Tax is something you cannot avoid. From being levied on everything you buy to your earnings, taxes are everywhere. However, that does not mean you have to just give up. While you may not be able to save tax on things you purchase, it is possible to save the tax levied on your income. This is the purpose of this piece today. For this reason, we have compiled a list of top5 tax saving tips for you. Use them and reduce your tax burden.
Top 5 Tax Saving Tips
Tip 1: Plan Early
Tax saving is more about planning than anything else. After all, how much of your money you wish to invest and where are the questions you will have to answer. A lot of people do that too. However, more than anything else, it is all about timing. How? If you wish for a plan to be successful, do you plan right before you need to enact it or way beforehand? If it is the former, any time is good time for you. However, in the latter’s case, do not wait till the year’s end and get cracking. You do not want to get caught with the short end of the stick.
Tip 2: Investment Diversification
Tax saving can be done, quite simply, by investing your money in various things. These range from PPF to health insurance. Even the money in your savings account helps in this case. However, it is all about investing in diverse items. Investing only in health insurance or PPF will not help you much. Throw in some investment towards government schemes that come out from time to time. Invest in National Saving Certificates too. When you will put all this together, you will just how much of tax you save on your investment. Also, all this money is yours only. So, after some time, you will be able to take it back too with interest. Hence, it is one of the most crucial tax saving tips we have for you.
Tip 3: Tax Benefit on Expenses
For this one, do read up on what can be taxed and on what can you get a tax break in your expenses. For example, a lot of people do not know that home loan EMIs are tax-exempt. Similarly, your life insurance and health insurance premiums qualify for tax exemption too. All you have to do is research on all things that are tax-exempt and claim exemption accordingly. Tip 1 comes in handy in this case.
Tip 4: Tax-Saving Investments
This tip can be looked upon as a continuation of Tip 2 and another one of important tax saving tips. Do not just look at diversification. Look for every new scheme government launches. Read up about it and if it is eligible for tax exemption, invest in it. Two things you will not have to worry about are – (a) tax and ; (b) your loss. Investing in a government scheme means that you will not lose your money. Moreover, you may even get some benefit when you are eligible to take it back. What is there to lose by investing in a government scheme anyway?
Tip 5: Tracking
Now that you have planned an invested your money, time for you to know how much you have invested and where. So, tracking it may become a problem if you have a diverse investment portfolio. What will help you is a note in a book or on your computer about your investments. Do include in this note the renewal dates of policies, further investment amounts, maturity dates, etc. This way, you will always know when it is the time to invest more money and save tax.