Blog: What is income without tax on it?

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What is income without tax on it?

You still have time to file I-T returns. The last date for this financial year is March 31, 2014
What is income without tax on it?

Phew! It can be really exhausting trying to count your savings. And after the pain, comes the exhilaration! I’m sure you are wondering what the hullabaloo is all about…Well, I just filed my income tax returns.

All the last minute running around, the strain, the anguish that I had to part with some money (gasp!) with the government had worked me up so much. I mean, I know it is just a few thousand rupees but surely the government can manage without them. As it is, most people in the country do not file tax returns, they should be glad that some people still do!

Not that I wasn’t planning to, but trying to save every last bit of penny was a little tougher than I imagined. I figured it was easier to just do it all at the end…why waste so much of time thinking about it? I was 100 per cent sure that all I needed was a day – and I was wrong. Hugely!

Like many people, I had not made any tax declarations. Now, depending on whether you plan conservatively or aggressively, the following situations will arise:

People who did not give any declarations for tax savings, but had managed to utilise some tax breaks or having invested money in tax savings instruments find that they suddenly have lots of extra cash in their hands as higher tax was deducted every month from them in the previous 10 months.

And people who gave aggressive tax saving declarations but did not manage to invest the money properly or bring the right proof for tax saving find that they are going without salary for the last two months to compensate for the additional tax they need to incur. In both cases, you have not gained financially in the bargain.

In order to minimise the damage to your bank account/wallet and make sure you get to keep your hard earned money, I’m going to tell you the secret of saving the maximum money from the taxman’s hand.

Get knowledge
The most important part about planning for your tax is to get familiar with the tax breaks that apply to you. They may sound complicated in the beginning, but take help from your finance department, your colleagues (every organisation has the Maru/Gujju tax consultant) who will give you quick advice on all the tax saving options you have. A little knowledge goes a long way in saving your hard earned money from falling into the pocket of the government.

Plan your taxes
Once you have the knowledge, plan well to ensure that you are utilising all the tax breaks as much as you can. You have taken care of your cash in hand, created provisions for your investments and feel happy about the fact that you may have saved enough to buy that new smartphone that you have always wanted to buy. This also means that you have given correct declaration to finance / payroll to ensure that the tax deductions are done appropriately.

Follow the plan
Ensure that the investments are going on time, the proofs that you will need to claim your tax breaks are obtained and filed property (travel tickets, medical bills, HRA receipts etc etc) so that you do not miss out on any possibility of saving on tax. Most times small slip-ups in doing the small things lead to big headaches at the end of the year.

Small things like this will ensure that you can file your returns much before the due date. That way you can avoid crashes the income tax site goes through (where have we heard that before?) and not go through a financial meltdown as the finance department deducts higher tax due to non-availability of the proofs. Yeah, you can also feel smug about the fact that you have managed to save those extra few rupees, which if we were to believe our politicians, can get us hundreds of meals!

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Topics: Watercooler, Life @ Work

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