Tax-Avoidance Strategies
You may save money on taxes if you choose the right investments and expenses. To attain your financial objectives, you must invest money. Tax-saving investments can benefit you in two ways :
- Increase your investment and discretionary income.
- Increase the rate of return on your investment
Why not invest in your aspirations with tax-advantage investments?
According to your life stage, here are our top suggestions for tax-saving instruments :
Young Unmarried Taxpayers and Single-Income Couples
If you're in your late 20s or early 30s and single, or if you're married but only one of you works, your greatest tax-saving alternatives are:
- Purchase Term Insurance with a Sum Assured of 15 to 20 times your yearly income
- Public Provident Fund (Provide EEE benefits)
- At least 20% of your annual income should be invested in Market-Linked Investment Options that provide EEE advantages
- Unit Linked Insurance Plans (ULIPs)
Start putting at least 10% of your yearly salary into a pension fund, such as a 401(k).
- National Pension System (NPS) (you can save Rs. 50,000 more)
- Bharti AXA's Pension Funds
Section 80D allows you to save up to Rs.1 lakh.
- Purchase a health insurance plan for yourself.
- Get a health insurance policy for your parents.
- Protect yourself against severe illnesses such as cancer (only in its latter stages), renal failure, and so forth.
- Obtain cancer coverage (all stages) for yourself.
Invest in a house property to get a tax break on interest up to Rs.2 lakh u/s 24. (b)
Single-Earner Couples
- If you have a child and one of you works, your investing selections will shift slightly to accommodate your financial goals. Investing according to your financial needs can not only help you save money on taxes, but also assist your children achieve their goals.
- Section 80C allows you to save up to Rs. 1.5 lakh.
- Purchase Term Insurance with a Sum Assured of 15 to 20 times your yearly salary.
- Public Provident Fund (PPF)
- At least 20% of your annual income should be invested in Market-Linked Investment Options that provide EEE advantages. For instance, Bharti AXA offers Unit Linked Insurance Plans (ULIPs) or Wealth Plans, as well as Equity Linked Savings Schemes (ELSS), and child Plans,
- You may also claim tuition fees for your children as a deduction under section 80C.
Invest at least 10% of your yearly salary in a pension fund like
- National Pension System (NPS) (you can save Rs. 50,000 more)
- Bharti AXA's Pension Funds
Section 80D allows you to save up to Rs.75000 extra.
- Purchase a Mediclaim health insurance policy for yourself, your spouse, and your children.
- Parents should get a Mediclaim health insurance policy.
- Protect yourself against crucial illnesses such as cancer (only in its latter stages), renal failure, and so forth.
- Obtain cancer coverage (all stages) for yourself.
- Invest in a home for additional tax savings of up to Rs.2 lakh on home loan interest under Section 24. (b)
Couples with Two Incomes
If you are married and both of you work, you can deduct more than Rs.8.5 lakh from your income through investments and insurance :
Under Section 80C, you can save up to Rs.3 lakh.
- Separate term insurance policies with an amount assured equivalent to 15 to 20 times your yearly incomes should be purchased by each of you.
- PPF Invest at least 20% of your yearly family income in Market-linked Investment Options that provide EEE advantages.
- Unit Linked Insurance Plans (ULIPs)
Start Putting down at least 10% of your yearly family income in a pension fund, such as
- National Pension System (NPS) (you can save Rs.1 lakh more)
- Bharti AXA's Pension Funds
If you are a parent, one of you may be able to claim the school fee that has been paid (or if you have two kids, each one can claim for one kid)
- Invest in a Child Savings Account
- Section 80D allows you to save up to Rs.1.5 lakh.
- Purchase a Mediclaim health insurance plan for yourself (both spouses should opt for separate Mediclaim covers)
- Purchase a Mediclaim health insurance policy for your parents (applicable to both spouses).
- Protect yourself against crucial illnesses such as cancer (only in its latter stages), renal failure, and so forth.
- Obtain cancer coverage (all stages) for yourself.
- Invest in property for up to Rs.4 lakh in extra tax savings on home loan interest.
- Invest in different properties or joint names.
How to Calculate HRA Tax Exemption?
HRA Salary Definition: HRA Salary is defined as follows: Basic pay + dearness allowance (DA) (just that portion of the DA that is included in the retirement benefit) + commission paid as a percentage of turnover.
The HRA you get from your company is taxed if the following requirements are met :
The HRA's tax-free part must include at least one of the following :
- Actual HRA received throughout the fiscal year.
- 50% of your salary if you live in a metro city (Mumbai, Chennai, Delhi, Kolkata), or 40% if you live in another city.
- Rent is paid minus 10% of your salary.
How to Form a HUF?
An HUF is a Hindu, Sikh, Jain, or Buddhist household having at least one male member.
- Make a deed for HUF.
- Karta can give income-generating assets to HUF in the form of gifts.
- Get a separate PAN card.
- Make a bank account in HUF's name.
What Are the Advantages of Creating a HUF?
There are various benefits of creating a HUF, including :
- Individuals and HUFs can split the family's income and file taxes separately, lowering their tax burden on both individual and HUF tax returns.
- The existence of ancestral joint family assets is not required for the HUF to exist.
- Women in the family might contribute to the HUF and leave property in their names.
- HUF members can get loans more easily.
So, these were a few of the most lucrative tax-free investment options for you to choose from. Select the one that matches your needs and get started today!
