Ever thought of saving some extra funds while paying your taxes? Well, often, through the journey of earning around the year, we continue to pay them without consciously considering tax-saving plans. You would be amazed to know that there are financial institutions that offer strategies to make this process straightforward and hassle-free.
Tax saving plans are a smart way of saving some extra funds. Moreover, this silver lining is also an effective method to reduce your financial burden. If you are wondering how, it can benefit you, continue reading to learn more about it.
What is Tax Planning?
Tax planning involves making strategic decisions and investments to reduce the amount of tax you pay. It’s a legal and systematic approach to ensure you benefit from the available tax-saving opportunities. By strategically investing your time in saving taxes, you can ensure your future financial well-being.
Benefits of Understanding What is Tax Planning
- Tax Minimisation: Tax planning aims to reduce the amount of tax you owe by taking advantage of available deductions, exemptions, and credits.
- Increased Disposable Income: Effective tax planning leaves you with more money in hand, boosting your disposable income for savings, investments, or other needs.
- Wealth Accumulation: Efficient tax saving plans help save money via deductions, which can be further used as investments. This, in turn, helps in wealth creation over time.
Now that you understand what tax is planning and its benefits, let’s explore how it is useful for salaried employees.
Tax Planning for Salaried Employees
For the majority of salaried individuals, plans about tax savings offer a reliable pathway towards building wealth and ensuring financial security. Here are some of the effective strategies that you can explore:
- Investment in Provident Funds (PF) and Public Provident Funds (PPF): While investing in PF or PPF secures your future, it is also an effective strategy for tax planning for salaried employees. Under Section 80C of the Income Tax Act, having such accounts offers double benefits. They will contribute to your overall savings by accruing interest and qualify for tax deductions as well.
- Equity-Linked Savings Schemes (ELSS): ELSS, with its potential for higher returns, helps save tax under Section 80C and presents an opportunity for wealth creation. In addition to its tax saving benefits, you also get to enjoy favourable stock market returns on your investments.
- National Pension System (NPS): NPS is also a part of tax saving plans under Section 80CCD(1B). It is an additional deduction is available for contributions made towards NPS, encouraging long-term savings. Besides saving taxes, this scheme also acts as a smart investment plan for your golden years.
- Health Insurance Premiums: Investing in health insurance is another strategy of tax saving plans. It helps you prepare for medical emergencies while also providing tax benefits under Section 80D. Premiums paid towards health insurance policies for self, family, or parents qualify for deductions, ensuring both well-being and tax savings.
- Home Loan Repayments: If you have availed of a home loan, repayments towards the principal amount fall under Section 80C deductions. In addition, interest payments also qualify for deductions under Section 24(b). This dual benefit encourages individuals to invest in real estate while saving on taxes.
- Donations and Charity: Contributions made to charitable organisations or specific funds are eligible for tax deductions under Section 80G.
Choosing Strategic Tax Saving Plans
Opting for strategic tax saving plans helps reduce tax liabilities and lay the foundation for a financially secure future. Individuals can ensure the following by managing their taxes wisely:
- Financial Security
- Long-term Wealth Creation
- Goal-based Savings
- Reduced Tax Burden
Canara HSBC Life Insurance can help you save funds for the future with their wide range of services. From tax planning for salaried employees to assisting with life insurance, they help in every possible way.
Reach out to them for the best tax-saving solutions today!
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