Plan it right-Enjoy a stress free Tax season

Posted on : Monday, December 30, 2013

So, the New Year has well set in with greater hopes and optimism. We all have started on with a set of new thoughts and resolutions to keep our coming year on track and better than the last one. And well in today’s life how can one ignore the crucial part of Tax planning for keeping finances on track.

So here we come up with few easy things which if taken into account at the right time will put you on a solid footing for tackling your finances and money better this year.

1. Stay alert with announcements of Tax Free Bonds-An attractive mode to save tax

Tax Free Bonds are highly popular in present times and are seen as very good investment offer. The Tax free Bonds are issued by government or PSU’s for a fix term say 10 years, 15 years, 20 years e.t.c. The peculiarity of tax free Bonds are:-

1. The interest earned on such bonds is not subjected to any taxation.
2. Tax-free bonds are listed on NSE and BSE Exchange for trading and one can easily sell them off in secondary market before the end of the tenure without suffering any penalty. Thus offering them a greater liquidity.
3. Capital Gain on Bonds: Prices of bonds may fluctuate with interest rates. If interest rates goes up then the Price of Bond may come down and vice versa. So, if one invests in tax-free bonds and interest rate goes down, one can then easily sell the bonds at a higher price. This surplus amount earned is known as capital gain.

2. PPF Account-A “Must have” in Investment portfolio

Very early this year ensure to own a PPF Account which is a government fixed Income account and can be opened in authorized nationalized banks or in post office The most lucrative aspect of PPF is

1. Its fixed rate of interest 8.7% p.a. compounded annually
2. The amount Invested in PPF is eligible for deduction u/s 80C.
3. The whole interest earned in PPF account is tax free.

3. Avail tax benefits on Health Cover for Family

Healthcare costs are rising at an alarming pace and becoming more and more unaffordable for a common man. Thus it becomes inevitable to invest in a health insurance product for medical security and to prepare yourself to cope with the rising healthcare costs in case of an unfortunate hospitalization.

If you have not brought a health insurance cover for your family then do it now and enjoy a healthy and a less taxing life thereafter. Health Insurance cover offers you attractive income tax benefits under section 80D which allows you the deduction of actual medical insurance premium paid or Rs.15000 (Rs. 20000 in case medical insurance premium is paid for senior citizen parent) whichever is lower.

4. Donate in kind and save taxes

Have you donated money for charity, social or any philanthropic purposes or have made contributions towards a National Relief Fund?

If no, then this New Year, help the needy by donating in Kind.

This Donation will also help you as it acts as a perfect instrument to save tax. Donations to Prime Minister National Relief fund, National Defence Fund, National Cultural Fund, are 100% tax deductible while donations to trusts or charitable organizations or NGOs which are registered U/s 80G of Income Tax Act are eligible for 50% of the amount donated. So help others is a help to yourself.