Let’s face it – everyone of us is on the lookout for ways to save our hard-earned money from being eaten by the tax monster. But sadly, a large fraction of people often fail to do so. The reason is simpler than you may have imagined – a large number of people fail to sustain their savings and tend to postpone their saving plans. But you may be surprised to know that it is never too late to start saving, and one can start saving at any time.
Now, how do you fool-proof your income tax savings without having to hamper the comfort of yourself and your loved ones? Well, this seems to be a very tricky question to many. But believe me, it isn’t so tricky. Simply read through this article to understand how you can make sizeable saving without having to run from pillar to post. So, here are five tax planning tips for salaried people.
Get Acquainted With Tax Slabs And Deductions
This is perhaps the first thing that anyone looking to save on income taxes must do. Without acquainting yourself with the tax slabs and the tax deductions allowed in your salary, you will really not be able to saves taxes. Depending upon your salary level and the tax exemptions allowed in that bracket, you will need to plan your tax. Remember, failing to do so may result in a huge chunk of your salary being depleted when paying your income tax.
Budget Planning
The second most important thing you must do when planning tax saving is to make a proper budget plan. It is easy to make a budget plan. Depending upon your recurring monthly expenses, make your own budget by adjusting the expenses over different things. Include the necessities first and think about the luxury items if you are left with an adequate budget after planning. Don’t forget to include recurring bills such as utility bills, vehicle repair charges, and refueling charges in your budget plan. Also, ensure you are saving a sizable amount of money to be used only at the time of emergencies.
Tax Saving Investments
There are plenty of tax saving investment instruments available that ensure tax saving as well as greater returns. Remember, if you are planning to save money in your bank account, you may be tempted to spend it on things that you may not need in the near future. If you choose to invest in tax saving investment plans, you will not only be able to save income tax, but also save for a financially sound future. To conclude, saving in tax saving instruments gives you options to cut down your tax liabilities and increase your investment in the near future.
Life Insurance
Okay, you probably already know how important it is for you to take out insurance policies for yourself and loved ones. But you will be surprised to know that insurance policies not only help protect your future financially, they also help you get tax deductions. Under the Section 80C of the Indian Income Tax Act, you can avail tax exemption for your life insurance premium payment. In addition, you may also avail tax deductions on pension plans and health plans. So, it is important to take out a comprehensive life insurance policy to financially secure your loved ones and save your income tax.
National Pension Scheme
This is yet another fabulous way to save income tax and build a sizeable corpus for your retirement. You can avail tax saving of as much as ₹50,000 if you choose to invest in the National Pension Scheme (NPS). There are a range of benefits of investing in NPS in addition to the tax saving benefits.
Conclusion
Saving your hard-earned money when paying income tax is disheartening. Therefore, it makes sense to smartly invest in the aforementioned and avail the dual benefits of savings and income tax exemptions. Remember, the more money you are able to save from cutting down on taxes, the more you will be able to save for a financially secure future for your loved ones.