Everything you need to know about Tax Planning

The best time to begin planning your taxes and start tax saving investments is now!

With a plethora of investment options that come with a long list of terms and conditions, tax saving can surely be an intimidating job to do.

The first step to efficient tax planning is paying your income tax on time. The income tax paid by you is pivotal for the Indian economy to grow.

However, you can save on your income tax (in a legal way) by planning your taxes and investing right.

How? Let us help you with it.
What is tax planning and how will it benefit me?

As mentioned, tax payment on your income is mandatory for every citizen of the country. However, you can reduce your tax liability by legitimate investments. Tax planning involves analyzing your current financial status, predicting 20 years into the future and saving your money accordingly by calculating your age, financial plans, risk appetite and investment horizons.

Tax planning is a long term process and it will help you stay aware of your financial goals and current status. It helps you protect your hard earned money as well as ensure its growth through right investments.

What is section 80C?
Section 80C is the most sought after tax saving option of the Income Tax Act. It includes a variety of investments and expenses you can save tax on, with a deduction limit of 1.5 lakh p.a. Section 80C provides a range of investment options such as PPF, National Saving Certificate, NPS, ELSS funds, which helps you save on your tax deductions.

How do I save tax on my salary?
Though the government levies taxes on your income, it also allows you to legally save on it. You are exempt from tax paying if you earn less than Rs. 5 lakh per annum. Above that, you will be charged according to the different slabs of income tax. However, you can save on your salary through investments, House Rent Allowance, travel and medical reimbursements.

What are the different ways of saving on tax?

Interest payment on loans
If you are paying interest for a loan on house, education or car, tax saving is easier. As an individual repaying loans, you are subjected to some tax benefits.

Mutual funds
Investment in mutual funds is a legal and valid way to make your income non taxable. The amount you invest in equity mutual funds in 100% tax exempt.

Medical insurance
According to the Section 80D of the Income Tax Act, deductions upto Rs. 15000 is available for insurance of self, spouse or children. This will help you cover medical emergencies as well as save tax on your salary.