What are the best tax savings options for salaried employees?
There are numerous ways in which salaries employees can utilise tax savings benefits. Here is a list of optimal tax savings options for them:
- Use EPF, Home Loans and/or ELSS Funds to max out the Sec 80C benefits. Note that the max total benefit offered here is Rs. 1.5 lakhs, and not Rs. 1.5 lakhs per asset class.
- Select the right medical cover to take Section 80D benefits
- If your annual income > Rs. 15 lakhs/yr, you may consider investing upto Rs. 50,000/- per year to take Sec 80CCD 1(B) benefits
- Where possible, take an education loan to claim Sec 80E benefits on interest amount paid
- Plan vacations where you can utilise your LTA benefits
- Stay in a rented house to claim HRA benefits
- If you own a home, use your home loan to take benefits on both Principle and Interest repayment
- If you are paying more than 20% tax, debt funds can be better for long term savings than Fixed Deposits and Recurring deposits
While we do not provide any tax advisory services at Glide Invest, we are happy to advise and help you setup your investments in mutual funds to optimise your tax savings.
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