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5 Steps to Save Tax - 2018

IndianMoney.com Research Team | Updated On Thursday, June 14,2018, 01:02 PM

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5 Steps to Save Tax - 2018

 

 

Best 5 Steps to Save Tax in India 2018

Planning your expenses and savings will not yield many benefits if you ignore the tax component. Saving tax is not an easy job. Hence, tax planning is as important as investment planning. In fact, one of the most effective ways to save tax is by investing, keeping tax liability in mind.

Want to know more about tax planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

 

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Here are the best 5 Steps to Save Tax

Tax saving is not rocket science once you understand the following steps:

Current Tax Liability

If you are to invest based on tax liability, the first point of reference is your net tax liability. You can arrive at this, after accounting for all tax deductions and exemptions. There are many online websites which help you do this. Keep in mind the benefits that you get from your employer like LTA, EPF, HRA, etc while assessing your net tax liability.

 

Invest in Tax Saving Instruments:

Don’t invest aimlessly. There are a plethora of investment avenues. But, not all investment options save you tax! If you are an aggressive investor, don’t hold yourself back from exploring the investment avenues available.

Be sure to spread your investments in non-tax saving and tax saving instruments in the right proportion. It is simple. First, ascertain your tax liability which will arise from the returns from non-tax saving instruments. Then, invest in tax saving instruments to the extent that tax liability will be set-off. Thereafter, clear up space for tax saving avenues only to the extent of your tax arising from non-tax saving avenues.

SEE ALSO: Fake Tax Claims Can Get You In Trouble

 

Tax Deduction Under Section 80C

Most taxpayers are familiar with Section 80C and are very fond of it,  only for the reason that it gives a lot of scopes to save tax. Be it 5 Year Post Office Time Deposit, EPF, VPF, PPF, ELSS or 5-year Tax Saving Fixed Deposits, all the returns arising from these are tax-exempt. So, go ahead and make the best out of Section 80C.

 

Tax benefits on education loan

If you have availed an education loan, use it for tax deductions. Whether you are studying here or abroad, you can save tax on the interest paid on education loan, but be informed you can’t save tax on the principal.

Tax Savings on Home loan

Also, home loan offers you tax benefits. You can claim a tax deduction on interest, principal, and stamp duty paid towards your property. Be mindful of the maximum deduction. Following table illustrates the same:

https://apps.indianmoney.com/images/article-images/Save Tax Table.jpg

 

Life Insurance Income Tax Exemption

This is a must for everyone, especially young earners. Health Insurance not only saves tax, it also costs less when you are young. This will keep you from raiding savings during health emergencies. You will be entitled to a tax deduction on premiums you pay for yourself + spouse + children + parents.

You may also avail a Term Insurance plans a pure risk cover plan, which gives tax benefits as well. To young earners, it is affordable when compared to Endowment Life Insurance

Invest on the lines of tax liability and build yourself an impressive and high yielding financial portfolio.

Be Wise, Get Rich.

 

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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