted from your salary every month and it includes 12% of your Basic salary + DA. The interest on EPF is decided by the government every year.

National Savings Certificate (NSC)

NSC (National SavingsCertificate) is a small saving scheme by the government of India. The Scheme is specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesse. The NSC gives tax benefit under section 80C. You can invest in NSC via your local post office.

Sukanya Samriddhi Account

Sukanya Samriddhi Account is a government-backed saving scheme targeted at the parents of girl children. The objective of the scheme is to promote the welfare of girl child. A natural/ legal guardian on behalf of a girl child can open the account. The minimum amount of deposit is Rs 1000 per annum. You can avail income tax benefit under section 80C for an investment of Rs 1.5 lakh. This scheme encourages parents of the female child to build a fund for their higher education and marriage expenses.

National Pension Scheme (NPS)

NPS (National Pension Scheme) is a voluntary defined contribution pension system in India. NPS is a low cost, tax efficient and flexible pension scheme started by Government of India for the unorganised sector and working professionals to have a pension after retirement. You have to contribute a minimum amount of Rs.1000 per year. You can choose from different NPS plans as per their risk profile. You can avail income tax benefit under section 80C for an investment of Rs 1.5 lakh in your NPS account. You are also allowed an additional deduction of Rs.50,000 from your gross taxable income for investing in NPS under Section 80CCD(1B). This deduction is over and above the maximum tax deduction of Rs. 1.5 lakh under Section 80C.

Bank Fixed Deposits (FD)

Bank fixed deposits (Bank FDs) or tax saver fixed deposits are the safest option for investment. These FDs have a lock-in period of 5 years. Investment in these FDs qualifies for deduction under section 80C of the Indian Income Tax Act, 1961. You can claim a deduction of a maximum amount of Rs.1.5 lakh by investing in these bank fixed deposits. The returns on these FDs are guaranteed and you will get a fixed return after the maturity. However, the interest earned is taxable. Presently, different banks offer different interest on these FDs.

Life Insurance Premium

Buying life insurance policy is a good way of saving tax. Life insurance is the most common and effective tax planning instrument in India. The policyholder is eligible for tax benefits under section 80C for the premium paid. Other then the tax saving, life insurance also ensures that your family will get financial support when you are no longer around to care for them. There are various life insurance plans like term plans, Endowment plans, ULIPs, and money back plans.

Health Insurance

Health insurance is popularly known as Mediclaim. It covers the cost of an insured individual's medical and surgical expenses. Health insurance is an important investment and hence you can enjoy tax benefits under Section 80D of the Income Tax Act.

Also read: 10 Tax saving options other than Section 80C

Also read: How to file your income tax return (ITR) online

Also read: Documents needed while filing income tax return in India

Also read: Aaykar Setu App | An App by Income Tax Departmnet

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Best Tax Saving Options & Plans | Tax Saving Investments

How to file your Income Tax Return (ITR) online?

The due date for filing income tax return is 31st July. If you have all your documents in place, you can now file your tax return online, as all the ITR forms are accessible online at the income tax department’s e-filing website (www.incometaxindiaefiling.gov.in). Please note that only ITR 1 SAHAJ and ITR 4 SUGAM can be filled via the fully online process. In this post, let us take a look at how to file your income tax return (ITR) online.

How to file your income tax return (ITR) online?

Follow the below steps and file your return online.

Step 1

To file your return online, you need to register yourself on the income tax department's website. You need to fill your PAN number, name and date of birth and choose a password. Once your registration is complete, you can log in to your account with your user ID and password. Your permanent account number will be your user ID.

Step 2

You need to select requisite ITR form on the basis of the source of your income.

Step 3

Keep the documents ready such as PAN card, Form-16, Form-16A, statements of all bank accounts or passbooks, interest income statement for fixed deposits, Form 26AS, investments proof under Section 80C, home loan details and interest certificates, stock trading statement, advance tax payment challan, medical insurance receipts, etc. Click here to read: Documents needed while filing tax returns in India.

Step 4

There are two ways you can file your tax return online.

1. Partially offline process

2. Fully online process.

Partially Offline Process

1. Visit e-filing website www.incometaxindiaefiling.gov.in

2. Go to the download section and click on “IT Return Preparation Software” option.

3. Download the requisite form for the relevant assessment year.

4. Save the ITR form on your computer and fill all the details.

5. Prepare the ITR using the downloaded software.

6. Login to the e-filling website with your Id and password.

7. Go to “e-file” and click on “Income Tax Return” option.

8. Next screen, you need to select assessment year, ITR Form number, Filing Type and submission mode. Here select submission mode as “Upload XML”.

9. Select an option to verify your income tax return. Click on “Continue” tab.

10. Upload the ITR XML file from your computer.

11. Upload digital signature, if applicable.

12. Now click on the “Submit” button.

Fully Online Process

1. You have to go to the e-filling website www.incometaxindiaefiling.gov.in

2. Login with your Id and password.

3. Go to “e-file” and click on “Income Tax Return” option.

4. Next screen, you need to select assessment year, ITR Form number, Filing Type and submission mode. Here select submission mode as “Prepare and Submit Online”. (Please note that only ITR 1 and ITR 4 can be filled online). Click on “Continue” tab.

5. Fill all the details and click on “Preview & Submit” button.

6. Upload digital signature, if applicable.

7. Now click on the “Submit” button.

Step 5

On successful submission of your ITR form, an acknowledgment number is generated if the return is submitted using the digital signature. Your tax return filing process is complete. Just preserve this number.

An ITR-V is generated if the return is submitted without digital signature. ITR-V will also be sent to the registered email. The ITR-V form should be printed, signed and submitted to the CPC within 120 days from the date of e-filing. Check your emails/SMS for reminders on non-receipt if ITR-V.

Step 6

You can e-verify your return through electronic verification by using the e-verify return option on the website. You can also use Net banking, Aadhaar OTP, pre-validated bank account, bank ATM and pre-validated Demat account to e-verify your return. E-verification eliminates the need to send ITR-V to CPC.

Hope now you will be able to file income tax return (ITR) online easily.

You may also like to read: 10 Tax saving options other than Section 80C

You may also like to read: Tax saving options and plans 

You may also like to read: How to link PAN to Aadhaar?

You may also like to read: 7 habits that canmake you rich

If you liked this article, share it with your friends and colleagues through social media. Your opinion matters, please share your comments.

The most common mistakes people make while filing Income Tax Return (ITR)

It is the time of the year when you need to file your income tax return. The due date for filing income tax return is 31st July. It is mandatory to file tax return if your income exceeds the basic exemption limit allowed by the government. The government of India has made the process of tax filing very easy and hassle-free by introducing e-filing. In this post, I will discuss some common mistakes that people make while filing their ITR.

Filing income tax return is once a year activity if you don't commit any mistake while filing your ITR. Individuals often make mistakes in the process of tax filing that can complicate the tax filing process further. I have listed below some common mistakes that you should avoid at the time of tax filing.

Common Mistakes People make while filing Income Tax Return

Following are some common mistakes taxpayers make at the time of tax filing:

1. Not filing income tax return

It is the most common mistake that people forget to file tax return. You need to file your ITR if your income exceeds the basic exemption limit allowed by the government. To avoid this mistake always file your ITR and that also before the last date.

2. Using wrong ITR form

Selecting a wrong ITR form is also a common mistake committed by people at the time of tax filing. Please note that use of an incorrect form is considered defective even if you file your income tax return correctly. The IT Department has prescribed various forms such as ITR 1 SAHAJ - for individuals having income from salaries, one house property, other sources (interest, etc), and having total income up to 50 lakh. The other forms are ITR 2, ITR 3, ITR 4 SUGAM, ITR 5, ITR 6 and ITR 7. You have to select the correct form for your tax filing otherwise your ITR will be rejected by the Income Tax Department.

3. Incorrect personal details

You are required to mention correct personal details like name, PAN, address, email ID, contact number, Aadhaar number, and bank account number with IFSC code to avoid rejection of your ITR. For example, if you fill wrong bank account number then your tax refund (if any) will be transferred to that account. Therefore, you should file your taxes carefully to avoid such mistakes. Also, note that most of the communication with the IT department happens through email so it is important to provide your correct email ID.

4. Not checking Form 26AS

It is important to check your Form 26AS before filing your ITR. Form 26AS is the annual consolidated tax credit statement issued to PAN holders. This statement shows all the taxes received by the Income Tax Department against the PAN of the taxpayer during the financial year. Therefore, always verify your Form 26AS for any discrepancies before tax filing for the year.

5. Not filing income tax return electronically

If your assessable income exceeds Rs 5 lakh then you have to compulsorily e-file your taxes. Senior citizens who are 80 years old or older can choose to file a physical ITR. Click here to read: How to file your ITR online? 

6. Not claiming deductions

You should claim your deductions under various sections of the Income Tax Act to reduce your tax liability. The government has given various deductions under Section 80. If you forget to claim deduction while tax filing, you may lose the money by paying more taxes. Therefore, always mention your deduction under appropriate sections to reduce tax liability.

7. Not disclosing exempt income

There are several types of incomes which are exempt from tax, but notifying about the same to the IT department is necessary. Exempted incomes such as interest on savings account up to Rs 10,000 and dividends from stocks should be mentioned while filing you tax return to avoid unnecessary queries from the Income Tax Department.

8. Not disclosing interest on fixed deposits

Most of the people often avoid adding interest earned from their fixed deposits to their total income while filing ITR. Interest earned on various fixed deposits should be added to the total income for the year and pay tax and pay tax accordingly to avoid unnecessary queries from the IT department.

9. Investment in the name of spouse and children

If you are investing your income in the name of your spouse and children then you have to add the income earned by your spouse/children out of that investment in your total income while tax filing.

10. Not verifying ITR

You need to either e-verify your income tax return, using the e-verify return option on the website, Net banking, Aadhaar OTP, pre-validated bank account, bank ATM and pre-validated Demat account to e-verify your return. You can also send a printed and signed copy of ITR-V to the Bangalore CPC within 120 days from the date of e-filing. If you forget to verify your ITR then it will be considered as incomplete.

Hope now you will keep these points in mind while filing income tax return to avoid penalties and any unnecessary trouble. The last date for filing tax return for individuals is 31st July.

Also, read: How to file your ITR online?

Also, read: Document needed while filing ITR in India

Also, read: What is NPS (National Pension System)?

Also, read: 5 Best ELSS tax saving mutual funds yo invest in 2019

If you liked this article, share it with your friends and colleagues through social media. Your opinion matters, please share your comments.

How to Link PAN with Aadhaar?

How to link PAN with Aadhaar?

The government of India has made it mandatory to provide Aadhaar number while filing tax returns as well as linking it with PAN (Permanent Account Number) card. In case you do not link your Aadhaar Number with your PAN card your PAN card would be invalid. The deadline to link PAN with Aadhaar is extended till June 30, 2020.

PAN Card

PAN (Permanent Account Number) is a unique 10-digit alphanumeric number allotted to each taxpayer. PAN card is issued in the form of a laminated card by IT (Income Tax) Department under the supervision of the CBDT (Central Board of Direct Taxes). It also serves as an important identity proof like driving licence and Aadhaar card. The PAN number once allotted remains unaffected by the change of address within or across states in India.

Aadhaar Card

Aadhaar number is a 12-digit random number issued by the Unique Identification Authority of India (UIDAI) to the residents of India. Any individual, who is a resident of India, can voluntarily enrol for obtaining an Aadhaar number. Aadhaar card is an important document and serves as a proof of identity as well as proof of address.

How to link PAN with Aadhaar?

There are five different ways to link PAN with Aadhaar.

1. Online Linking of PAN with Aadhaar via income tax e-filing website (For registered users)

2. Online Linking of PAN with Aadhaar via income tax e-filing website (For non-registered users)

3. Link PAN with Aadhaar through SMS

4. Linking of PAN with Aadhaar via Aaykar Setu App

5. Link PAN with Aadhaar through offline process

Link PAN with Aadhaar via income tax website (For registered users)

In order to link PAN with Aadhaar, registered users head over to Income Tax e-filing Website and follow the steps mentioned below:

1. Log in to the e-Filing portal of the Income Tax Department by entering your log-in Id, password, and date of birth. If you're new, then you have to register yourself first on Income tax e-filing website. Click on “Register Here” and then enter your PAN details and create a password after verifying the OTP.

2. Once you are logged in to the website and your account opens, now click on “Profile Settings” tab and select the option “Link Aadhaar”.

3. If your Aadhaar is already linked with Aadhaar then you will see a message on the screen as “Your PAN is linked to Aadhaar number XXXX1111”.

4. If your PAN is not linked with Aadhaar then a form will appear on the screen.

5. Enter the required details such as name, date of birth and gender as per your PAN card data.

6. Next, enter your Aadhaar number.

7. Now enter the captcha code and click on “Submit” button.

8. Once submitted, a pop-up message will inform you that your “Aadhaar-PAN linking is completed successfully”.

Link PAN with Aadhaar via income tax website (For non-registered users)

If you are not a registered user at the e-filing website and you also don't want to register yourself then you can use this method to link your PAN with Aadhaar. A hyperlink has been given at the homepage of the e-filing website. Just follow the steps mentioned below to link PAN to Aadhaar.

1. Visit e-filing website https://www.incometaxindiaefiling.gov.in/home

2. Click on “Link Aadhaar” under “Quick Links” on the e-filing website.

3. It will open a new page where you are required to fill a form by entering your PAN number, Aadhaar number, Name as per Aadhaar.

4. Tick the option: “I have the only year of birth in Aadhaar card” (If your Aadhaar card has the only year of birth).

5. Enter the captcha code and click on “Link Aadhaar” button.

6. Once submitted, a message on the screen will inform you that your “Aadhaar-PAN linking is completed successfully”.

Link PAN with Aadhaar through SMS

Now you can link your PAN with Aadhaar card through SMS also.

SMS format

UIDPAN<space>12 digit Aadhaar No.<space>10 digit PAN No.

Now send SMS to 567678 or 56161

For example, if your Aadhaar number is 112233445566 and PAN is AABPA1111B. Just send an SMS to 567678 or 56161 as
UIDPAN 112233445566 AABPA1111B

Link PAN with Aadhaar via Aaykar Setu App

Now you can also link your PAN with Aadhaar card via Aaykar Setu App

Download the Aaykar Setu app on your smartphone. Link your PAN with Aadhaar by using PAN/TAN feature of Aaykar Setu App.

 
Link PAN with Aadhaar through offline process

Now you can link your PAN with Aadhaar through the offline process using a single page form. The single page form is just another procedure by a paper medium for linking PAN with Aadhaar. The complete process is manual.

You have to fill the form and submit this form to designated PAN Service Centers of NSDL or UTIISL along with PAN card and Aadhaar card copy. If there is a mismatch then you need to visit the center personally for fingerprint authentication.

Note: This post was originally published in April 2017 and has been completely updated for accuracy and comprehensiveness.

Also read: 7 habits that can make you rich

Also read: Benefits of Investing in Mutual Funds

Also read: What is Gratuity and how to calculate Gratuity?

Also read: Small Business Ideas with low investment

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