What are tax benefits? Simply put, a certain amount of deduction from your tax bill due to achieving certain requirements is called Tax Benefit. Taxes are charged so that the country can function smoothly – so it’s not an expense as compared to a responsibility. Tax benefits can be issued in many forms like deductions, exclusions, credits etc.
Additional income is the driving tool for an individual to gain confidence and security to live a happy financial life. Through passing time, we incur many expenses that get overwhelming to adjust our daily life and the foreseeable quest of being financially independent. In such situations, tax benefits play a crucial role to get a head-start on planning for the future. Tax benefits influence short/long term financial goals.
What’s the best time to plan your tax-saving investments? It’s the beginning of the financial year. That way one can calculate the compound interests and plan for the future. There are various investment tools which can help us to achieve our financial goals.
Public Provident Fund (PPF)
National Savings Certificate (NSC)
National Pension System (NPS)
PUBLIC PROVIDENT FUND
7 – 8%
15 – 18%
7 – 8%
12 – 14%
Benefits of tax-saving investments:
Head start to the future
What would it feel like to have a clear vision of your financial life? Additional income by tax-benefits helps us to plan for the future. Paying off educational loans, home loans, car loans etc becomes easier. Moreover, it gives a longer duration for your investments to start yielding returns for a period when you might need them most.
Healthy Financial habit
A disciplined approach towards investments yields maximum rewards. It’s quite rightly said that the best way to be financially independent is to have healthy financial habits. Such habits include regular tax payment, steady investment portfolio, lack of greed in stock markets, 7:3 rule (70% savings and 30% expenses of your total income) etc.
Short / Long term financial goals
Achieving short / long term financial goals become realistic. Through sound knowledge and planning of investments – one can plan their future expenses and protect their finance. Knowing what works best works is necessary for us to understand because we have different financial goals and dreams
Easy loan accessibility
Having a good credit score is always a boon. Paying taxes regularly and on-time makes one eligible for home loans, education loans, medical remuneration etc.
There are so many options out there! Choosing which plan works fluctuates from individual to individual. Before you dive into it, we’d like you to keep a few points in mind.
Check for expenses you already have – like insurance premiums, children’s tuition fees, home loan repayment etc.
Deduct the amount from Rs 1.5 lakh to figure out how much to invest. There’s no need to invest the entire amount if expenses are covering the limit.
Choose tax-saving investments based on your goals and risk profile
The benefits of tax saving differ from person to person. Keeping a disciplined outlook towards tax-saving investments is the key towards a healthy financial life. Invest for today and live for tomorrow.
We are an Ahmedabad-based investment and financial advisory firm helping individuals, families and businesses in effectively and efficiently managing their finances, investment and further growing their wealth.