Tax saving is one of the most important aspects of financial planning. Every family, especially a salaried person would like to know ways in which he or she can save on tax.
For many people, it is investing at the last moment, when they do not have much time on hand.
- Today, let us look at some of the best tax saving tips for 2017.
Today, let us look at some of the best tax saving tips for 2017.
Many employers have already included this aspect in their employment benefits. These expenses are incurred as your job expenses – for e.g. conveyance, driver allowance, newspaper expenses, telephone and mobile expenses, office entertainment, professional tax etc.
All these expenses are a part of your job benefits and are given by your employer according to your grade and eligibility. These expenses are eligible for deductions.
ELSS (Equity Linked Saving Scheme) Funds.
ELSS has become one of the most attractive tax saving options. With the launch of KYC and online transactions, these transactions can be easily done on-line. For the past 3 years the ELSS annualised Rate of Return is around 18.5%.
There is no entry load and the investor is charged around 2.75% a year. These funds are high in transparency, tax saving and liquidity. The returns are tax free because of long term capital gains. These funds also have one of the shortest lock-in periods i.e. 3 years.
Even though SIP is the best way to invest in equity mutual funds, as we are close to March end you cannot do a monthly SIP and you will need to invest a lumpsum amount.
PPF, EPF AND VPF.
EPF (Employee Provident fund) is one of the most important retirement savings option. Individual contribution is linked to your salary, but you can increase the amount by opting for VPF (Voluntary Provident Fund).
For investors who are not covered under Provident Fund, Public Provident Fund (PPF) is a good option. Currently the interest rate is 8%, which is above the inflation level. PPF will continue to give a higher rate than bank deposits. A PPF account can be opened at public sector banks, Post offices etc.
NPS is another great way of saving tax, if you want to keep funds for your retirement purpose. In the last budget, 40% of the corpus was made tax free. PFRDA is insisting for the remaining 60% also to be made tax free.
NPS is ideally suited for those who have already exhausted the limit of Rs.1.5 lakhs under Section 80C and wants to save some more. Tax can be further cut by putting in Rs.50,000/- in this pension scheme. For last 5 years, NPS is giving 12.5% rate of return.
Senior Citizens Saving scheme.
This scheme is designed only for senior citizens. The interest rate is better than NSC and PPF. This gives senior citizens a regular source of income. Interest is paid every quarter and there is an investment limit of Rs.15 lakhs.
Leave Travel and Medical expense allowance.
Most employers will try to give personal expenses, like medical expenses as tax free. If you produce actual medical bills upto Rs.15000/-, then these expenses are exempt.
Similarly, your employer can give you leave travel allowance. You are entitled to tax free, leave travel allowance, if you meet the following criteria –
- Firstly you can avail of it, a maximum of 2 times in 4 years.
- You should be on leave during the travel period.
- It should be the shortest route in India.
- You can claim maximum economy air travel or AC1 train fare.
Government saving scheme for girls (Sukanya Samriddhi Yojana account).
This is a Government saving scheme for girls, which has one of the highest rate of return amongst the small saving schemes. The investment amount is locked in till the girl becomes a major i.e. 18 years of age. The maturity amount is tax free.
Charities recognised by the Government of India provide 100% tax benefit. You can also donate to any registered NGO, religious charity and claim tax rebate on the same.
The rent expense can be deducted from the taxable income. You need to provide rent receipts to avail of this deduction.
Some other tax savings.
- School and tuition fee for children.
- Insurance premium.
- Medical Insurance for family and parents.
- Home loan Interest payment.
These are the best 10 tax saving tips for 2017. As we come closer to March, most of us will be planning and thinking about our tax saving options. We hope that the above tips will help you in planning and saving on tax outgo.
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