5 Tips for Better tax Planning in India

Here are few tips which can help you for better tax planning in making your financial life easier.

1. Know your taxable income before tax planning:

Your cost to company (CTC) is not equal to your taxable income, there are many deductions available which can significantly reduce the taxable income and hence the Income Tax.

2. Know the amount you need to save

Find out how much you need to save to make full use of section 80 C. Section 80C, allows investments up to  Rs 1,50,000 to be deducted from taxable income.

3. Start saving bills/receipts

You may have opted for different benefits in your salary structure, such us Medical Expense, Telephone Bills, Leave Travel Allowance (LTA) etc. You would be required to show proof for the same at the end of the year, so it would be prudent to keep them safe in a digital/physical folder as applicable, to avoid any misplacement.

4. Emergency Fund

Check out how much emergency fund you have, typically one should have at least 6 months expenses available in an instrument which is readily accessible. You may opt for Liquid mutual funds to park your emergency fund. These plans give better returns than savings bank account and are very accessible too.

5. Protect your loved ones

Life insurance premium is eligible for deduction under section 80 C. If you have any financial dependents on you, then you must buy a Term insurance plan which is the cheapest and best Life Insurance product.