Each year we get tons of emails and reminders either from the tax department. Or from CA's to pay the tax on time. However you may not be happy enough to pay the taxes either.
Facing it, nobody really wants to pay the tax, at some point in time we all have thought of building a tax free society.
The main reason for stress is lack of knowledge for planning the tax, tax planning is an arrangement of one's financial affairs in such a way that, without violating in any way the legal provisions, maximum advantage is taken of all tax exemptions, deductions, concessions, rebates, allowance and other reliefs permitted under the Act so that the burden of taxation of the assesses is reduced to the minimum.
Best Ways to Tax Planning -
- Health Insurance
As the cost of medical treatment and medical care is rapidly increasing, it has now became a need rather than want, health insurance can ease your pain for both the medical bills as well as it can save your taxes up to ₹15, 000-20, 000 - Investment
Investment in common parlance is used where you invest today in assets today and in future it would provide you with the income. For example-
I) Mutual funds with huge return on investment has a lock in period less then that of Fixed deposit or PPF and on contrary it results in major return on investment.
ii) Post office deposit -
Post office deposit is exact same as a fixed deposit but it doesn't have a limit on investment, you can invest as such as you want to. The lower limit starts from ₹200 and it has an attractive interest rate of 8.5% per annum.
Here the lock in period is 5years.
iii) Fixed deposit -
Here you can invest upto 1 lakh to 1.5 lakh and enjoy the interest rate which is different from bank to bank, the lock in period is 5years for best returns.
- Provident Funds comes under the deductions part of taxation named 80C on income tax act wherein you will get an exemption putting your money into this.
The provident is made keeping long term return goals in mind.
3.Insurance policies
Insurance can be claims for anything, be it vehicle or house, but the other benefit of taking insurance policies is it saves your tax.
- Life insurance
Not only life insurance provide you with the full coverage to an individual but it may also save your tax as the deduction comes under 80C of the Income Tax. -
ULIP's
Unit linked insurance plans are nothing but the insurance plans linked with the market, in this plan the buyer may get both the benefits of investment and the insurance protection in one single head. This scheme is eligible under tax deduction.
Final words
There are topics other than these where to invest, what to invest, how to invest, budgeting your funds. You can get everything under one roof at Finance Smarti
where you are given sane ideas for all your financial need.
It is a personal financial blog where you can get all the tips and tricks to save your money.
