Why Indian People End Up Paying More Taxes
By Jigi Gajjar
15th April is just around the corner, and yet there is nothing that you can dig in to avoid paying more tax. Managing taxes can be truly stressful and financial draining task. Gone are the days when you work less, earn less and spend less. Every so often, people never make timely investments, and end up paying huge amount of taxes at the end of the year. What makes the matter worse is the lack of updated and timely information makes the tax filing a dreaded chore.
Salaried people are in huge misunderstanding that they do not require any tax planning, as their income and expenses are regular. They presume that their saving automatically accumulate in the bank and does not require any intervention to maximize the financial gains.
Tax planning is the vital part of any person's financial arrangement. Individuals find it hard to understand the details, and just shy away in knowing the open options. They do not make modest efforts to understand or take control of their finances which lead to pay more tax. With present competitive market, several companies are coming upfront to sell financial products to the people asking to invest and which prevents you from paying more tax.
It just requires a careful insight. Search and look for the available resources which will help you to invest for your future as well as also help to pay lesser taxes.
Read on further reasons listed below which are major causes making you pay more taxes.
House Rent Allowance: Very few people know that about 27% of the salaried employees do not know about claiming HRA. Salaried individuals whose income crosses over 10 Lac does not bother to claim house rent than tax payers from the minimum tax brackets. Also; majority of people do not know that they can claim home loan and house rent allowance at the same time.
Ignore To Claim Medical Insurance Premium Deduction: This is absolutely legal to claim medical insurance premium deduction. About 75% of people never claim their deduction which is to be done by under "SECTION D". This shows how people never bothered to utilize the benefit. There is only small portion of people who have claimed and that too during the cases of emergency.
Not Enough Tax Saving Investments: The major reason behind paying more tax. People do not get time or they do not have money to invest in certain tax saving products. The recent survey showed that approximately 86% of people are lacking right information when it comes to investment and they are full of lame excuses and lazy to bother about saving their taxes. Certain tax saving products are PF, NSC, PPF, Tax saving deposits with banks, Infrastructure bonds, Equity linked saving schemes, Life insurance policies or ULIP etc.
Not Claiming Donations To Charitable Centres: Every year many people make some charity as a good cause. However; they forget to show them while filing tax return. A person can claim either 100% or 50% of the donated amount as a deduction for any donation made to any charitable centre.
Not Noticing Home Loans As Tax Benefit: Home loan is an interesting tax saver exemption to which every individual should take. Rather than investing a major chunk of the salary in other investments where returns are low, and tax deductions not that favourable, an individual should think to invest in a property which not only help secure his/her future, but is benefitted of paying low tax.
Not Showing Income From Other Assets: About 95% people fear of showing their income or investments. People remain in a big misunderstanding and this confusion further leads to make them pay tax double or sometimes three times to that what they use to pay.
Not Claiming Exemptions On Educational Loans: Very few people know about this that they can claim a deduction on the interest paid on the educational loans taken for your own studies or for your family. As of now, there is no specified limit drawn on the amount of deduction claimed. The only thing, one requires to keep in mind is the educational program should be post graduate programme in subjects like medical, engineering, management or applied science.
Transport Allowance: It is quite surprising that people are allowed to get tax exemption under travel allowance. One can take advantage of this provision to get tax saved annually up to Rs. 9,600 by showing the travelling bills to the tax planner.
With the above strategies and rationale, an average tax amount of any individual can be reduced to 50% or less. However; it is important to take keen interest especially when certain factors alter the tax structure, so that you invest wisely and do not end up paying more in the end.
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