By: ABP News Bureau | Updated at : 13 May 2023 09:38 PM (IST)
Often, young employees have outstanding education loans. You can claim tax relief on the interest paid on an education loan. ( Image Source : Getty )
Tax savings and investments are two of the most important and confusing subjects for many people, especially those in their first jobs. After receiving their April salary, many employees receive emails from their company's human resources department to update their tax-saving investment plans. However, this can be a confusing task.
We have listed a few simple tips that can not only help you in saving taxes but can also help you make progress towards your financial goals.
Often, young employees have outstanding education loans. You can claim tax relief on the interest paid on an education loan. You can get tax relief under Section 80E for the interest paid on educational loans. A certificate from the lender confirming the interest paid is required. However, it is crucial to adhere to the repayment schedule to maintain a good credit report, or it will be difficult to obtain future loans. Starting from the first repayment, you can get tax relief on interest paid for the next seven financial years or till the financial year you'll pay your last EMI, whichever is shorter.
Many youngsters live in rented houses/flats/apartments. You can claim HRA exemption through your employer or file your tax returns to claim the same. If you are not getting HRA but are paying rent, you can claim a deduction under section 80GG to reduce your tax outgo.
PF contribution is a long-term investment plan offered by the government. It has a 15-year lock-in period and offers complete capital protection to its users. An individual can avail of up to 1.5 lakh tax exemption under section 80C. It's essential to keep track of the employee's contribution to the provident fund (EPF).
If you belong to lower tax brackets and prefer straightforward products that pose no credit risk, you might want to consider investing in National Savings Certificates (NSCs) and tax-saving fixed deposits offered by nationalized banks.
NSCs guarantee an 8 per cent interest rate for five years, while nationalized banks' five-year tax-saving fixed deposits give slightly lower returns, ranging from 6.5 per cent to 7.5 per cent annually.
Investors who can tolerate volatility may consider investing in Equity-Linked Savings Scheme (ELSS) as it offer the highest potential returns. With a lock-in period of three years, ELSS has the shortest lock-in period among tax-saving investments. For investors interested in long-term wealth creation, ELSS could be a good option.
It's always advisable to have health insurance to secure your health and save on taxes. You can claim up to Rs 25,000 as a tax deduction under Section 80D for health insurance premiums paid for yourself, your spouse, and your dependent children. For senior citizens, the limit is Rs 50,000. Term life insurance premium is admissible under Section 80C within the overall limit.
Before considering any investments, it is important to prioritize building an emergency fund that can cover at least six months of your expenses. You can use fixed deposits and liquid funds for this purpose. It is advisable to seek guidance from a financial advisor before making any investment decisions.
Can't Get Enough Of Stock Market Trading? Here's How Its Addiction Can Harm You
Groww User Alleges Fraud Over Deducted Funds Not Being Invested; Platform Issues Clarification
What If You Don't File Income Tax Return? Understanding The Financial And Legal Repercussions
Filing Income Tax? Don't Forget To Review Your Annual Information Statement First
94 Per Cent Of White-Collar Professionals In India Eyeing New Job Roles In 2024: Report
Parliament Speaker Election Live: Lok Sabha To See Rare Speaker Poll In Nearly 5 Decades After No Consensus
K.C. Janardhan: Inside The Mind Of 'Maverick' Handwriting Maestro Who Is The Only Indian To Ever Write His Own Passport
CBI Questions Delhi CM Arvind Kejriwal In Liquor Policy Case, Gets Nod To Present Him Before Court Tomorrow
Rahul Gandhi Appointed Leader Of Opposition In Lok Sabha: Congress MP KC Venugopal