4 smart tax steps to maximize investment returns
As Benjamin Franklin rightly said – “Only two things are certain in life: death and taxes.” The first is unavoidable, but we can try to reduce the tax burden and increase investment returns.
Tax plan at the beginning of FY
This is the first and foremost smart move that anyone can make the highest return on their investment.
Anup Bansal, Chief Investment Officer, Scripbox, said, “Tax planning is an important aspect of return protection. If you’re planning on investing in tax-saving instruments like PPF and ELSS, it’s best to do so early in the year to give it more time to grow. ”
If your situation changes, such as a rental agreement change (HRA), consider them and notify your employer for the correct TDS.
Invest in the name of your parents and spouse
To avoid income clubbing, you can try investing in the name of your parents, even your grandparents and spouses who may be in low tax brackets.
Bonsal explains, “If one of your parents is over 65 years of age and has no investment, you can invest in their name to get tax-free interest. Every adult over the age of 60 is already entitled to a Baseline Discount of Rs. 3 lakhs
In addition, if you want to take the help of a grandparent who is over 80 years of age, the discount is more than Rs 5 lakh.
Invest in your kids name
After all, your kids can help you save taxes, much like your parents, but only if your child is an adult, that is, over 18 years old.
Upon reaching adulthood, a child is considered a separate person for tax purposes and will even be eligible to open a demat account and invest in stocks and mutual funds, including money donated by you.
“Long-term capital gains up to Rs 1 lakh per annum will be tax-free, while short-term capital gains up to Rs 2.5 lakh per annum will be tax-free,” Bansal said.
NPS is a good option
With low annual rates in India and the scary thinking of keeping your retirement money away for a long time, experts say NPS is considered an attractive investment option.
Bonsal added, “The reform of the NPS withdrawal regulation has done the opposite, making the pension scheme more attractive in their 50s.” The new rules open up a number of different tax-saving options for investors. ”
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