Tax Planning for Young Professionals

Getting your first job, the credit of your first salary –  all are special occasions. But they also mark your entry into a world which is driven by money – banks want to sell you credit cards, pizza outlets want you to order a pizza with a click of a button, malls want you to shop more and more, the government wants you to pay your taxes on time…err…where did that come from!! Right?

Well yes, whether you like it or not, one part of your hard earned income goes to the government in the form of Income tax which your employer deducts from your salary every month before crediting it to your account.

Looks like you don’t have much of a say in that?

Not really!! You can plan this deduction in a way that the Tax-outgo is minimal.

How do you do that?

Simply take the advantage of all benefits of the Income tax Act. That very act is where you can find the solution but obviously wading through that sea requires a lot of patience. So here I list down some quick fix ways by which you can plan your tax & increase your Take home salary.

Section 80C

This is the first giant which can help you a lot in your Tax planning as it can give you savings of upto30K/annum.

How?

Well you see there are many financial instruments investing in which can get you the benefit of this Section. Some of these are:

1. Provident Fund: Yes, the PF deduction you see in your salary slip also counts here.
2. Public Provident Fund: This is over and above the PF deduction made by your employer. It is voluntary in nature.
3. Life Insurance: A life insurance besides creating a assurance also gives you tax benefits. There are also products in the market which offer insurance plus returns on your premium better known as ULIPs.
4. Equity liked savings schemes: Want to benefit from the stock market & enjoy tax benefits too, ELSS helps you achieve both.
5. National Savings Certificate: Another avenue which can be used to full effect & is an excellent savings tool.
6. Tax saving FD: We all know the good old Fixed deposits but their is another special breed of FDs which besides providing guaranteed savings can also provide you tax benefits.

Section 80D

This is the section which provides you a benefit on Medical insurance both for you as well as your family. This ensures that besides being safe on sudden medical expenses,  you are also relieved on the tax on same.

Section 80E

Remember the education loan you took to study, well the interest you pay on that loan can also increase your take home & not just this year but upto 8 long years.

Why should I care to do all this?

Well besides increasing your take home salary, all the above options also help you save for yourself so that when you need funds you need not always look out for a loan. So in a way Tax planning also helps you become self sufficient in long run.

So go on examine your salary slips & think about what all benefits you have been missing out on & how much you could have credited more to your account.