Clever Ways to Save Tax That Every Woman Should Know About

An expert-approved plan to save more 

It’s the beginning of another financial year and our guess is you must have received a mail from HR about the 12BB Declaration Form”, which is basically a statement of claims by you declaring your investments and payments you will be making that will provide tax savings. If you have received mails asking for proofs of your investment and you are a little perplexed or wondering what will happen if you do not submit your investment proof before the deadline then here’s all that you need to know about investment and tax saving from Dipika Jaikishan, co-founder and COO, Basis, an app-based platform that helps women sort their finances through knowledge boosters, supportive communities and expert advice.

For the uninitiated, it is mandatory for salaried individuals to submit the Form 12BB to your employer to claim tax benefits or rebate on investments and expenses. Your monthly salary is paid out based on your declarations. Dipika lays out a quick guide to help you save more. 

Know your pay structure before implementing your tax-saving plan

Before putting a tax saving plan in place, it’s imperative to understand your pay-structure, current income and expenses. Dipika explains, “For instance, if you aren’t living on rent, you might not benefit from the HRA section. Alternatively, if your expenses are already overboard you need to consider cutting expenses and making timely investments and not borrowing at the end of the year to make investments.” She also points out that your salary structure might already consist of some tax-saving elements like your EPF ( Employee Provident Fund). 

There are 2 tax-regimes to choose from

“After the introduction of two tax regimes, the old and the new one you might be able to use several calculators available online to help you select which one works best for you,” says Dipika.

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Find what’s lacking in your financial world

Dipika suggests that before making any financial investments, just make a list of things you need. For instance, check if you need to amp up your health insurance? Or If you are at the crux of a major life change and need to buy a life insurance cover? Or If you haven’t fallen into the habit of regular investing and want to start an SIP (Systematic Investment Plan). “Your tax-saving investments should complement what you need and not be investments made outside of your horizon,” she adds. If you plan well, you can save upto Rs 1.50 lakh by investing under Section 80C of the Income tax Act. Your health insurance premiums provide you additionally tax-breaks beyond this Rs 1.50 lakh

Link your tax-investments to your goals

If you know you’re going to need money in the next 7 years, you might not want to invest in the long term PPF (Public Provident Fund). On the other hand, if you are someone who has the house in order when it comes to savings, you wouldn’t want to invest in a fixed deposit that matures in 5 years but opt for a longer commitment like the NPS ( National Pension System), which is a great retirement tool. 

To help you make up your mid, Dipika further lists tax benefits options for your personal expenses:

1. PPF:  The Public Provident Fund is one good tax saving scheme which comes under Section 80C.

2. Sukanya Samriddhi Scheme:  A parent with a girl child less than 10 years of age can invest in this scheme to avail tax. The interest under SSS is totally tax free.

3. ELSS: Equity linked savings schemes are a great investment option. They should match your financial needs that  arise 3-5 years from now since it has a 3 year lock-in and an element of risk.

4. NPS: National Pension Scheme is a good option to consider for your retirement. One can avail the tax deduction for contribution as well as one employer’s contributions under section 80CCD. 

5. Health Insurance plans: Have ample hospitalisation cover and receive a tax-benefit on the premium paid.

6. Home Loan Interest payment/EMI can be claimed under section 24

7. Tuition fees: Parents can claim tuition fees charges of up to 1.5 lakh under section 80C

8. Education Loan: Your education loan could also provide you benefits for the EMIs paid.

“Make your tax-saving decisions well before the deadline. The deadline often becomes a blocker to make smart decisions,” adds Dipika. 

Bottom Line

The season of savings has begun and it’s always better to plan these things out so that you don’t find yourself scrambling to make up the compulsory savings - and end up putting your money in an instrument that isn’t right for you. To make the entire process of investments and savings smooth, you could do the following things recommended by Dipika.  

1. Add this into your yearly budget: When you chalk out your annual budget, allocate your tax-savings investments right then and there. April is the best time. This way, you won’t be running in circles to make these two meet.

PS: Need help with the chalking out of the plan? Talk to an expert!

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2. Make your investments in time: Save the date on this one as you will get the benefits only if you have made the savings in time. So forgetting someone’s birthday might not be cool, but forgetting the date for investments? That’s gonna cost you, literally!