The sooner you start investing, the better it will be for you.
If you have just started a job or your income has started, then you should understand that at the appointed time your employer (company) may demand from you the investment declaration i.e. documents related to your tax savings. In such a situation, you should get ready from now on to save your tax and take the right steps. Older employees are certainly able to step in immediately, but young people just starting out have to understand a bit. In such a situation, here we discuss smart investment tools that save tax, so that you can get some help.
You can consider investing in ELSS
ELSS or Equity-Linked Saving Schemes are equity mutual funds with a diversified portfolio that give you a chance to invest in the equity market along with high returns. According to HDFC Life, it also allows you to claim tax deduction under Section 80C of the Income Tax Act. The maximum amount of income tax deduction that can be claimed by the government is fixed at Rs 1.50 lakh in a financial year.
buy health insurance
Nowadays, treatment is quite expensive. In such a situation, keeping in mind the rising medical costs, it would be better that you buy a good and better covering health policy. A health insurance policy helps you cover the financial risk associated with a medical emergency or hospitalization expenses. With this, you will remain mentally relaxed about the huge expenses that may arise in case of medical emergency. You get tax exemption under Section 80D of the Income Tax Act for the amount of health policy premium paid in a year.
Understand here that the deduction amount for paying premium on insurance for yourself, dependent children and spouse can be up to Rs 25,000. An additional Rs 25,000 can be claimed for parents. Yes, the total limit can increase up to Rs 1,00,000 if your parents are senior citizens.
Make investment plans even if you are not in the tax slab.
Even if your income is not within the tax slab, consider making a financial plan. TDS may be deducted from your income, which you should not pay if your income is within the limit. In such a case, you will have to file your ITR to get it back as a refund. Apart from this, start investing as per your goals. Always set a clear objective while starting an investment and choose the right amount, tenure and type of investment based on that. The sooner you start investing, the more benefit you will get. You should ensure that you do not miss the deadline for filing income tax returns. Usually 31st July every year is the last date. Consider filing your returns in advance and double-checking them to avoid any mistakes.
Seek help from professionals if needed
When it comes to investing, taxes, and insurance, it’s helpful to have a basic understanding. You need to have a basic understanding of the technical terms and concepts related to taxes and investments so that you can make informed decisions. However, if you think you are new, you can consult tax advisors, investment advisors, financial planners, etc. to help you in preparing a financial plan and filing taxes.
Minimum income on which income tax is not charged
If your annual income is within the income limit of Rs 2.5 lakh under the old tax system and Rs 3 lakh under the new system, then you are exempted from paying tax. If it exceeds this amount, you can make investments which are eligible for deduction under Section 80C.
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