Do you really need to make tax-saving investments?
It is that time of the year again when you start gearing up to make tax saving. It sometimes comes as surprise to some people that they may actually not need to make these . Here’s why:
Tax savingreduce your
Tax savinghelp if you have large . Usually, this starts to matter when your CTC is more than Rs 5 lakhs per year.
Not all of your salary is
Many of your CTC components are not counted as.
- PF employer contribution is a tax exempted income.
- House Rent Allowance: Some rules apply but typically 90% of the rent you pay.
- A of Rs 50,000 from salary income is available to all employees.
And other components of your salary will help you get a tax break
Your contribution to EPF (listed as a deduction in your salary slip) is counted towards the Sec 80C deduction of Rs 1.5 lakh per year.
You may have some existing commitments that will reduce your.
- Home loan principal repayment of up to Rs 150,000 is counted towards Sec 80C deductions.
- Payment of tuition fee for your children up to Rs 1.5 lakh can be claimed as deduction u/s 80C for a maximum of two children.
- Home loan interest payments up to Rs 200,000 for a self occupied home can be reduced from your
- premium: Whatever you pay will count towards Sec 80C limit of Rs 150,000.
- Medical Insurance premium: Up to Rs 25,000 of premium paid ends up being reduced from your .
Is your income still?
Only after taking all of the above into account (and there are a few other, less common, breaks that we haven’t listed above) you would need to start tax planning and making additional.
Where should youto save tax?If your income is after taking all of these into account, you can save tax by in Tax Saving ( . in tax saving count towards Sec 80C deductions. These are superior to other options because:
- Highest historical returns
- Better taxability of returns