Tax Saving Tips and Methods

How to save Tax

There are different ways to save your tax and save a lot of money. Even there are different plans to save your tax in India. New salary is revealed in India in 2010, people get a higher salary or higher current salary beyond their own expectation and the current salary is dependable upon the cutting of tax. All types of new income tax schemes will depend upon the India finance ministry for government employees as well as for private employees in India. India government gives different types of tax discounts and there are different type of popular tax saving options for the people of India such as funds, saving bonds and life insurance etc. There are number of banks in the list of most popular tax saving schemes in India.

You can call any of the banks for the information about tax saving options. The tax saver will tell you about the plans and procedure about the tax saving according to your current salary or total CTC. It is better to pay the car loan EMI, home loan EMI and many more in advance because the bank will imply the new interest rate at higher level up to 0.50%. So don't take your loan EMI very easily. A powerful systematic investment plans will help people in India. Reserve bank of India has various tax saving tools. The bank will sign the bond for 3 and 5 years at the rate of interest is 7.5% per annum. There are two types of bonds under the reserve bank of India such as cumulative bond and non-cumulative bond. There are so many private sector banks in India for tax saving.

The financial ministry will give special or extra tax saving schemes for the senior citizen and widows in India. Above the pay scale of 1.8 Lac, you can invest your money up to 1 Lac on life insurance and other plans. The Americans staying and doing work outside the country must be free from the tax and they do not have to pay any tax. There are different types of tax saving schemes in the Europe countries some of them are as follow such as:

1. You can earn all the money outside the United States. Every country has its own rules and regulations on the tax saving incomes.
2. The bonafide certificate tells you that you are the resident of a foreign country. After getting a bonafide certificate of a country, you are eligible to live in that country.

Even the Europe countries are very strict to their rules and regulation about the tax as compare to the Asian countries. If your income is high you have to pay high tax.

One of the best options to get the information about tax saving schemes is to get online and browse various sites giving details about tax saving schemes. You do not have to do anywhere to get information as you can get it at the comfort of your home. You can also contact a tax consultant who can give you the

Tax Saving Tips

There are lots of financial schemes available in India. Many of them provides you guaranteed returns, high interest rates, tax savings under various sections of INDIAN INCOME TAX ACT and much more benefits.

These financial plans not only provide you money growth but also provide you with financial security at various steps in your life. It depends on your needs which product suits you best.

Determine your requirements...whether it short term or long term planning; how much risk can you afford, risk taking capacity is directly proportional to returns; whether it will be one time savings or regular savings in small amount and knowledge of pros and cons of the investment product you buy.

For example, if you are looking for short term savings then you can invest your money in post offices , government bonds, mutual funds, and if you are concentrated to long term savings then public provident funds (PPF ), life insurance, long term bank deposits (FDs, RDs) can help you.

BANK SAVINGS:

In a Fixed Deposit Saving Scheme a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest.

When you want to invest your hard earned money for a longer period of time and get a regular income, Fixed Deposit Scheme is ideal. It is SAFE, LIQUID and FETCHES HIGH RETURNS.

Loan / Overdraft facility is available against bank fixed deposits. Now many banks don't charges for premature withdrawal.

Under a Recurring Bank Deposit Saving Scheme, investor invests a specific amount in a bank on a monthly basis for a fixed rate of return.

The deposit has a fixed tenure, at the end of which you get your principal sum as well as the interest earned during that period.

Recurring Deposit provides you the element of compulsion to save at high rates of interest applicable to Term Deposits along-with liquidity to access that savings any time.

Government Tax Savings Bonds

RBI Bonds are tax saving bonds that have a special provision that allows the investor to save on tax. These Bonds are instruments that are issued by the RBI.

The interest is compounded half-yearly. Maturity period of RBI Bonds is five years, and interest received is tax-free in the hands of the investor.

Other Savings:

Infrastructure bonds are available through issues of ICICI and IDBI, brought out in the name of ICICI Safety Bonds and IDBI Flexibonds.

These provide tax-saving benefits under Section 88 of the Income Tax Act, 1961, for the investor. You can reduce your tax liability by upto Rs 16,000 per annum.

Fixed deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits. Financial institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits.

Life insurance saving schemes for government owned Life Insurance Corporation of Indiaand other private life insurance companies like Bajaj Allianz, Birla Sun Life Insurance, HDFC Life Insurance, ICICI Prudential

Health insurance Tax Saving schemes

Health Insurance and Tax Saving Schemes in India

People who are looking for options to save their tax have a reason to smile now. This is because of the reason that various insurance companies offer numerous health insurance schemes and other tax saving options. It is very important that your future and the future of your family must be secured. By obtaining a health insurance, you will be able to get health benefits in need and save tax. These medical insurance schemes are offered by both nationalized and private banks and institutes. You should get in touch with them for getting complete information about tax saving schemes so that you are able to save some amount of money.

People should know that they must pay tax as and when required and there is no way that they are able to get completely exempted from tax payments. However, there are numerous ways by which you are able to save the amount and one of the best options is to get an insurance policy. Mediclaim or medical health insurance is one of the most effective ways which can give the individuals highly beneficial tax saving schemes. Because of these reasons people have started relying on them for recent years. The budget of the nation has an impact on these plans.

There are a lot of sites on the internet offering these plans and you can even save significant amount if you buy health insurance online. One of the major advantages is that you will be able to calculate the tax gains as there are a lot of tax calculators available online. These calculators are quite simple and easy to use and the person does not need to be tech savy to operate them. It has been mentioned in Section 80 D of IT Act, people belonging to Hindu undivided families (HUF) and individuals or Hindu joint families have been entitled for tax saving schemes such as Mediclaim or health insurance plans and policies.

It is highly recommended to get the details of these plans and policies and how much you can save on tax. This is because of the reason that there is wide range of Mediclaim policies for the benefits of people. Health advantage plus is one of such policies and can be used for tax saving purpose. However, before taking any decision you must do complete research and choose the best suited to your requirements and the budget.

You will be glad to know that you can get entitled for additional tax saving if you gift the policy to someone else. These days, internet has taken a special place in everyone’s life and anyone can buy, renew or pay for the policy online. In case, you find it hard to understand the payment terms, policy rules and tax saving, one of the best ways is to get in touch with a tax consultant who is well versed with the rules and regulations. He will be able to assess your financial condition and offer the best suggestions for which health insurance plans you should go for.

Health insurance Tax Saving schemes

Federal tax benefits

529 plans provide income tax breaks. Your contributions are not deductible on your federal tax return. But your investment grows tax-deferred, and distributions to pay for the beneficiary's college costs come out federally tax-free.

State tax benefits

Your own state may offer some tax breaks as well (like an upfront deduction for your contributions or income exemption on withdrawals) in addition to the federal treatment

Control

You decide when withdrawals are taken and for what purpose. Most plans even allow you to reclaim the funds for yourself any time you desire, no questions asked. (However, the earnings portion of the "non-qualified" withdrawal will be subject to income tax and an additional 10% penalty tax).

Flexible

If you want to move your investment around you may change to a different option in a 529 savings program every year (program permitting) or you may rollover your account to a different state's program provided no such rollover for your beneficiary has occurred in the prior 12 months.

Substantial deposits allowed

Everyone is eligible to take advantage of a 529 plan, and the amounts you can put in are substantial (over $300,000 per beneficiary in many state plans). Generally, there are no income limitations or age restrictions. Thinking about going back to college or graduate school in the future

Tax Benefits

As long as the 529 plan satisfies a few basic requirements, the federal tax law provides special tax benefits to you, the plan participant. .

Some states (but not all) offer tax incentives to investors as well. Research your state's

Penalty of not using 529 plan

Only earnings are subject to a withdrawal penalty

Federal law imposes a 10% penalty on earnings for non-qualified distributions beginning in 2002. The penalty is not assessed on principal. (Distributions are allocated between principal and earnings on a pro-rata basis.) An exception to the penalty can be claimed if you terminate the account because the beneficiary has died or is disabled, or if you withdraw funds not needed for college because the beneficiary has received a scholarship.

How to minimize the penalty

You can change the beneficiary to another qualifying family member at any time in order to keep the account going and avoid (or at least delay) taking non-qualified withdrawals when the original beneficiary doesn't need those funds.  Example - if you have 2 kids.  You can change the name to other kid