The IT department extended the tax filing deadline to 31st December 2021 for filing your returns for the financial year 2020-21. This extension was allowed keeping in mind the disruptions caused by the second wave of the COVID-19 pandemic. However, the it deadline is drawing to a close. Have you filed your taxes yet?
If you haven’t, there is no time to lose.
Get working on your tax returns ASAP.
To help you along, here are some tax filing tips that can come in handy –
1. Check for Section 80C deductions
Section 80C of the Income Tax Act, 1961 is a very popular and beneficial way of claiming tax benefits on your income. It allows specified investments and expenses as a deduction from your taxable income. One such deduction allowed by the section is for your life insurance premiums. You can claim a maximum deduction of INR 1.5 lakhs on the premiums that you pay for your life insurance policy.
So, check the premium that you paid last year, i.e. before 1st April 2021. Aggregate the premium that you paid for different types of life insurance plans and claim them as a deduction under Section 80C.
Besides life insurance premiums, if you have invested in the ELSS scheme of mutual funds, 5-year fixed deposits, PPF, EPF, etc. you can claim them too as a deduction under Section 80C. Remember, the maximum deduction is limited to INR 1.5 lakhs.
Pro tip: Collect the payment receipts of your life insurance policies. These might be required to provide proof of deduction. Moreover, for the eligible investments that you have made or expenses that you have incurred, keep the documents of such investments or expenses handy.
2. Account for health insurance premium
The premium paid towards a health insurance policy is allowed as a deduction under Section 80D. If you are below 60 years, the deduction limit is INR 25,000. If, on the other hand, you are aged 60 and above the limit increases to INR 50,000. This limit includes the premium paid for self, spouse and children. If you insure your parents too, the premium that you pay for their coverage is allowed as an additional deduction under Section 80D. You can claim an additional deduction up to INR 25,000 or INR 50,000 depending on your parents’ age.
So, check the health insurance premium that you paid last year. Claim a deduction for the premium and reduce your taxable income.
Pro tip: Like life insurance premium receipts, the receipts of your health insurance premiums should also be kept handy. You might need to submit them as proof of premium payment when claiming the deduction.
3. Check for other eligible deductions and exemptions
Besides the two major sections of 80C and 80D for life and health insurance premiums, check other deductions and exemptions that you can claim.
For instance, if you have a savings account, the interest income up to INR 10,000 can be claimed as a deduction under Section TTA. Similarly, check for capital gains exemptions if you have any capital gains in the last year.
Don’t delay tax filing any longer. Start preparing your tax return and keep these tips in mind to claim the maximum tax benefits. You can also take the help of experienced tax professionals for a quick return filing process.
Moreover, this year’s last quarter is about to start and you would have to plan your taxes for FY 2021-22 within this quarter. Start planning this year’s taxes in advance. You have the next three months in hand in which you can plan your taxes carefully and avoid the mad year-end rush. Invest in life insurance and health insurance for financial security and make sure that you use the deductions and exemptions allowed by the Income Tax Act to reduce your tax liability.