Here’s how you can maximise your takehome pay by making right investment declarations

If you are a salaried individual, most probably you would have already received the investment declaration request from your employer and the last date for submission should be around the corner. It is that routine paperwork to be completed at the beginning of every financial year. While the form may be a simple one to fill, in a haste to meet the deadline, do not make mistakes that could cost you throughout the year. After all, your monthly takehome salary will depend on what you declare.
The TDS that gets deducted from your salary is computed on the basis of the tax deductible investments you plan to make during the year. These declarations, therefore, are made to give your employer a fair estimate of your annual earnings and savings plan at the beginning of the fiscal year.
Accordingly , your yearly tax liability is calculated and a portion of it is withheld on a monthly basis.
Often people get confused between the declaration made at the beginning of the financial year and the one they have to submit at the end of the year. While the first one is an intend of investments you are planning to make during the year, the later is the proof of investments that you have already made in a financial year.
Many miss on making appropriate declarations. Either they overdeclare their tax savings, leading to huge TDS deductions at the end of the year when they are unable to produce proofs, or, they under declare numbers that reduce takehome pay and they have to wait for a year to get the tax refunds.
Your aim, therefore, should be to declare just the right amount which will need some planning and calculations. Do not look at it as an encumbrance but an opportunity to plan your taxes at the beginning of the year, a standard advice all financial planners give.
Strike the Balance
Begin by calculating your annual income. This is easy for those who have only income from salary. However, there will be people with significant income from other sources as well. Do not forget to include your other income sources like rent, payment received for freelance work, etc. You may also consider a salary hike to this, if you are expecting one. This is important as it will all ultimately add up to the total tax liability. You may choose to not add income like interest income to this calculation as TDS would already have been deducted.
Once you know your gross income, start deducting the most obvious breaksEPF contributions, HRA (if you stay in a rented accommodation), reimbursements and prerequisites such as LTA, medical, conveyance and telephone bills. Once you have your taxable income, move to taxsaving investments that you have already made during previous years and would continue this year as well. It could be your PPF contribution, tuition fee paid for children’s education, premia towards insurance policies, home loan taxbreaks, ELSS SIPs, etc that will continue in this financial year too. All these investments would be part of your declaration form too.The number you now reach is the income you have to pay tax on.
“With the increase in deduction as per section 87A to Rs 5,000, there will be no tax on income up to Rs 3 lakh per financial year,”. So, for you to have a zerotax liability, after all deductions, your annual income should not be higher than this.
Most of the invests mentioned above will fall under Section 80C and could quickly add up to the Rs 1.5lakh investment limit under the section. However, you may still have to make some investments to get out of the tax net. You may consider the additional `50,000 deduction available under the under the new Section 80CCD (1b) for contributions towards the NPS scheme. “Up to Rs5,000 spent on preventive health checkups and medical expenses up to Rs 30,000 of uninsured parents above 80 years, are also eligible for deduction under Section 80D. Many forget to claim these,” .
Revise Anytime
Remember that this is just an intend of your investments that can be revised during the year. So, if you do not have certain supporting documents, for instance, the PAN of your landlord that is mandatory to claim HRA, calculate your rent allowance deduction eligibility and adjust it in another investment, says towards PPF contribution or insurance premium. You can later make
corrections when you get the documents. Changes to the investment declaration should also be made in case you surrender or discontinue a plan that will have a tax rollback effect on your deductions.
Similarly, in case of a job change during the year, you should submit a copy of your tax computation and payslips provided by the previous employer to your new employer. This will save you from the hassle of consolidating the Form 16 from two employees also alert you in case you have some advance tax liability.

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