Role of tax-saving in your financial planning

Planning financial goals is very important to lead a comfortable life. We spend most of our life earning money, but if we do not calculate our expenses and savings, our hard-earned money will be wasted. That is why planning is essential to save money and have a better future. Financial planning cannot be done in a hurry. One needs to plan every aspect of their earning, expenses, and savings to come up with a sound financial solution.

Why do we pay taxes?

We are bound to pay a certain amount of tax to the government as the citizen of a country. We get many facilities provided by the government, and we pay tax yearly in exchange. There is no fixed amount of tax that everyone has to pay. The tax depends on everyone’s annual income. A certain amount of money is calculated as the payable tax for every citizen.

Can we save the payable tax money?

The more we earn, the more tax we have to pay. Everyone pays a big part of their annual income as the payable tax. But there are some ways to save tax money. If we use all the tax-saving schemes properly, we can save a lot of tax money. For example, there are many tax saver mutual fundsthat can help one decrease their tax amount.

How can mutual funds save one’s payable tax money?

There are somemutual funds for saving one’s tax. Mutual funds tax saving rules are cited under Section 80C in Tax Saving Act, where a person can wave off up to 1.5 lakh of their payable tax if they invest the same amount of money on different mutual funds. The amount of money one invests in different schemes will not be calculated under their yearly payable tax amount. It is a huge tax benefit that one can get by investing in various mutual funds.

What are the other ways to save payable tax money?

One can invest their money in different schemes to gain various tax benefits. The amount one spends on Equity Linked Saving Schemes, Public Provident Fund, National Saving Certificate, and Insurance plans get decreased from their payable tax. Home loans, tuition fees, health insurances, National Pension Plan, donations, education loads also reduce the amount of yearly tax.

What do we consider before investing in any tax saver mutual funds?

Everyone wants to save money. But to gain the maximum benefits, one should plan from the beginning of a financial year. Usually, people calculate their taxes at the end of a year hastily, which further damages their financial condition instead of doing any good. Investing in the right plan is very important to gain satisfying benefits. One should not invest in money-saving schemes like different mutual funds tax saving schemes only to save their tax money. They should think if they really need that particular scheme or not. Only after considering thoroughly, one should invest in any tax saver mutual funds.