If you are a working professional, then Tax Planning is one of the most important things to learn so that you can utilise your money appropriately. As we are entering the New Year 2023, it is high time that we put on our resolution list to learn about Tax Planning and Income Tax Saving. To help you with the same, I am crafting this article where I will share the 6 important tips on Income Tax Saving so that you can ease yourself into the process.
1. Updated Information
We are living in a fast-changing world where a piece of new information is generated every day. It is true for every area of lifestyle which makes it equally important for Tax Planning in your life. Make sure that you have a credible source of information when it comes to having knowledge on the topic. It will help you stay on top when it comes to the topic and you will be able to take the necessary steps as per the situation.
2. Right Investments
If your salary is more than 5 Lakhs per annum, you will be required to pay tax to the government. Making appropriate investment decisions will help you save tax in India and I will be sharing my knowledge on the same. There are certain Government run schemes which will help you legally save tax on your income and you must invest in them for the same goal. Please find the list of these schemes below:
- Public Provident Fund (PPF)
- Employee’s Provident Fund (EPF)
- Home Loan
- Long-Term Capital Gains
- Donations
3. Health Insurance
Health Insurance is an investment that you can make which will help you in a two-fold way. The first way is that it will financially aid you in times of medical emergency. You can get yourself and your family covered so that you always have financial aid ready in such a case. Also, it will help you save on tax by sharing the amount of premium you pay for the same.
4. File Income Tax Returns
An individual or an organization is required to file ITR by the end of 31st July of every year or by the date shared by the Income Tax Department. In case you fail to do it, a penalty is imposed on the taxpayer. It would be great if you always file your ITR on time while paying all the taxes you are supposed to pay legally.
Also Read: What is Tax Form 8821?
5. Tax Regimes
There are two tax regimes where one is a new one and the other one is an old one. The new tax regime offers you lower tax rates while there won’t be any allowed deductions whereas the old tax regime can offer you tax deductions on high tax rates. While you are filing your taxes, make sure to pick the one that suits your needs.
6. Expense Management
If you are subject to tax audits, then you must maintain a proper book of accounts as well as manage cash flow. It will ensure that you have a proper record of revenue and expenses which can be shown to the Income Tax Department anytime they would like to review it. It will keep you away from any kind of unwanted fines, penalties and other punishments.
Conclusion
In this article, we learnt about Tax Saving, Tax Planning and Income Tax Saving which are a part of the complete process of filing Income Tax Returns. This article helped you get started on the topic while also sharing some ways to save tax if you are supposed to pay any. I hope it was as helpful to you as I intended it to be.
Please note that if you are earning more than 2.5 Lakhs per annum, then it is advisable to file Income Tax Returns. It will help you maintain a good record for yourself and will also help you learn about the process. So, when you finally have to pay taxes, all you need to do would be learn about tax savings because you would already be knowing how to file it.
Please share this article with people you know whose salaries are about to cross the income tax slab and soon they would have to pay the taxes.
Also Read:
Incomplete ITR Shall be Communicated by Tax Department: Here’s How
