Tax planning is an important aspect related to the way you manage your finances. It includes techniques and tools used to reduce the amount that you pay taxes and thus help you save more money for investments, spending or for your savings. Here are 7 simple ways to plan your taxes
- Reconstruct your salary
Allowances such as those for conveyance, medical purposes, uniform, etc. are actually non-taxable. So if you find yourself paying for these on your own salary, you can always ask your employer for a salary reconstruction. The amount that you spend on taxes, uniform or for any other purpose related to your job may be demanded from your employer as an addition to your salary in the form of allowances. You do not have to pay taxes for any allowances that you get.
- Save taxes on your Rent
If you are living in a place on rent and you’re staying there as required by your job, then you may avail the amount that you pay for rents as a deduction from your taxes. Some employers do give House Rent allowance as a part of your salary and this allowance is often non-taxable.
- Deductions Based on Home Loans
If you are left with home loans that are yet to be repaid, the amount that you spend from your income to pay your loans to be it the capital or the interest is non-taxable. You may receive up to Rs2 lakhs reduction from your taxes in this case.
- Invest In Medical Insurances
If you invest in medical insurances for yourself or your family, you may receive a deduction from your taxes. You will be eligible to receive a deduction of up to Rs25000 in this case. Medical Insurances may be for general treatment or for the treatment of any particular diseases.
There are several kinds of investments that are helpful when it comes to saving taxes. There are several avenues that you may invest in. Such investments can be made in Employee Provident Funds, Public Provident Fund, and Equity Linked Savings Scheme and so on. The deductions when investing in schemes of this kind may be up to Rs1.5 Lakhs.
If you desire to invest in charity, you need not pay taxes for the amount that you give away to charity. The part of your income that you spend on charity is non-taxable. In this case, you may deduct up to 50% of the amount that you spend on charity from your taxes and in some cases, this deduction may go up to 100% of the amount that you spend.
- Declare Your Taxes On time
Declaring your taxes on time is probably an essential part of your tax planning. On time declaration of your taxes may save you from a lot of trouble. Failing to do so, you may end up in you having to pay penalties for the delay.
These are just some of the methods that you may use to plan your taxes. Using these you may now develop an effective plan for yourself and save your funds.