View quick summary Very soon, your employer will ask you to submit Tax Declaration for Financial Year 2012-13. Based on your declaration, the HR/Finance department of your company calculates the Tax Payable by you. TDS is deducted accordingly, starting with your April salary. Think about it. If your employer plans to ensure that a reasonable tax payment is made by you over 12 months, shouldn’t you be planning to avoid any excess tax deduction by optimizing on everything you can?
What is Income Tax declaration?
As per income tax law, your employer has the responsibility to deduct the tax at source on the income earned by the employees on its payroll. It is to carry out this obligation that the employer, in April, asks you to submit your Provisional Income Tax Declaration for the new Financial Year (which will be 2012-2013).
Unfortunately, most employees see this activity as another hassle, and not as an opportunity. As a result, they procrastinate taking decisions, the best time for which is the beginning of April (during tax declaration activity).
I-T Declaration: Time to Plan Taxes
While your employer initiates the Tax Declaration activity to purely ensure compliance with law, it is in your interest to make the most of it. Moreover, it makes for a perfect timing to attend your personal finances:
- You have just completed a year, and have a fresh idea of how you’ve done financially. Were you able to earn as much as you wanted to? Was this income sufficient to meet all your needs? Were you able to gather enough savings to remain financially stable? Reflecting on how you performed is a good starting point for goal-setting for the new Financial Year.
- The year has just begun. This is when you have the maximum time in hand – 12 months. So, once you’ve set your goals and articulated them, you can align this to-do list with your I-T declaration. To a great extent, the actions that you need to take for meeting your financial goals are the ones that you need to declare as investments, reimbursements and savings.
- Since there are so many investment options that you need to choose from, April is the time to make these choices at ease. Moreover, closing on these items at this time gives you the advantage of spreading your investments across the year. This is a much more disciplined approach as compared to last-minute buying of financial products.
- April is also the time when employers conduct the appraisals for most of their employees. The best time for tax optimization is when you get an increment. This is when you can design your salary package to make it as tax-efficient as possible. Looking into the benefits provided by your employer and matching them to your needs can optimize your tax savings.
To get an increment over increment, consult a professional who can look into your offer letter and use the flexibility in your favor. TaxOptimizer – a full-year subscription service provides you all the support that you need at this time. The online tool maximizes your take-home by optimizing more than 35 variables of your Form 16. Further, you get access to a dedicated Chartered Accountant who customizes the suggestions provided and answers your specific income tax queries. For details, write to us at firstname.lastname@example.org