For every individual tax saving held a great importance, investment for most of the people starts and ends with tax planning. While being bachelor people does not think much about the saving but once you get married and start having a family it is important to set the financial goal and think about the different ways of saving. One can use tax saving investments effectively in order to achieve the financial goal. Moreover, it is wise to invest beyond ones tax saving investment to achieve the financial goal when the income arises after first few working years. In order to save tax you can either invest your money in insurance or put them in saving instrument for future. Even the various employers’ allowances can also be used to save on taxes. Here we have discussed some tips for tax saving to help you know more about it.
In general investment is an instrument where you invest today and reap the benefits in future. But apart from investments advantage they provide tax benefit too. Some of the common investments that you can do in order to save tax are
Mutual Fund– The mutual fund schemes or equity linked savings schemes can be used to gain profit in income tax under section 80C. These schemes are shorter than those of PPF and fixed deposit and come in the lock in period. While purchasing an investment plan there is also a benefit that with time your money can multiply reaping you good benefit at the end of the policy tenure.
Investments in ULIP’s- these are market linked plans that are also eligible for tax benefit and offers opportunity to help your money grow.
Purchasing insurance is another great way to how to save tax on your investment plan. Investing on numerous types of insurance also makes you eligible for income tax benefit. The two most common method of investing in insurance is life insurance and health insurance.
Life insurance is an excellent way to save on taxes. In return of the premium you pay every year the life insurance policy provide protection to your family. In case of the demise of the policy holder the policy provide a total sum assured amount to the beneficiary of the policy holder. Under section 80C of income tax act the premium paid for these benefits are liable of tax benefits.
With the sky high growing prices of medical expenses a health insurance has become a necessity in today’s world. According to the current tax deduction tool one can reduce a taxable income from Rs15,000- 20,000 as per the premiums of health insurance.
Home loans- Either you take home loan for the construction or buying of a new house or for renovation. Any individual is eligible for tax benefit ranging from RS 1lakh under section 80C and Rs1.5lakh for the interest under section 24 of the income tax act. The tax benefit are applicable from the principal and interest you pay every year you have taken a home loan.
Earn as A Newbie, Save Like a Savvy
Ruling your own bank account for the first time? Get an idea about how to channel your hard-earned money and learn to spend and save at the same time.
Spending and saving do not look appealing in one statement. But those are the two terms which need your major attention when you are beginning to earn a livelihood. It is important not only because of future uncertainties and unforeseen incidents, but also to inculcate the habit of judicious spending right from the start. It is necessary to melt the habit in your daily life.
The below mentioned tips would help a newbie to keep his bank balance steady and happy.
Refrain from being a reckless rookie
Earning for the first time is a different form of novelty. The sudden disappearance of financial dependency gives a sense of gratification. But amidst the financial independence carnival, one must not overlook a very significant element of earning money. That element is saving.
When you suddenly have a decent amount of disposable income in your hands, it becomes difficult to make spending decisions.
Someone who has received their very first pay check would blow all the money in parties or that new phone or those branded shoes. It is pretty common. It is only after a while we start coddling our money.
So, do not be hapless destitute at the end of the month. It is okay to spend a little while treating your friends. Maybe you could go that club you always wanted to go the next month. Lay the expenses in the piecemeal form. Don’t fulfill your each and every desire with that one month’s pay. You’re going to be paid every month. Have some patience and mercy on your bank account.
It is never too early to invest
Investment, deductibility, interest, etc. all these terms may sound very grown-up and mature. But there is never a definite age to start locking your money.
Channelizing your funds in various investment options like equities, real estate, mutual funds etc is always financially advisable for two reasons. One is that a considerable chunk of your bank balance is away from your reach. It implies that you will be forced to regulate your spending habits. Another reason is that you could fire up opportunities to earn extra income from the returns.
So, for long term saving goals, investing in bonds and securities is always a safe and feasible choice.
Do not let your tax go lax.
Filing your returns sincerely and on time, if you fall under the tax payers’ bracket, is absolutely essential to avail tax benefits like deductions and refund.
Well, refund is just the return of excess amount paid as tax in your account. But still it is saved and there is a popular saying to back this, “Money saved is money earned”.
Deductions like 80C can be availed via locking money in fixed deposits.
There are many such ways to relieve your tax expenditure.
Insure your health physically and financially.
Subscribe to insurance policies. They not only safeguard your uncertain future but there are numerous tax benefits as well. And it never hurt anyone in being pro-active.
Apart from section 80C of income tax act that are many other section that can work wonder in saving bundles of tax. Some of these sections include
- Rent receipt can help you to claim HRA tax benefit
- Medical bills to claim tax free medical allowance
- Travel allowances can help you claim tax saving
- Premium receipt of mediclaim/health care, including the premium paid on parent health insurance under section 80D
- Under section 80E statement of education loan along with details of interest component.
- Under section 80G donation proof to the recognized charity.