Tax Planning 2015

This year's budget had brought in changes in the tax provisions enabling every taxpayer to have valid tax savings for the current financial year 2014-15. Tax investments need to be made by 31st March 2015 in order to avail these tax benefits and save taxes. Thus, now is the right time to sit back, check your finances, and plan your tax investment to be made in the next three months. In this article, we are re-rolling tax saving opportunities announced in this year's budget, enabling you to save more for your pocket.

Don't miss to take benefit of enhanced 80C investment limit 

Limit under section 80C has been increased from Rs.1 lakh per individual per annum to Rs.1.5 lakh. It gives additional opportunity to all taxpayers and thus reducing their tax liability significantly. Maximum relief would be available to a taxpayer falling in 30 per cent bracket and total savings works out to be Rs. 15,450. Likewise, the savings available to the taxpayers falling in 20 per cent would be Rs. 10,300 and Rs. 5,150 for taxpayers falling in 10 per cent bracket.

How about Housing Loan Benefit:

Benefit under housing loan can be availed with payment of principal component and interest pay-out. The relief that has been provided in Budget 2014 in relating to same has been explained here under –

Income Tax Benefits on Home Loan – Principal Component

Since principal component is covered under Section 80C for the principal repayment of a home loan. You can claim deduction up to 1.5 Lakh along with all other permissible instruments like, life insurance premium, PPF, ELSS, NSC.

Income Tax Benefits on Home Loan – Interest Component

There is another good bit of news for home loan seekers as the interest on loan amount allowed to be deducted from total income has been increased from Rs.1.5 lakh to Rs.2 lakh now. Now the deduction available under section 24 is upto 2 Lakhs in a year for the home loan interest paid. The benefit is for self occupied house. If you are going for a second house i.e.; not self-occupied property, then the total interest amount can be claimed as deduction without any limit of 2 Lakhs.

 Make use of Increased PPF limit:

Public provident Fund contribution limit enhanced from 1 lakhs to 1.5 lakhs. However, both increments in limit of PPF as well as principal component of home loan are subject to the maximum limit of 80C. The total deduction extended under section 80C to 1.50 Lakhs from 1Lakh.

 New enhanced basic exemption limit:

The basic exemption limit was enhanced to Rs 2.5 lakh in the 2014 budget. This essentially means that every taxpayer, irrespective of tax bracket, will have a potential tax saving of Rs 5,150 annually or Rs.430 per month. For senior citizens the Basic exemption limit has been increased from 2.5 Lakhs to 3 Lakhs which is again reducing the tax liability to some extent.

And these benefits still continues in FY 2014-15:

 Budget 2014 did not discontinue the relief that has been announced in last year's budget. Budget 2014 will continue to give relief of up to Rs. 2,000 to marginal taxpayers above the newly set limit of Rs.2.5 lakh. This Rebate has been especially introduced for individuals.