Best Tax Saving Investments

It’s already December and most companies will require the 80C investment proofs by the end of January 2010. Do not leave this task for the last moment. Earlier you start the better it is. Investment decisions should never be made in a hurry.
InvestmentYogi tells you the investment avenues to maximize tax benefits available under Sec 80C & 80D.

* Invest in ELSS schemes: It is one of the best investments to make if you can afford to take the risk. It is also one of the options where the lock in is least. There are a lot of ELSS (Equity Linked Savings Scheme) which offer a good avenue to invest to save tax as well as avail growth. SIP (Systematic Investment Plan) is a good way to invest in this asset class as it averages your cost over the year. Here is a list of best ELSS for 2009-2010
Get your Insurance check up done: Do not take an insurance policy just to avail tax benefits. Get your insurance check done; calculate what your dependants need to stay financially fit even if you are not around. Life Insurance is for your loved ones’ goals and happiness. If you cannot afford a huge cover, take a term policy. It is one of those investments that will give you peace of mind and it is light on the pocket.
* Add to the PPF account: PPF is one of the best debt products. The investment is Exempt from taxes, the interest is Exempt and so is the maturity amount. You can only invest up to Rs.70,000 in a financial year.
* Home loan Principal: The principal component being paid in the EMI of your home loan is also eligible under this Section. Don’t forget to get a break up from your bank.
* Medical Insurance premium: You can now avail up to 15,000 of deduction if you pay your medical premium (your, spouse and dependants). In addition to this, if you are paying medical insurance premiums for your parents, that is eligible for another deduction (of up to 15000; up to 20000 if they are senior citizens).

But before you do this, do check what your contribution has been to the PF account, because that is also eligible under 80C. So, if your annual contribution to PF account is Rs.25,000 invest only the balance (Rs.75,000) for availing the 1 lakh deduction under Sec 80C.

In a nutshell:
- Check your PF contribution
- Check the principal component of the home loan payment
- Invest according to your financial goals
- Evaluate your insurance requirement
- Invest 1 lakh over the year not just the last 15 days

E-Tax Filing for NRIs

Non-resident Indians (NRIs) having taxable income in India are not only faced with lack of clarity when it comes to paying taxes, but also the ordeal of filing returns. However, with the advent of online tax filing, NRIs can breathe some respite, as e-tax filing for NRIs at TaxYogi is now as easy as counting 1-2-3!

Online or E-filing was enabled by the Income Tax Department a couple of years back. It is an improved and hassle-free method of filing returns electronically on the website - through the comfort of one’s home or office. In fact, e-filing has been accepted by the IT department as a trusted means of filing IT returns.

The process of NRI e-Tax filing requires the following simple steps –

STEP-1 - Register
Register to generate a login ID and password. Once you register, you can start your e-filing process. Remember to enter your residential status – Resident or NRI, as requested in the welcome page.

NRI tax return

STEP-2: Fill in
Complete fillin in your income particulars in TaxYogi’s easy-to-use ITR software tool and generate ITR form in electronic format (XML file) of the same - this format is a largely standardized one and helps in sharing of structured data across different information systems.

Tax websites differ in the way they allow you to input figures and information. TaxYogi has a step-by-step guide and takes one piece of information on one page.

A copy of your XML file is sent to your email address. Save the XML file to your desktop

STEP-3

Visit the official website of the Income Tax Department of the Government of India. Register/create an account using your PAN card; login to your account and click on the option of E-Filing.

STEP-4 - Upload the already generated ITR XML file on the website.

STEP-5 - An acknowledgement receipt called ITR Form-V would be generated; Download and print ITR-V; sign it at specified places; and mandatorily mail it to “Income Tax Department – CPC, Post Box No.1, Electronic City Post Office, Bangalore – 560100, Karnataka” within 30 days of e-filing.

STEP-6 - Receive confirmation from the IT Department, acknowledging the receipt of ITR-V. This is your final acknowledgement that concludes your e-tax filing.

Note:
i) If you miss submitting your ITR-V within 30 days, your e-filing will be considered as null and void; it means that it will be considered that you have not yet filed your return. In such a case you will have to file revised return, get a new ITR-V and submit the same within 30 days.

ii) ITR-V – It stands for ‘Income Tax Return – Verification’ form. This form is received when you e-tax file without using a digital signature; Income Tax Department needs to verify the legitimacy of the ITR when filed online without using a digital signature*. On receipt of ITR-V you have to sign the copy (at specified places) and mandatorily submit to the IT Department to complete the e-filing process (as explained above).

iii) E-Refund – It is refund process carried out electronically. The details of refund (if any) are filled up online in a prescribed form. After approval of refund request by the concern authority, the refund amount will credited to your bank account. Refunds are only allowed if you file your return on time.

*Digital Signature – It is an ‘electronic signature’ that is used to authenticate the identity of the sender of the e-tax document (to the IT Department). Tax returns can be filed online without digital signature. In such a case, since the e-return one files is not signed, a unique form called ITR-V is to be additionally submitted to the IT department along with your e-filed returns.Using a digital signature can be a costly affair. TaxYogi offers you hassle-free online tax filing without the use of a digital signature.