As a fact, every coin you save goes a long way to strengthen your business or personal financial health. The best way to save money is when you have money. This is particularly true, especially when you are planning for your taxes, and you, therefore, have to be keen during the year as you make your purchases and expenses you incur. Make use of every available avenue when tax planning in India and, as a result, make more savings. The following are some of the practical tax planning steps you can take for the benefit of your business.
- Home loan
Education loan through section 80E allows you a deductible tax exemption. When a taxpayer takes an educational credit for any of his family members, then he is permitted a deductible expense on the education loan Interest. As you spend your money in the year, you could put such into concern so that you can save more money.
Capital assets that have been held by a taxpayer can be exempted for paying capital gain interest when you invest the proceeds in specific instruments.
- Equity Linked Savings Scheme
A diversified equity mutual fund with most of the money invested inequities. This is considered one of the best investments, especially when you set long to lock-in periods. Investments can be made in a lump sum. ELSS also allows you a deductible tax exemption. Therefore investing in ELSS is a useful tool in tax planning. Returns from an ELSS fund reflects returns from the equity markets
- National Pension Scheme (NPS):
The Indian government has allowed organized workforces and professionals to ensure they have a pension when they retire. It is known as the National pension scheme. The returns rate on the NPS is based on the equity market. It varies between 12 %- 14 %. Above that, individuals can claim up to Rs 50,000 as an additional deduction under Section 80CCD (1B), which is in addition to Rs,1 50,000 permitted under Section 80C.
- Employee provident fund:
EPF is a retirement benefits scheme that is available to all salaried employees. The employer is mandated to deduct a minimum of 12 %of basic salaries and some Allowance of the employee. The employer then deposits this in the EPF. The employee may choose to have more money deducted from their pay. Especially when tax planning in India, they can then have a tax exemption on the amount they are saving for EPF.
- Save taxes by philanthropic activities and donations
Any donations made for charitable purposes may be claimed for a tax deduction. Donations made to the national relief funds may are claimed under section 80G. Some donations get a 100% deduction while others get a 50% deduction. If you have money left over, it would be wise to donate it. You may as well save some tax as you help the less needy. When tax planning in India, donations are a useful tool to utilize to save your tax.
- Utilize expenditures deductible under Section 80D/80DD/80DDB
An effective way to consider tax planning in India is to buy health insurance for a loved one. You will get a deduction on your payable tax. If you spend money on treatment, then you also get some deductions.