Savings on tax is a crucial aspect of personal finance of every household. Of the multitudinous taxes on the common man, one of them, a major one, which burns a hole in the pocket, is the Income Tax. If you earn more than Rs.2.5 Lakhs per annul, then you are in the income tax net. However, if you are earning less than that, then no income tax shall be imposed. However, simply because there are no taxes deducted from your salary does not mean that one should not save the money they earn. One should leverage the no income tax advantage and follow the below 5 points for better savings for a secure future.
Limit Extravagant Splurging
- Many expend their salary first and whatever is left is deemed as savings. The trouble with this approach is that it makes people spend even more if they think that the money left is meagre and will not contribute much to savings.
- Many also tend to buy expensive things even when economical options are available. Hence, follow the golden rule of saving ‘Money saved is money earned’ and you shall never go wrong.
- Expenditure = Income – Savings
Stay Out Of Debt
- There are times when one may want to purchase a new automobile or a house, which is costly. Hence, the feasible option is to take loans and buy what you plan to. The EMIs also help in tax savings.
- It’s a good practice to limit the borrowings from loans or even credit cards to an extent depending upon one’s income and not go overboard with it.
- Apply for loans depending upon your savings. It’s wise to apply for loans from banks or agencies which offer easy repayment options or where you can customize your EMIs, this will not burden your finances.
Invest In Mutual Funds
- When the salary is on the lesser side, then the risk appetite is less too. Many live from hand to mouth when it comes to their monthly expenses and cannot invest in anything.
- In such circumstances, mutual funds are an apt choice. With Systematic Investment Planning (SIP), one can start saving as low as 1000 INR monthly and build up good returns.
- The money invested is managed by a fund manager adept in markets; hence the returns are better assured as compared to directly investing in markets.
Cashback & Discounts
- We live in an internet age where much of our transactions occur online or cashless through net banking, smart-phone apps. Whether it is booking a movie or travel ticket, paying bills or reserving a hotel, make sure to check for offers in the forms of discounts, cash-backs, reward points.
- Now, with so many apps and websites, there are always some or the other offers floating around. In fact, there are apps dedicated to offers across all other apps and sites!
File Income Tax Returns!
- Filing Income tax returns simply means documenting your entire income from all sources. Now, even if you do not come under the taxable income and you are of an Indian citizenship and have any asset or financial interest in an entity located outside of India, then you qualify to file the same.
- People do not file tax returns simply because of lethargy or conundrum regarding the procedure. One of the advantages of filing tax returns is that it acts as a proof of your income. Also, in case you want to claim a tax refund, then you will be eligible if you file tax returns. Then, there is also an ease of getting loans, as financial institutes check income tax returns of past 2-3 years to better under your financial situation. Same goes for visa processing.