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.
What are ELSS Funds?
An equity-linked saving scheme (ELSS) is an equity mutual fund scheme which invests a minimum of 80% of its total assets in equity and equity-related instruments. It is an open-ended scheme with a lock-in period of 3 years. When you invest in an ELSS ...
What is Tax Loss Harvesting?
Tax Loss Harvesting is the act of offsetting gains against losses to minimise taxes that need to be paid either for short term or long term. This allows investors to book profits for well performing funds and exit poor performing funds from their ...
Why am I being made to sign the FATCA declaration?
The Foreign Account Tax Compliance Act (FATCA) is an American act requiring all financial institutions to report the identities and assets of all American citizens currently not residing in America. This is to ensure that tax evasion does not take ...
What are the applicable taxes on Mutual Funds?
Equity mutual funds are those funds that invest 65% or more in equity shares of listed Indian companies. All other funds are categorised as Non-equity mutual funds and include debt funds, gold funds, fund of funds and international funds. Taxation ...
What is indexation?
Indexation is the benefit provided on long-term capital gains in various assets, including debt mutual funds. It allows investors to increase their ‘cost of acquisition’, while calculating capital gains and, thus, reduces taxable capital ...