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New Indian Express
15 hours ago
- Business
- New Indian Express
How to maximise your income tax refunds
The income tax return filing season has started. Filing return is a mandatory requirement for all taxpayers except those whose income does not exceed the basic exemption limit of Rs 2.5 lakh per annum under the old tax regime and Rs 3 lakh under the new tax regime. ITR not only helps the tax department calculate the real tax liability of a person, it also helps taxpayers to get a refund of taxes paid in excess of their liabilities. There could be several reasons for a taxpayer to get a refund. When the advance tax paid under self-assessment exceeds the actual tax liability; tax deducted at source (TDS) on income such as salary, interest on securities or debentures, dividends, or other sources is higher than the tax payable; or same income is taxed twice in India and a country with which India has a tax treaty. Also, there could be situations when a correction in the assessment process leads to reduction in tax liability or you may not have reported earlier eligible investments or expenses that qualify for tax deductions. So, while filing returns, you must take the following steps to maximise your refunds. File on time: First, always file your return on time. Delaying it not only brings penalties but can also affect your ability to claim certain benefits or carry forward losses. Claim all eligible deductions: Nehal Mota, Co-Founder & CEO, Finnovate, says, "making sure you are claiming all the deductions you're eligible for under the Income Tax Act—things like investments under 80C, health insurance under 80D, NPS under 80CCD(1B), and donations under 80G. These can significantly reduce your taxable income." Rakshith H D, CFP and Head Digital Sales, GoalTeller, advises, if you receive HRA or other allowances like travel and medical, claim them with proper proofs. Choose the right tax regime: Choosing the right tax regime is equally important. New tax regime does not allow deductions on investments and certain expenses. Charu Pahuja, CFP CM, Group Director and COO, Wise Finserv, says one of the first and most important decisions is to choose between the old and new tax regime—an option that can directly affect your home income. Reconcile your tax credits: Don't forget to check your Form 26AS before filing ITR. This is where you can see the tax that's already been deducted from your income—whether by your employer, bank, or clients. If they've deducted more than necessary, you can claim it back as a refund, but only if you've reported everything correctly. Rakshith H D says don't forget to include all TDS and advance tax paid by employers, banks, or other institutions to ensure accurate refund claims. Gather all necessary documents and report all income: Before filing your income tax return, ensure you have all necessary documents like Form 16, interest certificates, Form 26AS, AIS, and investment details to avoid missing any refund opportunities. "Report all sources of income, including bank interest or freelance earnings, to avoid future complications," says Rakshith H D of GoalTeller Offset losses: If you have incurred losses in stocks or property, set them off against your income to lower tax liability. Ensure accurate filing: Filing your return early and e-verifying it through Aadhaar OTP or net banking ensures faster processing of refunds. Finally, double-check all details, including PAN, bank account number, and deductions, before submission to ensure smooth and timely refunds. Rakshith H D says, "In case the Income Tax Department requests additional information, respond promptly to avoid delays."
New Indian Express
01-06-2025
- Business
- New Indian Express
How to create retirement corpus through mutual funds
Creating a retirement corpus of Rs 5 crore or even Rs 10 crore may seem like a daunting task for a middle-class salaried individual, but a systematic investment approach can make the journey more manageable. Starting early and maintaining consistent investment discipline are key factors in achieving this long-term financial goal. Mutual Funds: A simple and effective tool One can create such a corpus through mutual funds—a no-frills investment option that provides exposure to equity, debt, gold, and silver. A well-planned investment strategy involving long-term mutual funds, index funds, and a diversified portfolio can help build the required corpus over time. Step-Up Investment Strategy: A smarter way to invest A step-up investment strategy—gradually increasing the monthly SIP amount as income grows—can ease the pressure of retirement planning. Starting with a modest contribution and increasing it by a fixed percentage every year can deliver substantial long-term results. For instance, someone who begins investing at the age of 35 has a 25-year horizon to accumulate the target amount. Assuming an annual return of 12%, one can start with a monthly SIP of Rs 12,000 (with a 10% annual step-up) to reach Rs 5 crore in 25 years. A 10% step-up SIP means increasing the monthly SIP amount by 10% every year. If the investment horizon is longer—say 30 years—one can start with a SIP of just Rs 6,200 (with a 10% step-up) to reach a retirement corpus of Rs 5 crore at an average 12% return. Delaying retirement planning often leads to a heavier investment burden later in life, as catching up would require more aggressive contributions. Portfolio Allocation: Balancing Growth and Stability A suggested allocation mix could include large-cap, mid-cap, and small-cap equity mutual funds to maintain a balanced, growth-oriented portfolio. "Equity mutual funds—especially Flexi-cap funds—should be the foundation of long-term wealth creation," says Ajay Kumar Yadav, Group CEO and CIO at Wise Finserv (Private Wealth). "These funds empower fund managers to dynamically allocate across large-cap, mid-cap, and small-cap stocks based on valuations and macro fundamentals," he adds. Investors may also consider balanced or multi-cap funds, which offer automatic rebalancing and diversification. Balanced funds typically follow a 70:30 equity-to-debt allocation, offering stability along with growth potential. Multi-cap funds, while more volatile, can generate higher returns in a rising market. A slightly more aggressive portfolio might consist of two multi-cap funds—one with a mid-cap focus and another with a small-cap focus—offering higher returns over the long term. Even those who begin investing later can still aim for the Rs 5 crore mark by increasing monthly contributions. For example, a 15-year plan with a monthly investment of Rs 45,000, along with a 10% step-up option and 15% average return, can take you closer to a Rs 5 crore corpus. For those planning over 30 to 35 years, a diversified portfolio could include around 40% in index funds mirroring the Nifty 50 and Sensex, with the remaining 60% equally split between mid-cap and small-cap funds. "As you approach retirement, gradually shifting towards Hybrid, Multi-Asset Allocation, and Debt Funds is prudent to reduce volatility and preserve capital," Yadav advises.
