360 Degree Working (Monday-Friday)

Do you really need to save tax?

Come March (better known as end of the Financial year) and we all are busy depositing and clearing our dues for the year that we call taxes. April marks the beginning of “tax saving” year. This means that by March end, we all have to clear our dues and file the tax on our income – commonly called as Income Tax returns. Tax saving sessions are implied on both the salaried and the non-salaried citizens. Both the groups of people start comparing their tax saving investment options for the financial year and as soon as the financial year commences.

Investing towards your future and creating a nest egg is very vital for every individual and if done wisely, even tax planning can help you earn higher returns. The right tax planning is an ideal blend of long-term and short-term investments which can secure your future while providing for your now.

As an investor, there are some necessary steps that you need to follow in order to get tax free income and know more details about how to save tax.

Be it for individuals who have just started earning, for employed adults or even for senior citizens nearing their retirement age, planning for taxes is essential. However, it is not always every employee or entrepreneur’s cup of tea to be able to file taxes and plan for their taxes in advance. As a dutiful citizen, if it is crucial to pay taxes, it is just as important for you to know where you should invest money online – in order to get benefits in long term and short-term. While selecting the proper tax saver instruments, among many different factors like safety, liquidity and returns, check that you perceive how the returns earned on investments would be taxed as well. If the financial gain attained is non-exempt, the scope to form cash over the long haul gets strained as taxes can get at your returns.

Before getting into more details about tax saving and planning, it is essential to know that not all your salary is taxable! Every common man generally has this notion that his/her entire salary is taxable when in fact, there is a certain cap that is government approved, above which your income is taxable. Anything one earns below this capped amount is tax-free!

Now let’s check out some of the advantages of planning well and saving your taxes:

- In tax-saving products like the National Savings Certificate, Senior Citizens' Savings Scheme; a 5-year long deposit with banks and post offices is essential. This way your interest amount gets doubled over the period of five years. This benefit is given to every citizen of India who has invested in such schemes with the banks.
- Various tax saving schemes and investment also reduce your taxable income. Investing in such schemes help you increase your taxable income.
- There are many diversified investment portfolios that will help you better. There are many components that are not counted under taxable income. For instance, house allowances aren’t taxable and a provident fund employer’s contribution is also exempted from paying taxes.
- While you are paying taxes on your salary/income, it gets better if you know that a standard deduction (amount differs as per different country) is available to all the employees.
- It is better that you invest time and hire wealth advisors to help you with Portfolio management so that you become a beneficiary of what you have saved. Portfolio management schemes help a lot in saving the taxes.

Even supposing they assist you to save tax for the present year, the financial gain becomes a liability annually until the tip of the tenure. It gets all the more essential to note the fact that all the tax savers will help in saving the tax of an individual to an eligible limit, both on investments and even on maturity. Since they are available with tax advantages, the returns on them are seemingly to be below the market returns but quite competitive.

Where should you invest to save tax?

An individual's total financial gain remains inside the exemption limit as provided by taxation rules. Above the exemption cap, whatever amount an individual earns can be invested in various tax-saving schemes, up to a certain limit, on a yearly basis. These financial instruments, like the NPS, ELSS Mutual Funds, PPF and more, are very instrumental in helping the earning individuals to create a tax-saving portfolio and focus on wealth building in the future.

If your income is taxable after taking all deductions, like house rent, medical claims, transportation and more, into account, you can then consider saving tax from the investment mode. Plan for your taxes way ahead of time so that you can ensure a tax-free future.

You get better taxability of your returns when you are thinking of investing in mutual funds and other policies. Governments implement many schemes for your benefit. Invest money online – a better way to double the amount that you have invested.

Investing in the markets at the right time and in the right instruments will help you earn higher returns while planning for your tax wisely. Keeping all these factors in mind, you can surely become a good tax payer and tax saver too.