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Rediff.com » Getahead » 5 hacks for saving tax!

5 hacks for saving tax!

Last updated on: October 27, 2015 09:22 IST

The wise pay their taxes on time and

plan for it before time. That does not

mean one has to necessarily go

through the big fat books on taxes!

Knowing a couple of hacks for saving

tax can have it sorted for you.

lanning one's taxes means

understanding where you are liable to pay

tax, getting the taxable amount right and

claiming deductions. It is indeed possible to

save your hard earned money by investing

appropriately and doing that while paying

taxes. These five hacks will definitely help

in that endeavour.

1. Life insurance benefits

Picking a life insurance is one of the most important financial decisions that we take. The

impact of that investment has a direct effect on the lives of those associated with us. Along with

it come tax benefits. It is essential that the premium on the policy is paid before March 31 to

avail the benefits in a particular financial year.

Getting an insurance hastily to save on tax may not turn out entirely beneficial.

In order to fulfil the primary purpose of the policy, one must put in enough thought and

research to pick one that suits well. Hence, it is only wise to start the process early and take

time to make that decision.

2. PPF bonanza

Investing in the Public Provident Fund is a smart and breezy way to save on taxes. One can

deposit up to Rs 150,000 every year in the PPF account. Not only is the principal amount tax

deductible but also the interest amount is tax exempt. This is one tax saving fest you must take

part in.

3. Pay rent and save

Under HRA, amount paid as rent can be claimed as tax exemption. So if you are staying in a

rented place then make sure you have all the supporting documents and claim the exemption.

Also, if you are staying in a place owned by your parents, then you can pay rent to them and

benefit from the same.

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However, they are liable to pay tax on that amount unless it is further invested in a tax free

plan. That way a family that stays together, saves together!

4. Another incentive to buy a home

Tax deduction can be claimed on the repayment of principal and interest on a home loan.

Paying EMIs on time has multiple benefits and now add this one to that.

Remember that every time you pay the home loan EMI, you are saving on tax. Disciplined

repayments will also ensure that your CIBIL report speaks positively about your credit history.

It's a complete win-win situation.

5. Plan and be organised to save more

Many people consider investing in tax saving schemes after getting a call for submitting the tax

saving investment proofs! Investments have to be done deliberately and not hastily.

You can make the most of your investments by doing the planning bit at the beginning of the

year.

Secondly, practicing diligence while filing the investment documents throughout the year, will

ensure that you don't miss out on any tax deductions and claims.

Be a smart investor by planning in advance and a good citizen by paying taxes on time. These

hacks will lead the way. It requires planning and awareness and is definitely worth the effort.

After all money saved is money earned!

Illustration: Dominic Xavier/Rediff.com

The author is a credit expert with 10 years of experience in personal finance and consumer

banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in

setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He

has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in

various capacities.

Rajiv Raj

Related News: CIBIL, PPF, HDFC Bank, IDBI Bank, EMI

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5 Hacks for Saving Tax! - Rediff