“I like to pay taxes. With them, I buy civilization.”
―Oliver Wendell Holmes Jr.
Investment declaration is an activity that is commenced in the beginning of the financial year. It is vital as it can result to higher & progressively increased in-hand salary. For this, you needn’t submit legitimate proofs by the end. Your investment can be wishfully less as well as more.
Assessment year refers to the year following the financial year wherein simultaneously the income of the same is revised. It is hereby a period of about 12 months, technically commenced post April 1st of every year.
It focuses on the income of an individual citizen in relation to the previous year that is assessed to the tax. Further on, the individual who holds the liability to conform payment of this tax is supposed to file a return with accordance to various prescribed dates.
Appointed and stringent officers are then made to review the returns along with income tax department officials. This procedure is termed as assessment and it follows a complete run-through of each step discretely.
Previous year, on the other hand, is partially a subset of the above. As defined amidst the section 3 of the Income Tax Act of 1961, it refers to the financial year that preceding the assessment year.
Truth be stated, it primarily highlights the covering of income post the initiation of the financial year and helps conclude the income prior the finalization of this financial year simultaneously.
Also, here, “form 12BB” is offered. It is a statement of claims for the motive of deduction of tax by an individual employee. This administers to all taxpayers who are salaried. Formerly using this form 12BB, an employee is to declare all investments that have been made by them during the year.
Alfred E. Neuman once said, “Today, it takes more brains and effort to make out the income-tax form than it does to make the income.”
The following are various methods that you can adopt so as to efficiently plan tax for the upcoming assessment year of 2017-2018:-
Reductions under Sections 80C, 80CCC, 80CCD & 80D
80C refers to the premium that is to be paid for life insurance alongside all investments to be made in ELSS funds, PPF, NPS & fees for children.
80CCC makes sheer reference to the premium paid for annuity plan.
80CCD refers to the additional contributions made to NPS.
80D is the premium that is paid for medical insurances.
House Rent Allowances
This is in reference to the rent that is due to be paid to the landlord. It should consist of the name, PAN & address of the landlord.
Travel Expenses (Concessions)
It is always advisory to leave travel allowance as per the salary package.
Interest (Home Loan)
This refers to the interest payable to the lender with the legit name, address & required PAN details of the lender.
Deductions under other sections like 80G, 80TTA & 80E
80G – this refers to the donations and endowments made to specific organizations.
80TTA – this means a well-calculated interest income as earned from the individual’s bank’s savings account.
80E – this refers to the interest that is needed to be paid for education loan.
Hereby, the sole intendment behind investment declaration is to persuade employees to submit a legitimate declaration, followed by the exemptions they wish to claim. Furthermore, the employer is bound to reduce TDS on the employee’s salary on the accredited basis of the declarations made.