How to avail maximum tax benefits

We understand the importance of having a financial plan. If one wants to achieve something great in life, they must plan properly from an early age. There are some concepts about financial planning that needs clarification.

• The first thing is the age of financial planning. There is no perfect age for financial planning. The earlier you start, the better it will be for you.

• Some people think investing in different financial schemes is not for all. But this is not true. There are numerous schemes and plans where you can invest small amounts and gain great profits in future.

• People usually calculate their finances at the end of the year. This is a faulty process. When you calculate your finances in a hurry, you cannot consider all aspects and make the best use of your money. As a result, you waste a huge portion of your hard-earned money in paying taxes.

• A good idea about different schemes and tax benefits is also important for your financial planning. You can seek the help of a financial advisor if you are not sure.

While discussing financial planning, taxes are worth mentioning. Tax is something every citizen must pay to the government for all the facilities they get. We have to pay a good portion of our yearly income as tax to the government. But, there are some ways by which we can save a significant amount of tax money.

Under Section 80C of the Income Tax Act, we can save almost 1.5 lac tax money by investing in different schemes. In simpler words, the money we invest in different schemes will be waved-off from our payable tax amount up to 1.5 lac per year.

Where can we invest in deducting our tax money?

There are various sectors which can give us tax benefits. Some of them are mentioned below;

• Life insurance

Most of us invest in life insurance policies for ourselves and our family as life is uncertain. We can invest in multiple life insurance plans. All the money we are paying as the life insurance premium can be deducted from our payable tax amount. SME insurance is currently the most popular insurance plan.

• Public Provident Fund

PPFs are long-term investment plans that last for 15 years. Any withdrawal can only be made after 7 years and you can withdraw the plan only after 5 years. Because it is a long term plan, it gives you good returns, and you also get tax benefits with PPFs. You have to deposit at least 500 Rs to avail of this scheme.

• Equity Linked Savings Scheme

ELSS is the best plan for people who want to invest a minimum amount of money for a short time. The minimum time is 3 years here. You get all the tax benefits with ESLL schemes.

Apart from these, EPF, ULIP, Tuition fees, home loan, donations, and other investments also give you a tax benefit. So, plan your investments carefully and enjoy the maximum tax benefits.