Simple governance & strategic decisions at the right time can make your tax planning easy and wise!
Hurrying at the eleventh hour sometimes can be cruel on your pocket. Therefore, you should plan your taxes prior. Tax planning helps you decrease your tax liabilities and optimally use tax benefits. Every salaried individual must consider the salary components like HRA, LTA, PF, etc. before planning your taxes. Analysing tax early; can help you utilize all the legitimate ways to reduce your tax burden, take advantage of all the tax rebates, and plan your finances without leaving it for the last moment.
Here are some tips that can help you plan your taxes:
Understand & Evaluate your Pay Slip
A substantial contributor to the fulfilment of any salaried individual is his salary. Everything relies a lot on the monthly paycheck, but only a handful of salaried individuals have understood that their salary components can help them save on some taxes. If you’re living in a different city and paying rent for the accommodation, then you can claim exemption w.r.t house rent allowance or HRA under section 10 (13A). You can also avail tax benefits for Leave Travel Allowance or LTA: only if you are travelling within India.
Stop Getting Confused by Different Sources
Tax planning is a critical process in your financial planning. Either it will help you fill the hole in your pocket, or it will dig out one. There are a lot of sources that pretend to help you plan your taxes; however, what they do is confuse you. Browsing many websites may create ambiguity. This results in pushing your tax filing to the last moment, eventually forging a hole in your pocket. Hence, it is up to you how you want to go ahead.
Invest, Invest & Invest
The best way to save taxes is to invest in deductible options. The only viable option where you reduce your tax liabilities and accumulate some wealth. However, keep in mind that you should not invest in anything only to get the tax exemptions. The sole purpose of any investment is good returns; hence you should always invest to maximize your ROI along-with tax benefits.
A few instances where you can invest, and avail of the tax rebates are:
- Invest in ELSS (Equity Linked Savings Scheme) to get deductions up to 1.5 lakhs under 80 C.
- You can invest in PPF (Public Provident Fund) or NPS (National Pension Scheme) and get exemptions up to 1.5 Lakhs under section 80 C.
- The repayment of the principal amount of your home loan also gives you exemptions up to 1.5 lakhs under section 80 C. The interest you paid on your home loan gives you benefits up to 2 lakhs under section 24 of IT Act 1961.
- You can avail deductions up to 1 lakh (with senior citizen parents) towards premium payment of health insurance under section 80 D.
- Also, you can get benefits towards interest paid for your education loan under section 80 E.
So, the tip here is to invest, save and accumulate.
Avoid Last Minute Tax-Planning
One huge mistake that numerous taxpayers commit is waiting for the deadline to plan and file the taxes. You plan your taxes amidst all the work pressure and make mistakes. Once the filing date is gone, you realize you could have saved more. So, stop pushing your tax planning to tomorrow, and start today for the optimal utilization of tax benefits.
The paycheck you receive at the end of the month is your hard-earned money. Do everything in your hands legally to save as much as you can. Tax planning has proven its importance in many taxpayers’ life by stitching their pockets and putting an end to the senseless expense of taxes. Start planning your tax today & you will feel the difference.