10 Tips For Tax Saving in 2021

Tips for Tax Saving

In India, the individuals are liable to pay income tax if their income is above 2.5 lakhs. Income tax is payable according to slab rates on an individual varying with their income level. Regular payment of income tax reduces the burden on an individual. People who pay income tax at the end of the financial year face a lot of challenges. If you want to save tax and protect yourself from financial stress, it is necessary to look at the following tips for tax-saving.

1. Provident fund:

The amount of interest on provident funds is tax-free. It takes time of five years before you withdraw the money from provident funds. Before five years, you cannot withdraw any amount from your provident fund. Provident funds help or save us from paying any amount of tax.

2. Equity Linked Saving Schemes (ELSS)

ELSS is an equity-oriented investment option mainly focused on equity funds and other equity-related instruments. It has a lock-in period of 3 years. Any investment made in ELSS funds is eligible for deduction in 80C.

3. Insurance policy:

Money received from a life insurance policy at the time of maturity or receiving the claim amount. The amount of premium is deductible from the taxable income. For insurance policies issued before 1st April 2012, premium up to 20% of the amount insured is deductible & for insurance policies issued after 1st April 2012, premium up to 10% of sum-insured is deductible.

4. Education scholarship:

The amount of education scholarship is tax-free under section 10(16). The amount received either under private or public scholarships is tax-free. Scholarships help students a lot come from a middle-class family. Now they can get scholarships free from tax.

5. Agricultural income:

Any income earned from agricultural activities is exempt from tax. For example- revenue from land, amount through a farm field, the amount received from agriculture products, income from the sale of seeds, etc.

6. Inheritance amount:

The amount received in the form of a will or the inherited money is always tax-free in India. No tax will apply on such an amount. This type of amount can be useful for a person. He/She need not pay any amount of tax on such an amount.

7. Gifts received at the wedding:

In India, weddings are an auspicious occasion for an entire family. It’s even where couples receive a lot of gifts. Such gifts are not taxable. Gifts, cash, cheque, stuff received at a wedding is tax-free. Mostly gift from friends or relatives and are purely a gesture of good wishes and love. They are non-taxable under section 56(2).

8. Expenditure on the treatment of specific diseases:

Tax benefits apply to expenses for treating specific diseases like cancer, Aids, etc. For these kinds of the disease, tax deductions up to Rs 40000 are applicable. For a senior citizen, the amount increases up to Rs 1 lakhs, any incurred expenses in this behalf are exempt from tax in India.

9. Education loan:

Education is the most important key factor in the development of every country. Every person or every family gives more emphasis on good higher education. Pursuing higher education is very expensive & not everyone can readily afford it. Often, individuals need to take an education loan to pay the fees. Education loans help them to pay the amount of the price of that particular institute. Under section 80E of the income tax Act, the interest paid for an education loan is non-taxable.

10. Donation to charity:

Tax can save by donating the money to charities. Money spent on donations or charity is tax-free under section 80G. If you have a valid certification from a charity organization, you will avail the benefits. Donations to charity can also help a person from paying any amount of tax.

To know how you can save your tax, you have to understand your pattern of income. If you want to save money from paying the income tax, invest your money in financial markets or instruments. Following up on the tips mentioned above will help you to a great extent. You should have a clear-cut objective and link the tax instruments to the desired goals. Apart from the mentioned points, there are other ways more that can help you to save on tax, but these were the best ways to save tax, adopt these ways and be free from the income tax.

Retire Early and Travel Forever

Retire Early and Travel Forever

Have you ever imagined about enjoying a life travelling the world? The solo thought amazes us! What if you retire young and spend the rest of your life travelling the world? We know it sounds a little crazy, but several people have already done this. Most people retire early to travel the world full time and enjoy the life of their dreams. The reality is that we live in a time where it is not that easy to live as you like. Travelling is easier said than done. It is not affordable each time you plan a trip. However, many people have made it possible and taught us how to make travelling affordable. Reading books about the type of life you want to enjoy is always a great source of motivation. They not just only motivate you but implementing the steps will help you to create a new road map to living your dream life.

Early retirement-an easy cup of tea
Early retirement does not come easy, but it has never been easier to make it happen. Few takeaway steps will surely help you to consider a new way of life. It is suggestible to invest around 50% of your income in such a way so that you can get timely growth on your investment. It is up to you to decide how you want to live your life. If travelling is your passion, then saving is the best opportunity. Savings should be a part of your behavior and not just a sacrifice for your dreams. It will make it easier for you to live your life as a traveler.

Krysty and Bryce-best example
Many people shared their views regarding retiring early and travelling forever but, in our opinion, the best of all is the experience shared by Kristy Shen and Bryce Leung. They both have written a book named- quit like a millionaire. One of the best books we have ever read. It is full of real deals and original strategies on how to travel the world forever. They quit their engineering jobs in their early 30’s to travel the world. Their book is all about simple rules, optimizing your investment efficiently, and to build a 7-figure portfolio. Their FIRE story has featured in the New York Times, CNBC, and UK independent.

Early retirement-never a regret.
If you think retiring early and being rich can only be possible when you have inherited property or won a lottery, there is another example that will change your mind. The Bangalore based couple laid a job as It engineers and retired in their early 20’s. They never regretted their decision & they consider it as a crucial step towards their success. During the time of their retirement, they were earning five figures. Adopting FIRE philosophy-financial independence & retiring early, has given immense popularity among the working people in history and will be beneficial in the future as well.

Adopting FIRE approach
FIRE approach aims to maximize your savings rate. Focus on your spending rather than on earning. Most people have a common misbelief that early retirement is possible for the people with high paying salaries rather it’s difficult for people with a spendy lifestyle one should be very controllable regarding his/her spending habits. The approach is simple- don’t make your cost of living unnecessarily high. While travelling this will help you to an extent- when you will move from country to country, you will be comfortable. It’s never been easy to travel with less money. Learn more about travel rewards, use credit card rewards. Travel smart, not expensive.

Saving strategies
Getting older and potentially starting a family may change your travel lifestyle in the future. You have to preplan your guide map that will lead to a completely balanced lifestyle- family, money, and travelling. Exploring the world never comes with a simple step of having money, but it’s all about strategies you plan with your money. Saving, investing, and spending is the key interlinked with each other. You have to balance them to unlock the door of your dream life.
Live life like an adventure, explore the world as a traveler!

Easy Ways To Teach Your Child How To Be Responsible With Their Money

How To Be Responsible With Their Money

As a parent, it’s your responsibility to help your children to be confident and sensible with money.

When they receive money as a birthday gift, insist that they set aside a percentage for their savings. When they get their allowance, remind them to budget any extracurricular activities they choose to participate in. Every time the opportunity presents itself, discuss making small and large purchases, and then how they can save for them.

Over time, children will understand how money is used to acquire goods or services and how it can be spent wisely.

You shouldn’t be intimidated by teaching your kids all about finances. Here are some excellent ways to help your children learn to be responsible with their money:

Teach Them Where Money Comes From
The first thing you should teach do is explain to your kids how money is earned, and introduce them to ways they can make money as kids. Make the link between having a job and being able to enjoy having money to spend. To demonstrate this principle, you can assign paid tasks to your children, which helps them to fully understand the value of hard work.
Make sure that these tasks are not their usual chores. For example, you might offer to pay them for mowing the lawn or picking up items from the store. There are different tasks you can ask them to do, depending on their age.

Use A Money Jar
When you want your children to appreciate the value of saving, you should start with a simple money jar. Kids appreciate it when they see their money grow in the jar every time they save it, rather than making impulsive purchases. When they’re old enough, take them to the bank to open an account, and make them responsible for their savings.

Show Them How To Monitor Their Spending
Another way to let children understand the value of money is to give them actual money and monitor their spending. For example, get them to write down everything that they eat or buy in school. When they come back home and list what they have eaten, they have the opportunity to learn the difference between an unplanned snack and a planned one.
This will also teach them the value of wants and needs. Looking at their spending habits will make them realize how much money they’re wasting on items they don’t necessarily need. They can also learn how to find cheaper alternatives to save more money on their purchases.

Introduce Them To Following A Budget
There are many benefits of teaching financial responsibility to children; one of which is that they learn to make better financial decisions. Teach your child how to be responsible with their money by giving them a fixed budget to follow. When they know what their allowance is each week, they will be more likely to stay on track.

You can also limit how much they spend each month on clothes, video games, and entertainment. Many kids don’t realize that they can get into trouble by spending too much money. It is essential to set a limit so that they learn how to stick to it.

Setting a budget for them and explaining the advantages and disadvantages of having a particular amount saved for emergencies will help them realize the importance of having good spending habits.
They should save some of their income for emergencies and, when they’re old enough, buy what they need for daily living. This helps kids to learn how to prioritize what they really need against things they simply want; a key step in developing financial responsibility.

Teach Them About Investments Early
Children need to learn the basics about stocks, bonds, investments, the stock market, and other financial topics like types of mutual funds and insurance. These are great ways to teach kids about money and help them to understand complex concepts from an early age will pay dividends when they’re older. Teaching kids about investing will give them a realistic expectation of what they can do with their money, as well as steps they can take towards future financial security.

Summary
Teaching kids about money might seem daunting, but when you take your time and offer consistent advice, it’s not that hard. You can begin the process of understanding finances from an early stage in their lives. Teaching kids about money now will prepare them for future life decisions regarding spending habits and retirement. It also instils in them the importance of savings and the importance of investment.

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