income tax india efiling
income tax india efiling Did you fail to follow all those resolutions taken on 1st January, at the beginning of new year, to improve your financial life? Don’t worry here is another chance to once again make some fresh resolutions and make some amends. This week marks start of another New Year — a New Financial Year. Lets discuss what are the top 4 priorities you MUST have among others to put your finances in order.
Tax Planning
Make sure to file your tax returns by 31st March, if you
Go to www.incometaxindiaefiling.gov.in for filing your returns online or contact a tax preparer nearby. For the coming year, starting April 1st, make sure you do your tax planning in advance.
Use all tax deductions possible to bring your tax liability down
Declare your HRA, home loan principal and interest contribution, and tax saving investment related details to your employer at the start of the year itself.
Keep all HRA receipts received from your landlord, keep at least 6 months of salary slips and keep a record of previous tax returns
If you plan to invest in ELSS from mutual funds, start a SIP rather than wait till the end of FY to make lump sum investments. It will average out the risk and reduce financial burden at the end of the year.
Investment PlanningDiscuss your long term and short term financial goals with your family and make sure you write them down. Taking inflation in to account will make your future requirement a more realistic figure. For eg, if the current cost of your son’s education is Rs 10 lakh, then assuming an inflation of 7 per cent, the requirement after 10 years would be over Rs 20 lakh.
Look at equity for long term goals and debt for short term (1 to 2 years). If you do not have the expertise or inclination to invest directly in to stocks, you can look at equity diversified mutual funds. CEO, Value Research, Dhirendra Kumar believes, “mutual funds are a good vehicle for equity investments as you have a dedicated fund manager to manage your investment and even with small amounts of money you can invest in several companies through the fund of your choice.” Make a portfolio of 4-5 equity diversified mutual funds with proven track record and consistent performance and review the portfolio from time to time. Equity, as an asset class has given best returns over the longer period. However, discipline to contnue investing and patience for long term is a must for an equity investor.
For debt investment you can look at fixed maturity plans or liquid funds offered by various fund houses. Though the returns are not guaranteed, the post tax returns on debt funds makes them an attractive option as compared with Fixed Deposits.
Along with equity and debt you must have 15 to 20 per cent of your portfolio in gold. You may look at gold exchange traded funds than buying physical gold, for investment purposes. However, you need a demat account for buying a gold exchange traded fund.
Assessment yearThis is perhaps the most common area of mistake where mistake is done. Assessment year refers to the period of 12 months commencing from the first day of April every year. It is therefore, the period from 1st of April to 31st of March. Things can be put in a clear cut way, with the help of an example. Let take the present year 2011. In this case, from 1st April 2011, the assessment year 2011-12 will begin and the last date of this year shall be 31st March 2012. Tax is levied in each of the assessment year, with respect to or on the total income earned by the assessee in the previous year.
Union budgetMost of the people are unaware of this fact but the truth is that the tax structure of our country is directly affected by the Union Budget of India. The Union Budget acts as the basis on which the taxability of a person depends upon and with time it keeps on changing according to the need of the system. For an example: the union budget of 2011-12 has raised the exemption limit in respect of men of men’s from Rs. 1, 60, 000 to Rs. 1, 80, 000 and from now onwards the same shall be applicable. Therefore, we find how the Union Budget affects our taxability.
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