Income Tax: Tax planning is an essential component of financial planning. An intelligent tax-planning strategy can help individuals meet their financial goals while also saving money on taxes. Taxpayers are provided with various tax-saving instruments on which deductions can be claimed, but to take advantage of these deductions it is necessary to know which tax-saving instrument to choose and how to file deduction.
Income tax filing is a complex process as a result of which taxpayers frequently make mistakes and miss out on important deductions and exemptions that could save them a significant amount of money.
In this article, we will explore some of the most common tax-saving mistakes that taxpayers must avoid:
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Not taking advantage of deductions
Taxpayers sometimes miss taking advantage of the deductions provided to them. These deductions are available for a variety of categories, including investments, insurance, and home loans. It is critical to go over the list of available deductions and ensure that you take full advantage of them.
Ignoring tax exemption
Tax exemptions help people in reducing their tax liability, but many are either unknown or do not take advantage of tax exemptions. It is important to go through the list of available exemptions and to make sure that one takes full advantage of them.
The government provides citizens with various tax deductions and 80C is the most common deduction which allows a maximum deduction of up to Rs.1.5 lakh every year. It is critical to be aware of the various deductions and exemptions available under Section 80C and to make full use of them.
Tax rebates are yet another important tax-saving option available to Indian citizens. Tax rebates are deductions from taxable income that can help lower total tax liability. It is important to be aware of the various rebates available and to take full advantage of them.
Not claiming HRA
Another important tax-saving option is HRA or House Rent Allowance. HRA is a stipend given to employees by their employers to help cover their rent expenses. It is essential to know the rules and regulations governing HRA and to ensure that one claims to save taxes.
Not maintaining records
Keeping accurate records is an essential part of tax planning. It is important to keep a tab on all the investments, deductions, exemptions, and so on to fully benefit from the various tax-saving options available.
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