People in India require filing their income tax returns every year by the last date of March. Assessment years begin from the 1st of April each year and ends on 31st March the following year. Assessment is done for the previous year during the time frame known as the accounting year. All your income earned during the accounting year is assessed after you file your tax return. Many Indians ignore the tax for most of the year and it is only in February or early March every year that they get up and running with their accounting and financial transactions for filing of income tax returns. Not to forget, in order to file tax returns in India or pay Income tax one needs to have a permanent account number or what we call it as a PAN Card.
A very good tax site from India that help non resident Indians (NRIs) in Indian taxations is: http://www.India-Tax.com
There are many ways you can do tax planning in India on your income. You can save taxes under Sec 80cc up to a maximum of Rs1, 00,000 and your income can also be exempted from taxes on any interest on housing loans that you had to pay in the accounting year. You can avail of savings on interest to a maximum of Rs1, 50,000 each year.
For medical insurance, senior citizens can claim exemption of up to Rs20, 000 every year on their incomes. You can also take the help of several instruments like the ELSS and life insurance premium for claiming benefits in tax planning. For those who are working, they can claim a deduction on the amount deducted from their salary for payment towards provident fund. If a certain amount of money is deducted every year towards provident fund, then the balance amount of your income will be liable for taxation.
There are many taxes saving funds that you can also avail of for tax planning purposes like the Equity Linked Savings Scheme. You can invest in the Indian equity market with the help of an automated debit system monthly, but it has a three year lock in period. You can take away the money only after three years. It helps both in tax planning and saving as well as wealth creation. Since the money invested is again reinvested in the equity market, the value would depend on the index of the stock exchange after three years. You can gain a lot of money from your ELSS savings made three years back. Many of the tax funds also come with medical insurance benefits and your financial advisor or agent can show you the various ways taxes can be planned.
Among the most favored tax planning schemes among Indians is the life insurance plan. You should always opt for this plan as it has life benefits and tax benefits loaded into one. It is a sort of forced saving that can ensure a good life for your dependents in the event of something unfortunate happening to you.
Your income and lifestyle can be maintained with a good life insurance cover. If you already have enough life insurance policies for the future of your dependents as well as yours, then you should opt for the ULIP or the Unit Linked Insurance Plan and all payouts in life insurance policies are free from taxes.
You can also do tax planning with the help of the NSC or National Savings Certificate. By investing a bulk amount, you get back 60% more of it in 6 years and the total amount would be tax free. Fixed deposits are another preferred form of investment, but it is fast losing favor to the ELSS that has chances of higher payouts. You can invest amounts that you wouldn’t require immediately into Fixed Deposits. Both the education as well as home loans are exempt from taxes in India and only principal payments are exempted under sec80cc while for the interest on which you can claim deduction comes under sec24. You can get to know more if you interact with your tax planner.
To get more information on how to do your tax planning in India, you would be interested in visiting this new informative & resourceful website that offers some great tax services to global Indians living abroad, called: http://www.India-Tax.com