Personal Finance

Year End The Income Tax Checklist

Every year , this is the time when you start thinking about various saving vehicles that you should use in order to save on your income tax .This article is dedicated to these users who actually care for personal finance and want to ensure that their hard earned cash is easily conserved .

Bunch Expenses

Some deductions are only allowed once your expenses exceed a certain percentage of your income .Like the medical expense is 7.5% and micellaneous expeses are 2% . For example your salary is Rs 10000 and you have 2000 as your medical expense , the entire Rs 2000 will not be eligible for deduction from your taxable income .You only get to deduct from 7.5% of 10000 i,e  7500 . So you can deduct only 7500-2000= 2500 from your taxable income .So the best way to save on this to collate your
entire medical bill by December of every year and they deduct the same from your total taxable income .

So if you are close to reaching your threshold of Rs 2500 and is not in dire need of this expense the wiser option is to
defer the investment till next fiscal year so that you dont have to pay extra for this expense .Also it is beeter to go for
services that are under tax rebate rather than opting a taxable option .

Next year TAX buckets

Its better to calculate the TAX bucket for the next fiscal year so that your expenses are well planned for the coming year .For example if you feel that your total taxable income will increase by 15% in the next year do plan your deductions keeping in mind the tax slabs for the current year for that particular salary bracket . Similary if the salary is expected to take the downward spiral it is beeter to increase the expenses under “tax benefits” this year so as to evade any TAX  calamity in the near future .

The Bottom line

The year end tax planning is a tedious task . Its better to take the help of TAX professional to create an ongoing plan for your investments and spendings .Also it is better to increase or decrease your expenses in accordance to tax slabs rather than moving towards a fix expense strategy .

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