Things to Know about Declaring Investments for Income in 2018 - HDFC Life
The end of the current financial year is drawing to a close. This is the time to declare your investments made throughout the year. Failure to submit the required investment proof will result in a higher deduction of income tax by your employer.
In case you are seeking to declare investments for the income earned during the last financial year, you may go through the following five major tips.
1.Know the income tax slabs
The income tax rates for those with taxable income of INR 2.5 to 5 lakhs has been lowered from the earlier 10% to 5%, resulting in savings of up to INR 12,500. Upon adding education cess, which is charged at 2%, and higher and secondary education cess, which is charged at 1%, the total tax saving amounts to INR 12,875. Therefore, take advantage of this reduction and reduce your tax liability further.
2.Declare the investments you will make in February and March
Generally, you are required to declare your investments during the months of December or January. Many believe that investments to be made in February and March will not be accounted and hence do not make the declaration. However, you may go ahead and declare those investments which you plan on making before the end of the financial year. Based on this information, your employer will process the tax deducted at source (TDS).
3.Share all investment proofs on time
In order to provide a clear picture of your taxable salary and help your employer deduct your income tax with more accuracy, submit all the related investment proofs on time. This includes any capital gains from mutual funds or shares, interest received from recurring deposits or fixed deposits, rental income, and public provident fund (PPF) receipts among others.
4.Know the tax rebate limit
Earlier, taxpayers could avail of a tax rebate of INR 5,000 under Section 87A. This amount has now been reduced to INR 2,500. It is also important to note that this rebate, which was available to those with taxable income of INR 5 lakh and above, is now reduced to a limit of INR 3.5 lakh.
5.Be aware of fines with respect to delay of income tax filing
You may now have to pay a higher penalty in case you fail to file your taxes before the deadline â€“ i.e. 31st July of the assessment year. If Income Tax Returns (ITR) are filed post this date, a penalty of INR 5,000 will be charged, while INR 10,000 will be levied if ITR is filed after 31st December of the assessment year. Individuals with income within INR 5 lakh will, however, face a smaller penalty amount of INR 1,000.
In case you have not declared your investment yet, fret not. Though a higher amount will be deducted towards your income tax, you may claim a tax refund later at the time of filing your returns. However, it is advisable to keep up the practice of providing investment proofs to your employer on time in order to avoid bearing any penalties.
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