{"id":10572,"date":"2022-03-24T16:04:38","date_gmt":"2022-03-24T16:04:38","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=10572"},"modified":"2022-03-24T16:04:38","modified_gmt":"2022-03-24T16:04:38","slug":"tax-saving-hacks-to-close-the-fy-2021-2022","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/tax-saving-hacks-to-close-the-fy-2021-2022\/","title":{"rendered":"Tax-Saving hacks to close the FY 2021-2022"},"content":{"rendered":"
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Lo & behold, Taxpayers! The tax-saving season is upon us\u2013 count your blessings and prepare to save tax on them. There will be no better time than now to contemplate- <\/span>where\u2019s all my money going?<\/span><\/i><\/p>\n

As we near the end of March, we become protective of our money. It\u2019s also an appraisal season for some, so the urge to up the portfolio might also be high.<\/span><\/p>\n

More money means a more restrictive tax bracket. But a wise investor knows how to turn such opportunities into long-term wealth creation instruments. There\u2019s plenty to be done in the process, but let\u2019s start with the basics.\u00a0<\/span><\/p>\n

Sooner or later, the tax lords are coming for your money. Although you can reclaim it, it\u2019s easier to avoid the hassle altogether with efficient tax-saving hacks.<\/span><\/p>\n

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How to choose the right tax saver?<\/b><\/p>\n

The first step towards building an investment portfolio is goal-setting. Your friend\u2019s portfolio, however lucrative, might not work well for you. Neither are those hot tips from influencers going to secure your future.<\/span><\/p>\n

One must set their financial goals with much consideration for factors like age, risk appetite, liabilities, and dependents.<\/strong><\/span><\/p>\n

What you will have ready now is a beginner\u2019s portfolio, don\u2019t settle just yet. Because you might not have learned all about interests, commissions, and the most dreadful of them-taxes, yet.<\/span><\/p>\n

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3 lenses to analyze your tax-saving strategy:<\/b><\/p>\n

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  1. Safety – Does it secure your future?<\/span><\/li>\n
  2. Liquidity- Are there sufficient liquid assets?<\/span><\/li>\n
  3. Returns- Are some of your tax-saving funds offering good returns?<\/span><\/li>\n<\/ol>\n

    Your investments should serve two goals:<\/span><\/p>\n

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    1. Lower tax burden<\/span><\/li>\n
    2. Grow portfolio<\/span><\/li>\n<\/ol>\n

      We\u2019ll talk about the former with some consideration to the latter.<\/span><\/p>\n

       <\/p>\n

      Here\u2019s how you can diversify your tax-saving regime:\u00a0<\/span><\/p>\n

      1. Mutual Funds<\/strong><\/p>\n

      There are two ways to invest in Mutual funds- SIP & Lump sum.\u00a0<\/span><\/p>\n

      Systematic Investment Plans (SIPs) help manage cash flow by putting your money to work sooner. By starting early and as low as with Rs.500, you can reap the <\/span>benefits of compounding<\/span><\/a>. It not only helps save tax but also grows wealth over time. Lump-sum investments mean investing a substantial amount at one go instead of recurring installments. They usually have an upper hand in rising markets.\u00a0<\/span><\/p>\n

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      2. Equity-linked savings schemes (ELSS)<\/strong><\/p>\n

      ELSS has two differentiating features – they have the shortest lock-ins (3 years) and they are tax-free. ELSS allows you the flexibility to save for short-term goals such as weddings, car purchases, or even save for a rainy day. ELSS invests in stocks, so the risk rate is considerably higher.<\/span><\/p>\n

      ELSS makes you qualified for tax benefits for up to a limit of Rs 1.5 Lakh a year. Only gains made above Rs 1 lakh per annum are subject to tax whereas any gains made below that limit in one FY remain tax-exempt.<\/span><\/p>\n

      Did you know?<\/span><\/p>\n

      The ELSS category offered an average return of around 15% over last 10 years. Source: Economic Times<\/span><\/p>\n

      Read about the last-minute mistakes to avoid while investing in ELSS, <\/span>here.<\/span><\/a><\/p><\/blockquote>\n

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      3. Employee Provident Fund (EPF)\u00a0<\/b><\/p>\n

      EPF covers your finances after retirement. The employee has to pay 12% of their basic salary while the employer matches the contribution equally. You get the total of both along with interest post-retirement.\u00a0<\/span><\/p>\n

      The EPF currently offers guaranteed returns of 8.50 percent per annum\u2013 higher than any other similar debt investment scheme. It is also tax-free on retirement so long as the annual contribution does not exceed Rs 2.5 Lakh.<\/span><\/p>\n

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      4. Public Provident Fund (PPF)<\/b><\/p>\n

      What\u2019s one great and not-so-great fact about PPF?<\/span><\/p>\n

      -It is beneficial for long-term goals and especially when the inflation-adjusted target amount is high. It currently returns 7.1 percent per annum (for the quarter ending March 31, 2022)<\/span><\/p>\n

      -It has the longest lock-ins among tax-saving investments. One cannot make any withdrawals until the 6th year.\u00a0<\/span><\/p>\n

      Note:<\/p>\n

      Both EPF and PPF are long-term ones and therefore not liquid. The minimum annual amount required to keep the account active is Rs 500, and the maximum amount that can be deposited in a financial year is Rs 1.5 Lakh.\u00a0 \u00a0 \u00a0<\/span><\/p>\n

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      5. Health insurance<\/b><\/p>\n

      Investing in health insurance not only gives you financial protection against medical emergencies but also saves tax under Section 80D.<\/span><\/p>\n

      It\u2019s advised not to mix insurance with investment. You can buy one policy with max coverage to insure yourself and invest in another lucrative option with good returns. A single, costly insurance policy might prevent you from investing in other goals.<\/span><\/p>\n

      Interested in how we think about the markets?<\/p>\n<\/div>\n

      Read more: Zen And The Art Of Investing<\/strong><\/a><\/p>\n

      Watch\/hear on YouTube:<\/p>\n