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| More method, less madness |
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Rattan Chugh
ExpressMoney
It’s an annual ritual. Come March and July every year, Rajiv Sharma, 35, a senior manager in a manufacturing company, can be found scrambling to get his finances organised — making investments to save taxes, digging out receipts, splitting hairs with his CA about how much income he received during the year and from where. He always manages to file his return just in time, but he invariably carries some gnawing thoughts. “Did I miss out any sources of income? Did I avail of all the tax breaks I was entitled for? Has my tax been worked out correctly? Will I invite a tax scrutiny?”
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Sharma’s plight is shared by many, especially among the salaried, for whom preparing the return is a reactive exercise — just get it done with and hope that nothing is left out. Agreed, it’s not much fun tabulating your accounts, but it’s something that has to be done. So, you might as well do it right. Here are five low maintenance things you can do around the year to help you organise your finances better and relieve you of the last-minute madness. |
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| List your sources of income |
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Most of us, even the salaried, have several sources of income. We might be earning interest income from bank deposits, dividends and capital gains from shares and mutual funds. On an excel sheet or a plain paper, list your sources of income, other than salaries (which will be taken care off by your employer and be stated in the Form 16). As and when you have an inflow, just key in the amount received, date of receipt, cheque number and TDS deduction, if any. You can refer to the tax form for the sources of income.
If you are making investments in certain avenues or spending beyond a certain amount, the government wants you to give details in the AIR (annual information returns) section of the tax form. You might as well do a similar maintenance exercise for the items listed under AIR at your end so that you are prepared come tax time |
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| Make your intentions clear to payroll |
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For the salaried, the most convenient way to pay tax and avail of tax deductions is through their employer. Since your employer will work out your tax numbers, wherever possible and to the extent you feel comfortable sharing that information with your employer, tell them your other sources of income, investments and deductions. The typical ones are:
*Tax-saving investments under Section 80C
*House rent to be paid to claim HRA tax benefit
*Interest paid on housing loan
*Income from other sources
Do so sufficiently early, and give them the support documents by the target date set by them. That way, the tax deducted at source (TDS) from your salary will reflect your financial position more accurately. Also, when you file your returns, the Form 16 will serve as a more accurate guide. |
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| Mark your calendar |
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There are some dates you need to remember (See table: The dates), which you can put down in the tax excel sheet and your organiser. Your employer will be tracking your salary income and paying advance tax accordingly. Any other income will have to be tracked by you. If your tax liability from those other sources exceeds Rs 5,000, you will need to pay advance tax, the due date for which is September 15, December 15 and March 15. |
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| Keep a record of the papers |
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| Start a folder to keep all your support documents. Although filing of tax returns is getting paperless, it is advisable to keep all support documents |
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| Invest early in the year |
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Don’t leave your Section 80C investments to the last minute. If you make them early, you will earn more from your debt investments (a savings account pays 3.5 per cent, PPF 8 per cent), you will also make more informed choices. If it’s equities you are looking at, a convenient way of disciplined investing is to start a systematic investment plan (SIP) in an ELSS (equity-linked savings scheme).
You can do all this peacefully through the year or spend the same amount of time scrambling at the end of it. Which will it be?
The writer is CEO, Cornerstone Wealth Management
rattan.chugh@cstone.in |
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