TAX SAVINGS MANTRAS
Everyone in this world wishes to earn money and save money.In this blog we are providing effective information to manage your finance.Read the following tax saving mantras which gives tips to manage your investment,savings and money.
TAX SAVINGS MANTRAS
One can use tax saving investments effectively, to achieve financial goals.
For example, one can take a children’s plan that also provides tax benefit. Consider the impact of inflation on your needs.
After your first few working years, as income goes up, it is wise to invest beyond one’s tax saving investments to achieve your goals. Also, evaluate the life cover requirement, while planning for your taxes.
As you begin your career, you may not have visibility on your needs. In this case, set a target of corpus achievement. For example, how quickly you can hit a corpus of Rs 1 crore from tax savings investments. You can accelerate this by increasing your contribution yearly, keeping in mind salary hikes and inflation.
Having a goal makes the exercise of investing more interesting and there is always the corpus to look forward to. Having clarity will also help you keep track.
There are a range of avenues with different levels of risk, return and liquidity. Choose an
appropriate mix of investments to maintain an appropriate asset allocation and to help achieve your financial objectives. Past returns data may be misleading. Example, when markets are at a high and about to fall, equities will give you the best track record. Today, when markets are down, it could be a better time to invest with a three year horizon. The maturity should suit the needs you are planning for. Keep in mind the tax you need to pay on the returns.
Here are some of the tax saving mantras that helps to save income tax
Maximising your tax saving
1). Exemptions/reimbursements – Identify the reimbursements available from the company and take maximum advantage of the same. Normal expenses that one incurs could help save tax.
Example- Telephone/fuel reimbursements, meal vouchers and company car.
A person in lower tax slabs can reduce his tax liability to nil with exemptions alone.
Similarly, salaried employees staying in rented apartments can claim exemption under Section 10(5) of the Act in respect of house rent allowance by making the HRA a component of there salary.
Following are some of The Popularly Known Exemptions/Reimbursements
1. House Rent Allowance
Minimum of –
1. Actual HRA
2. Rent Paid – 10% of Basic
3. 40% of Basic (Non-Metros) or 50% of Basic (Metros)
2. Conveyance Allowance
Rs 800 / Month
3. Leave Travel Allowance
Two trips in a block of 4 Yrs Amount not exceeding Air Economy or Rail AC I Fare shall be for shortest distance and for a single destination
4. Medical Reimbursement
Rs 15,000 / Annum
1. Section 80C allows a maximum limit of Rs 1.5 lakh across investments ranging from provident fund, PPF, infrastructure bonds, fixed deposits (5 years or more), NSC, insurance/pension plans, unit linked insurance, equity linked savings scheme etc. It also includes tuition fees of your children and the repayment of principal on your housing loan.
2. The interest component on your home loan has a separate limit of Rs 1.5 lakh.
3. Medical premium upto a maximum of Rs 15,000 qualifies for deduction, with an additional Rs 15,000 for parents. Additional deduction of 20,000 could be availed in case of a senior citizen.You can claim a separate deduction for medical premium of your parents.
Save tax of up to Rs 20,085 through the section 80D.
This section gives you tax deduction on the payment of medical
insurance premium and health check up.
4. A person with disability or those who have spent money on the maintenance (including medical treatment) of dependant persons with disability, could avail deductions under section 80U and 80DD of the Act, respectively.
5. Individuals paying interest on education loan should obtain the interest payment certificate undersection 80E of the Act.
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