With first salary, comes tax responsibility! Start saving your Taxes!
(Last Updated On: August 2, 2019)
When a person starts with his job, one of the most tedious and challenging task for him can be having a robust financial planning. Often it is observed that ‘Gen X’ or the young generation focus their energies only on Financial Planning and ignore Tax Planning.
It is the most pertinent time for managing your financial goals along with vehement tax planning as being unmarried means you just have to look for one file. This is the period where you can actually think for long term and save more, having fewer expenses.
However, you just can’t skim over the whole of your taxes, but we can save a lot through smart tax planning.
We list some of the tips that can help you in saving your taxes immensely:
Ask your employer to make changes in the salary breakup. Many companies ask their employees to design their salary breakup themselves as per their individual financial profile known as ‘Flexible Benefit Plan’. Your employer can also help by contributing into various pension schemes reducing in hand salary, making tax savings.
Start utilizing the maximum limit for investments allowed under section 80C and 80D. For example under section 80D you can save your taxes just by having Health insurance, it’s advised to go for additional health cover even if it’s provided by your employer. Here’s a fact, even the preventive health checkup bills of yours may get you a deduction.
Choose your investments carefully as there is some investment which yields tax free incomes. For e.g. Provident funds, equity linked mutual funds, etc. Some insurance plans also provide tax free income but they are not always advisable because of their basic structure.
Here’s a not so bookish trick, make gifts to your parents or any other family person who have lower income and make investments through them.
Make Donation, get its receipt and you are all set for deduction under section 80G. Often most of the people do not get deduction under this section as they forget to take the receipt of the donations they make.
Keep a minimum balance in your saving bank account. Park your surplus funds in mutual funds, choose as per your short term and long term needs. Maximize your tax saving through their tax free dividend income and long term capital gains.
Financial planning and tax planning shall go simultaneously, so that whatever is being invested for tax savings can also supports your long term as well as your short term financial goals. So it is time to pull up your socks and save some taxes!
And if you have any doubt in implementing the above tips and want to know more such tips, we are always here at your beck and call.