No one wants to pay taxes. So why not avoid it to the extent it’s legally possible with better tax planning.
A good way to start this year is by asking some questions first.
#1. What is my taxable income?
Very often, this question can be answered by calculating your taxable income. This is because your taxable income is what you pay taxes on, and this is the income you have to reduce to save tax.
#2. How much do I pay in taxes every year?
Ask your HR manager. Your payroll/accounts department will be able to tell you how much taxes you will end up paying. If it’s a significant amount, something like more than Rs. 40,000 in a year, then you should try and save this amount.
#3. How can you save some of these taxes?
By putting money in approved tax-saving investments. Decide what tax saving investment you want to go for and mention this in your investment declaration. Use this guide to decide your instrument of choice. We recommend tax saving with mutual funds and here’s why.
An easy way to go about tax saving?
Our recommendation: To the extent, putting your money in tax saving investments will help reduce your tax, invest in Tax saving (ELSS) mutual funds every month.
Scripbox helps you automate this process and we also provide a ready investment proof listing your tax-saving investments. You can submit it to your HR manager at work in good time, to avoid the last minute panic of filing of returns.
This 10 part weekly series helps you identify and complete a single task every week to take charge of your financial life. Over these 10 tasks, you will know more about your money and how to make it work harder while having to do less work and also worry less.