Tax planning has always been the test of efficiency for people along with being a test of their cunningness such that they can save their taxes in a lawful manner. Here are some of the tips that can help you to plan your taxes for F.Y.2021-22 & F.Y.2022-23. Here are 11 simple tax planning tips to save more tax in A.Y. 2022-23 and A.Y. 2023-24. Be sure to read the 4 other important points given at the end of this article to help you plan your taxes for the next assessment year. The points given here have been amended up to the finance act of 2022.
1) Divide Income among various family members
- Get the benefit of the basic exemption limit of Rs.2,50,000 (Rs.3,00,000 for residents and Rs.5,00,000 for residents 80 years and over).
- It is recommended that the maximum members of your family are designated as assessees, so that the basic exemption (as aforesaid) can be enjoyed by all members of your family.
- Due to the higher exemption limit, it is more advantageous if there are senior citizens/very senior citizens (parents) assessees.
2) Avail Rebate u/s 87
In the event that the taxable income is up to Rs. 5 lakh, then the rebate will be equal to the tax amount or Rs. 12,500 whichever is less. So you can avail the benefit of rebate if your income is below 5 lakh.
3) Invest in policies
Policies are a prominent way to save a handful amount of tax. Up to Rs. 1, 50, 000 (A.Y.2022-23 & A.Y.2023-24) can be saved by way of investing PPF, EPF, Fixed Deposit for 5 years, Pension Plans, etc. as specified u/s 80C, 80CCC and 80CCD.
4) Contribute to NPS
NPS stands for New Pension Scheme has recently been initiated by the Government under which investors can claim a deduction as a have a Tax free NPS return, however, withdrawal under the such system is still taxable. You can get an extra deduction for contributions to NPS up to Rs.50,000/-
The maximum deduction as an aggregate of section 80C,80CCC & 80CCD(1) should not exceed Rs. 1,50,000 but after including section 80 CCD(1B), total deduction limit becomes Rs. 2,00,000.
It should be noted that in addition to the limit of Rs.1,50,000 that applies to deductions under sections 80C, 80CCC, and 80CCD(1), the income tax act also provides for an additional deduction of up to Rs. 50,000 under section 80CCD(1B) of the income tax act.
5) Buy a Medical Insurance
A deduction of Rs. 25, 000 is available for people who wish to invest in medical insurance for themselves. This deduction increases to Rs. 50, 000 when it is done by senior citizens. More about medical insurance deduction. You can also get a deduction of your parent’s medical if paid out of your own funds. The expenses on preventive health checkup are also eligible for deduction under section 80D.
6) Avail Deduction u/s 80TTA
Saver’s accounts (in banks/post offices) are eligible for deductions under section 80TTA up to Rs.10,000 (except for senior citizens). In a nutshell, you can say that funds which are kept inactively in a savings account can earn tax-free returns.
7) Avail Deduction u/s 80TTB
The income from bank/post office deposits (including fixed, recurring, and daving) can be deducted under section 80TTB up to a maximum of Rs.50,000 by senior citizens.
8) Deduction 80GG
You can also avail the deduction under section 80GG for rent paid (not owning any house).
9) Deduction 80E
There is also the option for the assessee to claim a deduction for interest on loans taken for higher education taken under section 80E of the income tax act.
10) Expenditure for disabled dependent
As per the provision of section 80DD the amount is allowed up to Rs.75,000 in aggregate. The deduction can be claimed up to Rs.1,25,000 if the person with sever disability.
Donation to charitable trusts and organizations have always been regarded as an auspicious event, therefore, 100% deduction is available in such context. The same rate is also applicable in situations where the contribution is made to a political party.
Importnat Points While Doing Tax Planning for A.Y. 2022-23 & A.Y. 2023-24
1) It is possible to deduct the loss from one house property from the revenue from any other house property, and any remaining balance, if there is any, can be deducted from income categorised under any other heading in addition to the loss from one house property.
2) When a self-occupied house property is acquired or constructed with borrowed funds after April 1, 1999, the interest on borrowed funds is deductible up to a maximum of Rs. 2,00,000. In order to claim this deduction, you need to submit a claim within five years of the end of the financial year in which the funds were borrowed.
3) In the event that a loan for an affordable house is obtained from a bank housing finance company between 01 April 2019 and 31 March 2022, a maximum interest deduction of Rs. 1,50,000 is permissible under section 80EEA. The house in question must have a value of up to Rs. 45 lakh.
4) A maximum amount of Rs. 1,50,000 can be deducted for interest on electric car loans taken out between 01 April 2019 and 31 March 2023 under section 80EEB.