Making donations is a philanthropic act and thus should not be done only to save taxes. You get tax relief if you donate to institutions which come under section 80 G of the Income Tax Act.

The rate of deduction varies from 50 to 100 percent. It depends on the choice of the charity fund. There is no restriction on the amount which you can donate to a charitable institution, so you can donate as much money you want to.

At the same time one needs not be very specific while making donations. Only specific trusts allows you tax benefits besides only 10 percent of your total income qualify for deductions which entitles you for tax benefits.

Getting receipts is very important in order to claim tax benefits.

Tax return filing is an annual process and is also the duty of a responsible citizen so that they operate within the law.

Do I need to file a tax return?

If you fall in any of this category you need to file a tax return:

1. If your income is more than the cases mentioned below:

Rs.150,000 for all resident Indians, other than the two cases mentioned below
Rs.180,000 for resident women
Rs.225,000 for resident senior citizens

2. If you need to file for a tax refund for tax deducted at source.

3. If you get a notice from the Income Tax Department for return of income.

4. If you want to claim carry forward losses from the current year in future years.

Individually a person can file a tax return in two ways:

1. By filling the tax deposit form and depositing the hard copy to the local income tax department office.
2. Or, you can file it through internet. The income tax department has its own website; all you need is a digital signature. Incase you don’t have a digital signature you will need to file a hard copy of your online acknowledgement manually with the tax department.

The due date for filing tax returns failing which you might have to pay penalties are as follows:

• For individuals who accounts do not require tax audit, the deadline is July 31.
• For person and company who need to be audited, the deadline is September 30

Tax planning is the most essential part of your financial planning. Efficient tax planning can reduce your tax liability to the minimum while increase tax savings. All you need to do is to be aware about all tax exemptions, allowances and deductions rebates.

However there are certain myths which must be cleared. Tax planning is not tax evasion. It is merely sensible planning of your income and is completely legal under Indian laws.

Tax planning is an easy task and can be practiced by everyone. All it requires is little time and commitment as long as one is organized with their finances.

For planning taxes in order to enjoy tax savings one needs to meet some desired goals. You need to understand what they are and then figure out how to maximize tax efficiency in your effort to meet them. Tax planning should come under your overall financial planning.

For example if you are getting married you need to have a financial stability to support your spouse. Besides you might even need a home loan. Then you should think about your priority and your capacity to afford. Putting money blindly into an insurance policy might not be sufficient to provide you an adequate insurance cover. However at the same time if you choose to pay off the principal on your home loan, it will be a better option.

1.  Avoid investing money blindly with the first agent that you might come across. Many people end up making mistakes by buying insurance policies with minimal insurance coverage or putting money in instruments where they cannot access the money when they need it.

2.  Just because the payroll department has reminded you about the internal deadline for submitting proofs, do not make a hasty decision.  You need to plan in advance to avoid last minute scramble.

You should consider the following criteria before selecting your tax saving investments for the year.

Liquidity: You should decide how quickly you will need the money because most of the investment methods do not let you withdraw your money quickly. Generally there is a three year lock period in almost all the tax saving investments.

Risk and Return: The amount of risk you want to take is an important factor. There are some investments which are available at a very low risk but they give low returns as well which are capped.

Inflation protection: The instruments which give you low returns are not considered good investment regarding inflation. Many of these investments will give you low returns and will also lock your money for a considerable long period. That is not a good protection against inflation.

Tax Exemption: Under Section 80C, all the tax saving investments are alike in one respect that when they are invested they are tax exempt. However they differ with respect to the tax on the income you earn from such an investment as well as the tax on the maturity of the investment.