<ul><li>A good investment should be evaluated on two parameters – return on investment, and the tax treatment of such return. </li><li>Tax deductions on investments will not be available if one opts for the <keyword id="548629" type="General" weightage="20" keywordseo="new-tax-regime" source="Orion">new tax regime</keyword>. </li><li>Investments like ELSS, PPF, and tax-saving <keyword id="6377620" type="General" weightage="20" keywordseo="fixed-deposits" source="Orion">fixed deposits</keyword> are likely to lose their sheen. </li></ul>The old tax regime offered several tax deductions that helped bring down one’s taxable income, and save on taxes. With the Government revising the tax slabs under the new tax regime, and making it the default tax regime in budget 2023-24, the new regime has become more attractive to certain taxpayers as they can save more on taxes by opting for it. “A good investment should be evaluated on two parameters – return on investment, and the tax treatment of such return. The tax implications of an investment has three layers – at the time of investment, at the time of earnings, and at the time of withdrawal. The tax treatment for the last two layers almost remains the same in both the old and new tax regimes,” says Naveen Wadhwa, deputy general manager at Taxmann, an online source of tax and law-related information. A lot of investments were popular due to the available tax deductions, and section 80C provided deductions of up to ₹1.5 lakh for various investments. With deductions under section 80C no longer available under the new tax regime, many popular tax-saving options have become less attractive. Let us take a look at these. <cmsannotation type="cmsannotation" annotationid="Public Provident Fund (PPF)" comment="subhead" text="Public Provident Fund (PPF)">Public Provident Fund (PPF)</cmsannotation> PPF was one of the most popular investments under section 80C as it was government backed and fell under the EEE category. This meant that the investment made, interest accrued and payout at maturity were all tax exempt. However, under the new tax regime, any amount invested in PPF will not be eligible for tax exemption under section 80C. “This change might have affected the attractiveness of PPF for certain investors,” says Atul Sharma, founder of Lex N Tax, a tax consultancy firm. <cmsannotation type="cmsannotation" annotationid="Equity-Linked Savings Scheme (ELSS)" comment="subhead" text="Equity-Linked Savings Scheme (ELSS)">Equity-Linked Savings Scheme (ELSS)</cmsannotation> ELSS funds were a very popular deduction under section 80C, since they had a lock-in period of 3 years, and also provided market-linked returns. “Since the deduction under section 80C is not allowed under the new regime, ELSS investments have become less popular,” says Sharma. <cmsannotation type="cmsannotation" annotationid="Tax-saving fixed deposits" comment="subhead" text="Tax-saving fixed deposits">Tax-saving fixed deposits</cmsannotation> FDs have been a popular investment choice because they offer fixed returns. “Tax-saving fixed deposits are long-term deposits with a lock-in period of five years, offering tax benefits under section 80C of the Income Tax Act,” says Sharma. However, since 80C deductions are not available under the new tax regime, the appeal of tax-saving FDs have reduced, especially because without tax savings at the time of investments, the real rate of return on FDs will be even lower. <cmsannotation type="cmsannotation" annotationid="Endowment plans" comment="subhead" text="Endowment plans">Endowment plans</cmsannotation> Certain types of life insurance policies, such as traditional endowment plans, have witnessed a decline in popularity due to the new tax regime. Even though they were not a wise investment option, they were popular because of the guaranteed returns and the tax benefits they offered under section 80C. Now, with that gone under the new tax regime, endowment plans have lost their sheen. <cmsannotation type="cmsannotation" annotationid="National Savings Certificate (NSC)" comment="subhead" text="National Savings Certificate (NSC)">National Savings Certificate (NSC)</cmsannotation> With no tax deduction available under section 80C if one opts for the new tax regime, NSC becomes taxable as per the individual's income tax slab rate – thus making it less popular as a tax-saving investment.

5 tax-saving investments that will lose their charm under the new tax regime

In assuring convenience and safety over several other kinds of investments, Fixed Deposit (FD) and PPF (Public Provident Fund) are highly popular investment options. Though both of them are investment instruments, there are some stark differences between them that are worth considering for the purpose of making the right choice. If you are wondering which one is the right kind of investment option for you, the discussion hereunder will give you some useful points to weigh their pros and cons. <keyword id="8078727" type="UNKNOWN" weightage="20" keywordseo="fd-and-ppf">FD and PPF</keyword> differ substantially from each other Both these modes of investments offer a great degree of convenience to the investors. Nevertheless, the differences between them are substantial. Each of them come with their own unique set of characteristics that are important for customers. Here we compare the different features of FD and PPF. FD and PPF - Comparison Tenure PPF comes with a rigid tenure. This means the investment you make will be locked in for 15 years. There are no other flexible tenures offered to the customers when it comes to PPF. On the other hand, FDs come with flexible tenures ranging from 12 months to 60 months. While the investor can choose the tenure of his investment in case of FD, it is not possible to do so with regard to PPF. Premature withdrawal The amount invested in PPF can be withdrawn only after 5 years. Even then the amount you can withdraw is limited. Hence for all practical purposes, you can say you have no control over the amount invested in PPF for the entire tenure of the investment. On the other hand, it is possible for you to withdraw the amount invested in FD during any point of time when you come across a need. You can close a FD prematurely or can avail of a loan against them. Tax benefits Section 80C of the taxation laws in India makes it possible to earn tax benefits on both PPF and FDs. In order to avail of the tax benefit for investing in FD, you must invest the amount for a specific period of time. Loans The investor can avail of loans against PPF only after the PPF investment completes 3 years. However, you can get a loan against FD during any point of time. You can get loans up to 75% on cumulative FDs and up to 60% on non-cumulative FDs. Limit on deposits In PPF, you can invest only up to 1.5 lakhs in a year. There is no upper limit on how much you can invest in a FD in a year. Rate of interest In case of PPF, the rate of interest is set by the government. The rate of interest of FDs are set by individual banks NFBC. Final word As an investment instrument, FD offers more flexibility than PPF. If you are keen to take advantage of the benefits of FD, do some research to find out which bank is offering the best interest rate on a FD and make your investment decision.

FD and PPF which is better?

When it comes to investments, you always need to do a careful planning and research before settling with an option. This is because, the decision you make can affect the several aspects of your investment like flexibility of operation, tenure and interest rate besides many others. Here we compare between the FDs offered by banks and the Post Office Savings Scheme to decide which among them is the better option for investors looking from different angles. Bank FDs and Post Office Savings Bank FDs are the conventional fixed deposit investment instruments offered by different banks. Any amount of money without any upper limit can be invested in FD for a period ranging from 12 months to 60 months. The rates of interest for FDs vary between banks and for different categories of investors like regular investors and senior citizens. Post Office Savings scheme is operated by Post Office which is also popularly called as small savings scheme. They are known to offer far better interest rates and returns than bank deposits. Here is a comparison of the different features of FD and Post Office Saving Scheme. Interest rate of Bank FD and Post Office To compare the interest rate between FD and Post Office, let us take the case of SBI for example. SBI is the largest lender in the country. While SBI offers only 5.75% interest on your investment in FDs, a five year term post office term deposit can give you 7.4%. The interest rate of PPF is 7.8%. NSC offers 7.6% interest on deposits and the interest rates for deposits in <keyword id="248266" type="PERSON" weightage="20" keywordseo="Sukanya">Sukanya</keyword> Samriddhi and KVP are 8.1 percent and 7.3 percent respectively. Tax efficiency When compared to the banks FDs, some schemes offered by the post office are seen to be more tax efficient. For instance, what is earned from PPF is completely tax exempted. On the other hand, all that is earned from FD is taxable. Under Section 80C, it is possible to get tax savings for bank FDs. Some select post office savings schemes like PPF, National Savings Certificate, and Sukanya Samriddhi can give the investors similar tax benefits. Since post office savings schemes combine in them a higher interest rate as well as some attractive tax benefits, they weigh more than the bank FDs. Advantages for senior citizens in FD and Post Office Majority of the bank deposits do not give any encouraging benefits to senior citizens. Whereas, the Senior Citizens Saving Scheme offers 8.3% per annum. The senior citizens looking for monthly income will find the monthly income scheme much better at Post Offices s it would offer an interest rate of 7.3% per annum. The monthly interest rates on the bank deposits are considerably lower and hence are not that beneficial when compared with the post office savings schemes. Service quality in Bank FD and Post Office In this one aspect, the banks significantly outweigh the post offices. When it comes to customer service, banks work with the latest and advanced technology today. The experience at the post office can be time consuming and tedious involving a lot of paper work. However, considering the significant gains that you have while investing in the post office savings schemes, you can overlook this aspect and settle with these better investment instruments to gain more from your hard earned money.

Bank FD Vs Post Office Saving Scheme : Which Is Better

Retirement is often compared to a long vacation in Las Vegas: the aim is to enjoy it to the fullest without running out of money. Elevated inflation rates, low real returns from debt investments, and increasing life expectancy – all heighten the risk of underfunded retirements. Therefore it is crucial to engage in retirement planning and start investing for <keyword id="112023" type="General" weightage="20" keywordseo="wealth-creation" source="Orion">wealth creation</keyword> as early as possible. Here is a detailed guide to help you navigate this process: <cmsannotation type="cmsannotation" annotationid="Understanding the dynamics" comment="subhead" text="Understanding the dynamics">Understanding the dynamics</cmsannotation> In India, economic factors like inflation rates, interest rates, and the cost of living significantly impact retirement planning and wealth creation. Inflation erodes the value of savings, while interest rates influence investment returns. For example, with an annual inflation rate of 5%, Rs. 1000 saved today will be worth only Rs. 950 in real terms next year. As deposit interest rates have been falling over the long term, the fixed deposit (FD) rates you see today might not be available when you retire in 20-25 years. Additionally, interest income is taxable. The rising cost of living also directly influences post-retirement expenses. If the cost of living increases by 3%, monthly expenses of Rs. 30,000 today would escalate to Rs. 30,900 next year. Understanding these dynamics is essential for effective retirement planning. <cmsannotation type="cmsannotation" annotationid="Identifying your needs" comment="subhead" text="Identifying your needs">Identifying your needs</cmsannotation> Determining retirement needs requires careful calculation. A common rule of thumb suggests that <keyword id="415826" type="General" weightage="20" keywordseo="retirement-savings" source="Orion">retirement savings</keyword> should ideally replace 70-80% of pre-retirement income. For example, if your current annual income is Rs. 8 lakhs, then you should aim for Rs. 5,60,000 - Rs. 6,40,000 annually in retirement. Now consider the desired retirement age and expected lifespan. For instance, retiring at 60 and living until 85, necessitates planning for 25 years of retirement expenses. Don't forget to account for inflation. Typically, inflation is 5-6%, meaning your retirement wealth has to grow faster than this rate, ideally more than 6% after paying taxes. Therefore, your investments must offer high return potential with a low margin of error. <cmsannotation type="cmsannotation" annotationid="Exploring your options" comment="subhead" text="Exploring your options">Exploring your options</cmsannotation> Traditional retirement savings options include the Employee Provident Fund (EPF), Public Provident Fund (PPF), and the National Pension System (NPS). Other investment avenues like stocks and real estate are also popular. However, mutual funds emerge as a versatile option among these. Mutual funds offer professionally managed portfolios catering to diverse risk appetites, unlike the rigidity of EPF and PPF. <cmsannotation type="cmsannotation" annotationid="Tailoring investment strategies" comment="subhead" text="Tailoring investment strategies">Tailoring investment strategies</cmsannotation> Tailoring investment strategies to varying income levels and risk appetites is crucial for financial success. For individuals with modest incomes, starting <keyword id="176782" type="General" weightage="20" keywordseo="systematic-investment-plans" source="Orion">systematic investment plans</keyword> (SIPs) in mutual funds with as little as Rs. 500 monthly can lead to steady retirement wealth growth. Long-term investment strategies ensure financial resilience, regardless of income level or risk tolerance. If you want to adopt a hands-free approach, stick to mutual funds that come with various diversified and long-term options such as equities, debt, hybrid, and multi-asset and even retirement-friendly portfolios. <cmsannotation type="cmsannotation" annotationid="Food for thought" comment="subhead" text="Food for thought">Food for thought</cmsannotation> Many Indians prioritise home buying and children's education early in life, often delaying retirement planning until their forties. Ideally, retirement planning should start in the mid-twenties. Avoid common mistakes such as neglecting inflation, underestimating longevity, or taking on excessive risk. A smart approach is to integrate mutual funds into systematic investment plans (SIPs). This way, you can look forward to a peaceful retirement and enjoy the financial freedom that you deserve. Disclaimer: The article is authored by Sangeeta Parag Mehta, Mutual Fund Distributor. The opinions expressed are those of the author and do not necessarily reflect the views of Business Insider India. Do your own research (DYOR) before deciding to invest in any financial asset class. This article is published by the Insider Studios team. You can get in touch with them on <a href="mailto:insiderstudios@businessinsider.in">insiderstudios@businessinsider.in</a>.

A comprehensive guide to retirement planning in India: Secure your future

<ul><li>Investing in <keyword id="103549" type="General" weightage="20" keywordseo="elss" source="Orion">ELSS</keyword> not only aids in tax reduction but also offers the opportunity for wealth accumulation through equity exposure. </li><li>Investing in PPF provides a secure avenue for long-term savings, with a fixed tenure of 15 years and the option to extend in blocks of 5 years.</li><li>Investors opt for 5-year FDs due to their stability and assured returns, making them suitable for those seeking low-risk investment options. </li></ul>Now that we have stepped into the new year, there are just three months left before the current financial year draws to an end. Those who have made investment declarations to their employees to save funds under section <keyword id="6381499" type="General" weightage="20" keywordseo="80c" source="Orion">80C</keyword>, would have another month or two to show proof of investments to their employers. One needs to give evidence of investments to his/her employer by a certain time. This helps your employer calculate your taxable income and the amount of tax to deduct from your salary. “If you forget to submit the proof of investments to your employer, you can still claim those investments when you file your income tax return. Just make sure the investments were made before the end of the financial year,” says Archit Gupta, Founder and CEO, Clear, a fintech company It always helps to plan early, but in case you have not, here is a guide on how you can invest to avail section 80C tax deductions. Remember, that would apply to you only if you have opted for the old tax regime. Before making 80C investments, it is important to remember that the maximum deduction that you can avail is ₹1.5 lakh. Your contribution to the employee provident fund (EPF) is eligible for 80C deductions. So are your insurance premiums. If you have a home loan, the amount you pay towards the principal component of the home loan is also eligible for deductions under section 80C. So, when planning for 80C investments you need to first understand the amount you need to invest, which would in most cases be less than ₹1.5 lakh. Let us take a look at 5 investment options to avail 80C deductions in 2024. Equity Linked Savings Scheme Equity Linked Savings Schemes (ELSS) serve as a tax-saving avenue under section 80C of the Income Tax Act, offering benefits like a lower lock-in period of three years compared to other tax-saving instruments. ELSS primarily invests in equity and equity-related instruments, providing potential for higher returns over the long term. “ELSS helps you save tax and grow money at the same time,” Suneel Dasari, CEO, EZtax.in. However, it's essential to acknowledge the risks inherent in equity investments, including market volatility and fluctuations. The returns aren't guaranteed and can vary based on market performance. ELSS funds as a category have given returns of 26.57%, 19.55% and 17.13% in one, three and give years respectively. Public Provident Fund The Public Provident Fund (PPF) is a government-backed long-term savings scheme offering tax benefits under Section 80C. It allows contributions up to ₹1.5 lakh annually, making the invested amount tax-deductible. Investing in PPF provides a secure avenue for long-term savings, with a fixed tenure of 15 years and the option to extend in blocks of 5 years. It offers a 7.1% rate compounded annually. The risks associated with PPF are notably low due to its government backing, ensuring safety and stability. However, the lock-in period of 15 years and limited liquidity might pose constraints for individuals seeking shorter-term investment options. National Pension Scheme The National Pension System (NPS) is a voluntary retirement savings scheme offering tax benefits of up to ₹1.5 lakh under Section 80C and an additional ₹50,000 under Section 80CCD (1B), providing substantial tax savings. Investing in NPS is ideal for retirement planning, offering a choice of investment options across equities, corporate bonds, and government securities. Its unique feature includes two accounts: Tier I (non-withdrawable till retirement) and Tier II(withdrawable at any time). While NPS provides the opportunity for market-linked returns, it also carries market risks associated with investment in equity and debt instruments. Additionally, the Tier I account has a lock-in period until retirement, restricting liquidity. “Tax benefits will be applicable only to the investments under Tier 1 NPS Accounts. Tier 2 NPS accounts are not eligible for tax benefits,” says Dasari. Tax saving FDs A 5-year Fixed Deposit (FD) offers a secure investment avenue with a fixed interest rate for the specified tenure, typically ranging from banks to post offices. The invested amount is eligible for deduction under section 80C. Investors opt for 5-year FDs due to their stability and assured returns, making them suitable for those seeking low-risk investment options. However, these FDs may have lower returns compared to market-linked instruments like equity-based investments. Additionally, the lock-in period of 5 years limits liquidity and flexibility. Sukanya Samriddhi Yojana Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme designed for the financial security of the girl child. It offers tax benefits under Section 80C of the Income Tax Act, allowing contributions up to ₹1.5 lakh annually to be tax-deductible. Investing in SSY provides a dual advantage of tax savings and creating a corpus for a girl child's future expenses like education or marriage. The scheme offers an attractive interest rate(8.2%) and has a maturity period of 21 years from the date of account opening or until the girl child reaches 18, whichever is earlier. “For higher education purposes you can withdraw 50% of the amount deposited,” says Dasari. The risks associated with SSY are minimal as it's a government-backed scheme.

Tax saving countdown – With 2 months to go, options to consider under 80C

<ul><li><keyword id="103549" type="General" weightage="20" keywordseo="elss" source="Orion">ELSS</keyword> is an open-ended equity mutual fund that invests primarily in equities and equity-related products. </li><li>ELSS funds have a lock-in period of three years, meaning that investors are not allowed to withdraw their investment before the completion of this term. </li><li>Under Section 80C, investors can claim a deduction of up to ₹1.5 lakh by investing in ELSS funds. </li></ul>If an investor decides to opt for the old tax regime, he/she can still take advantage of the various deductions available to minimise tax outgo. Section 80C, with its plethora of tax-saving investment options, remains a favourite with investors. One of the options to save tax under section 80C is ELSS (equity-linked saving scheme), which is a type of mutual fund that focuses mainly on equities and provides tax benefits to investors, making it a popular investment choice. ELSS funds have a lock-in period of three years, meaning that investors are not allowed to withdraw their investment before the completion of the term. This lock-in period is shorter than that of other tax-saving investments such as the public provident fund (PPF), national savings certificate (NSC), and fixed deposits (FDs). Under Section 80C of the Income Tax Act, investors can claim a deduction of up to ₹1.5 lakh from their taxable income by investing in ELSS funds. This deduction is one of several deductions available under Section 80C. Despite being considered high-risk investments due to their primary focus on equities, ELSS funds have the potential to provide higher returns than other tax-saving investments over the long term. Professional fund managers manage ELSS funds and base their investment decisions on market trends and analysis. “Investment in ELSS is a good option as it gives both tax benefits, as well as good return. A taxpayer saves tax on the amount of investment made. Further the return on such equity investment is better than any investment in debt like FD, bonds etc,” says Ved Jain, founder, Ved Jain Associates, a chartered accountancy firm. Though past performance is not an indication of future returns, ELSS funds as a category have given 9.64% returns over the last 5 years, and 14.58% returns over the last 10 years. Investors have two options for investing in ELSS funds: lump sum or systematic investment plan (SIP). In a lump sum investment, the entire investment amount is made at once, while in an SIP investment, a fixed amount is invested at regular intervals. SIP investments are an excellent choice for investors who want to invest in ELSS funds but do not have a large sum of money available at once. “Investors should look at ELSS as an opportunity to participate in an equity scheme. It should be looked at as an option for creating wealth in a 15-year time frame. Tax saving should be taken as incidental benefit,” says AK Narayan, CEO and founder of AK Narayan Associates, a financial planning firm. Investors can select from various ELSS funds offered by different mutual fund companies. Before investing, it is essential to conduct research and compare the different funds to ensure that they are aligned with one's investment goals and risk appetite.

ELSS Mutual Fund: A way to claim tax deduction while enjoying market-linked returns

The taxation laws in India contain a number of provisions to let the tax payers save on taxes. By taking some informed decisions on how you spend and account, you can save on taxes in a legitimate way. Here we discuss some important deductions under the Income Tax Act 1961. Tips to save on income tax Make the right use of Rs.1.5 lakhs limit allowed under Section 80C Investing up to a limit of Rs. 1.5 lakh in schemes like Tax-Saver FDs, PPF (Public Provident Fund), ELSS Funds, NSC (National Saving Certificate), Life Insurance Premiums, National Pension System (NPS), Home Loan Repayment, Payment of tuition fees of your children, EPF, Senior Citizens Savings Scheme, and Sukanya Samriddhi Yojana can enable you for appropriate tax deductions depending on the case. National Pension System This deduction facilitated by Section 80CCD (1B) allows up to Rs 50,000 for contributing to the National Pension Scheme. The NPS makes it possible to invest in equity and debt pension funds for building a corpus for the retirement life. This can be withdrawn at 60 years of age. Health Insurance Premiums Paying for health insurance premiums can let you qualify for a deduction up to Rs 25,000 under Section 80D. This is permitted on top of all the deductions listed above. In case of senior citizens, this limit is up to Rs. 50,000. The taxpayer contributing towards health insurance premiums for himself as well as for a senior citizen can claim a combined deduction of up to Rs. 75,000 per annum. Deduction on your rent If you are getting HRA, it is possible to claim tax deduction on your House Rent. Though there is no upper limit specified for this, there are some rules that place a cap on the maximum deduction. If you do not get HRA but pay towards rent, a maximum claim of up to Rs. 60,000 per annum is allowed under Section 80GG. Deduction on the home loan interest When you have a home loan running, the interest you pay towards the home loan is tax deductible under Section 24 of the Income tax Act. The maximum limit that you can claim in this regard is Rs. 2 lakh. If the house is rented out, there is no upper limit. Money in your savings account The easiest way to save money on income tax is to keep some money in your savings account. Up to a limit of Rs. 10,000 per year, the interest on savings accounts is tax free under the Section 80TTA. In case of senior citizens, this limit is up to Rs 50,000 applicable in cases of both FD and savings account interest. Give for charity Donations made towards charity enable you for tax deductions. Though there is no upper limit for this, there are different rules that restrict the amount deductible on the contributions towards charities. Across a majority types of donations to the NGOs, this limit is fixed at 50% of the donated amount and up to 10% of the total income that is adjusted. If you want to claim this deduction, the NGOs to which you contribute must have 80 G certificate.

How to save Income Tax in India Schemes to Invest in 2019

Tax saving is a tricky subject and needs a lot of planning. By learning the intricacies in the taxation laws and studying your own situation in relation to the taxation laws will enable you save on your taxes. Here are some easy ways for the salaried employees to save on income taxes. Understand your salary slip first You must understand your salary slip well to know the ways to save on the gross tax you are liable to pay. The salary slip consists of three segments namely earnings, allowances and deductions. These sections will give enough clues on how to save on your taxes. The basic pay reflects on your earnings. Towards contributions, you might receive conveyance allowance, leave travel allowance, dearness allowance, house rent allowance and others. This section will also include deductions including income tax, professional tax and provident fund. Here are a few useful tips to plan for your taxes efficiently. How to save on taxes Income tax is levied on basic pay. Your House Rent Allowance (HRA) is tax exempted if you live in a rented house and pay the monthly rent. A fixed amount received as conveyance allowance also qualifies for tax exemption. Some employers might deduct income tax at the source. In such cases, the taxes paid already can be claimed by producing the necessary supporting documents at the end of the financial year. Also explore some options for investing in tax saving instruments. Understand Section 80C If you can understand the 80C section of the Income Tax Act thoroughly, you can hope to save on taxes and take home more salary. You are allowed to invest till an upper limit in schemes like National Savings Certificate (NSC), Equity Linked Savings Scheme (ELSS), Public Provident Fund (PPF) Bank Fixed Deposit (FD) and many other products. Do not plan for the taxes during the last minute If you will only study the tax during the last minute, it will give you very less room to save. If this happens, you will be overburdened with a need to make a sizeable investment in one time during the last minute. Small regular investments in Mutual Funds and SIPs over the entire year can help you make significant saving on taxes. Meet your financial goals through investments Investments planned in the right way not only enable you save on taxes, they also help you meet some of your cherished goals in life. It is possible to convert all your tax saving investments into ones that will bring you higher returns. For example, if you wish to buy a car, invest regularly in any ELSS. The lock in period will end in three years and after that you can withdraw this amount. Hence many tax saving instruments can help you meet your financial goals easily and effectively. Other ways to save on taxes It is possible to claim tax benefit on LTA once in every two years. To do this, you must submit the proof of travelling. Section 80D contains provisions for you to avail of tax benefits for the premiums paid towards health insurance policies. Section 80E contains provisions for tax exemptions on interest paid towards education loans.

How salaried employees can save on Income taxes

<img class="gwt-Image" src="/photo/47998673.cms" />Taking <keyword id="6354730" type="UNKNOWN" weightage="100" keywordseo="Home-loan">home loan</keyword> for the first time can be jittery as a number of questions cloud our minds. Doubts like whether it is the right time, if the property is suitable, which bank to seek loan from, etc, keep cropping up. 
 
Some people are almost cavalier when sealing a home loan deal and purchasing a property, and end up realising their mistake of not doing enough homework. 
 
So, one has to be very careful while taking the home plunge, because buying a house is much more than securing a home loan. When you decide on buying a home, make sure you know the long-term implications of your move and your capacity to make repayments. 
 
Here are 7 tips for beginners looking for a first time home buy 
 
-Evaluate your monthly cash flow and assess ways to save more 
Get your basic calculations rights. Make sure you list out your income and expenditure details regularly for at least four months to assess some basic factors like what extra expenditure you can cut, how much money you can save, and how large repayment instalments you can afford. This will not only make accounts clear in your mind but also make it easier to plan your expenses well. Your rented apartment may be bigger than what you need right now, consider moving into a smaller apartment to save on rent. Move in with your parents for a year or two, if possible. Only when you are convinced that you are saving enough and to the best of your potential should you move ahead with a house and loan search. 
 
-Select what you can really afford 
Now that you have a fair understanding of your buying capability, make an assessment of what you can afford. Do not take impetuous decisions while selecting property. Never select a house that will put more financial burden on you than you can carry in your present circumstances. Do not indulge in wishful thinking and assume promotions and appraisals down the years will help you tide in the payments. Apart from affordability, also take into account factors like safety, location, public transport accessibility, among other conveniences. Also factor in the cost potential of the property, whether it promises to surge in value with time. 
 
-Save for down payment and seek help if needed 
It is advisable to save as much you can to make a down payment for the purchase. The more you can pay without a bank loan help, the better it would be for you. Apart from saving some money, sell some assets if needed; or seek help from parents or other willing family members for making a substantial down payment. You won’t need to pay interest back to your family, just the principal some. The lesser loan you take from the bank, the shorter will be the payment course and the lesser the interest payment. 
 
-Check with multiple banks 
Do your homework well. Do not just plunge into a deal with the first bank you speak to. Make sure you go around and compare different deals, different banks are offering. Opt for the best deal available. Sometimes people hurry into a deal with a bank and realise later that another bank could have made a better and more profitable deal. 
 
-Go for loan consolidation 
When people decide to buy a home, they often have another running loan or liability. For example an auto loan which would now run parallel to the home loan. In such circumstances, consolidation of loans is a good option. Nobody likes to pay two EMIs simultaneously; a loan consolidation reduces the amount payable per month resulting in a single monthly payment instead of multiple payments. By consolidating two simultaneously running loans, one would not only reduce the instalments per month but also reduce the rate of interest as compared to what one would be paying on multiple repayments. 
 
-Have at least 3 months payments in your account 
When you activate a loan, you must not be living from paycheck to paycheck. Make sure you have some cushion money in your account to fall back upon. You should have at last three months of payment equivalent money in your account even after making the down payment. 
 
-Have contingency funds 
Some people buy a house without realising the liabilities it will bring. They end up forfeiting the buy, and this harms their credit score. Unforeseen events and exigencies can happen to anybody. One needs to be very careful and always have a Plan B. Make sure there is a contingency fund such as an FD that can be en-cashed on emergency or a PPF fund that can be relied upon in case an unfortunate incident like a pink slip happens. These emergency funds can come in the form of life insurance deposits, FDs, or mutual funds that you have invested in. 
 
(Author of this article is Brijesh Parnami, CEO, Destimoney Advisors) 
 
(Image: Thinkstock)

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