5 Simple Tax Saving Tips and Strategies

Saving tax with other benefits

Beginning of the new financial year

We are in the beginning of the new financial year. Everyone is through with their share of investments etc for tax-saving purposes for last year. Till we hit February, no one will be interested in thinking or contemplating investing money in tax-saving investments. However, it will be prudent to start planning early for this year’s provision to avoid last minute hassles. It is better to start thinking and planning so that you invest money in avenues which are much more than just tax-saving instruments.

5 simple tax-saving strategies

Here, we present you with 5 simple tax saving strategies to invest form now on which will help you in reducing your tax burden and also give you other benefits:

1) Buy your first home. In the budget, first time home buyers can avail of a deduction of Rs.50000/- for properties costing less than 50 lacs and where the loan availed does not exceed 35 lacs. If you’ve been waiting to buy that dream house since a long time, start planning for it now. With the real estate market settling down and rates stabilising, this is perhaps the most opportune time to buy a home on EMI’s.

2) Buy a life insurance policy. Life insurance premiums are eligible for deduction under section 80C. Life insurance is a safe investment which not only provides you with life cover, but can also act as an investment. With some planning and research, you can buy insurance to not only provide tax rebates, but also provide funds for your long term goals.

3) Investing in ELSS Equity Linked Savings Scheme are diversified equity funds with a lock-in period of 3 years. The best way to invest is to create a Systematic Investment Plan for an ELSS. Like MF’s, ELSS gives the option of dividend and growth. In the dividend option, the investors get a regular dividend depending on the performance of the fund, whereas in the growth option, the proceeds are received in lumpsum at the end of the term. T

4) Buy medical insurance or better still buy a critical illness plan. These are eligible for tax rebate under section 80D. With a critical illness plan, you are not only insured against the medical emergency, but also against the loss of income that may be a consequence of a critical illness. Medical insurance can cover only your hospitalization needs, but a critical illness plan can protect you against the loss of income resulting from suffering a critical illness. Ideally, you should have both as healthcare costs have risen manifold and are set to rise further in the near future. Without insurance, healthcare costs may burn a big hole in your pocket.

5) Public Provident Fund (PPF) are another good investment for tax rebates. The interest rates on these range between 8-9% and are the highest offered among all the tax-saving instruments. With withdrawals possible after the fifth year, PPF’s offer a good combination of flexibility, safety and returns.

Tax planning need not be a year-end exercise

The above tips are simple and can give you options to invest your money in avenues that give you a better deal than just saving tax. Plan your tax-saving investments early and ensure that you are comfortably placed at the end of the year.

Swati Tumar - Travel & Finance Writer   

Swati is a Writer in the day and an illustrator at night. Among her interests, she is quite fond of art and all things creative. She often indulges herself in creating doodles, illustrations, and other forms of content. She identifies herself as an avid traveler and shameless foodie.