What is Tax Planning?
Tax planning is the analysis of a financial situation or plan from a tax perspective. The purpose of tax planning is to ensure tax efficiency. Through tax planning, all elements of the financial plan work together in the most tax-efficient manner possible. Tax planning is an essential part of an individual investor’s financial plan. Reduction of tax liability and maximizing the ability to contribute to retirement plans are crucial for success.
Save tax save money you know about that. Every people want a know how we will save the tax and increase our income. You always talks about that your charters Accountant. But you are not satisfied there advise because you don’t like this type save tax.
Income tax deducted on your income. That called income tax, which you are earning by business, jobs, services, e-commerce.
Meaning of Tax Planning
Each year we get reminders from the taxmen, the chartered accountant or the employer that it is the season to plan your taxes. In all likelihood, your reaction isn’t going to be like somebody just gifted you the latest iPhone.
Let’s face it ‐ most of us are averse to paying taxes, and at some point in our lives, we all have fantasized about living in a tax-free world.
Apart from the fact that taxes are viewed as a financial burden, what could further add to the stress could be a lack of knowledge about tax-planning. A majority of taxpayers struggle with fitting the tax-saving piece in the puzzle of their finances. Perhaps, it is time to teach taxes to students while they are still in school to prepare them for the inevitable as adults taxes.
If you can relate to this, then fret not. We have compiled a detailed and elaborate tax-saving guide to ensure your tax-planning journey is smooth sailing.
Read also Tips For How to Save Money
Types of Tax Planning
Tax planning is an integral part of every individual’s financial growth story. Since paying taxes is mandatory for every individual falling under the purview of the IT bracket, why not streamline your tax payments in ways that it offers substantial returns over a period of time with minimum risk? In addition, effective planning also reduces your tax liability drastically.
- Purpose tax planning: Planning taxes with a particular objective in mind.
- Permissive tax planning: Tax planning that is under the framework of law.
- Long range and Short range tax planning: Planning done at the start and end of a fiscal year respectively.
How to Save Tax in 2020
The Income Tax Department has given great relief to the taxpayers. The Central Board of Direct Taxes (CBDT) has now extended the last date for filing income tax returns. Now you have till 30 September to file the tax. In such a situation, every taxpayer is trying to save income tax. We are telling you some easy ways through which taxpayers can easily prove to be helpful in saving tax. The best part is that all the investments are available with you.
Top 5 ways to Save your Tax
1. Home Loan
That way is very effective to save your tax. Home loan is easy way to save tax. Those paying home loan EMI also get the benefit of tax exemption. In this, you get deduction up to 1.5 lakh under section 80C. At the same time, a rebate of up to 2 lakh rupees will be given under section 24 on the interest portion.
2. Education Loan
Education loan also gives you the benefit pf tax exemption. Under 80E, you get an exemption in interest charged on the loan. This rebate can be availed immediately for the assessment year and thereafter for 7 assessment years or until the entire loan is repaid, whichever is earlier. Keep in mind that you should have taken a loan from recognized destitution.
3. Health Insurance
To protect again this ever increasing infection and diseases around us, everyone is getting health insurance. Health insurance is also helpful in saving you from the expensive treatment expenses of hospitals. If you are less than 60 year old. then you can save tax up to 25 thousands rupees though health insurance premium. you can also make a premium for your wife and child. in this you get exemption under section 80D. in this, you can take mediclaim, family floater or critical illness. At the same time those whose age is more than 60 years, they will get a tax benefit of up to 50 thousands.
4. Discount on Interest
If you get a discount on interest in addition to the income earned from the deposit, tax is also saved. Under Section 80 TTB, the interest on the amount received from the deposit is exempt. Under Section 80 TTB you can avail a maximum discount of up to 50 thousand rupees.
5. National Pension Scheme
The National Pension Scheme of Busty Government is a good option for tax saving. If you invest money in this pension scheme, you can get tax deduction of up to 50 thousand rupees under 80 CCD (1B). Keep in mind that this deduction will be received after investment made under Section 80 CCD (1).
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