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AXE YOUR TAX #2

Tax Planning should be an integral part of your overall Financial Planning, irrespective of your age.

Starting a series on "Tax Planning for Different Age Groups".

🔸Here is a 🧵on Everything you need to know about Tax Planning in your 20s⤵️

🔸Tax Planning in your 20s

▪️20s are the best time to start investing for your future - you are young and have lesser responsibilities. ▪️However, this is also a time when you have just begun earning and may know very little about investing.
 ▪️Hence, it makes sense to stick to such Tax Saving Instruments that are simple yet effective.

Let's take a look at a few such instruments⤵️

🔹Equity Linked Savings Scheme (ELSS)

▪️ELSS Funds give you a dual benefit of Tax Saving with the growth potential of Equities.
▪️ELSS Funds have the shortest lock-in period of just 3 years.
▪️Eligible for deduction up to ₹1,50,000 under section 80C of the Income Tax Act,1961


🔹Health Insurance

▪️Health insurance plans do not stop with just helping you save big on medical expenses; they offer attractive Tax Benefits too
▪️Your Health Insurance premium is tax-deductible under Sec 80D of the IT Act.







🔹Life Insurance

▪️You can get a term insurance plan at a low premium in your 20s and can change the nominee or increase the cover amount at key milestones in your life later. 
▪️Life insurance plans are eligible for deduction under section 80C upto ₹ 1,50,000.
▪️The benefits received from life insurance plans are also tax-exempt, subject to conditions under section 10(10D).


🔹House Rent Allowance (HRA)

▪️You can claim HRA under section 10(13A) of the IT Act. The exemption amount is the least of the below,

- HRA received from your employer
- Actual rent paid (-) 10% of salary
- 50% of your salary if you live in a metro city,40% for non-metro city


🔹Public Provident Fund (PPF)

▪️PPF gives returns of 7.10% with the entire amount being non-taxable. 
▪️However, it comes with a lock-in period of 15 years.
▪️Investment in PPF is eligible for deduction from Taxable Income under section 80C up to ₹ 1,50,000.



🔹Education Loan

▪️Your 20s are also a good time to pay back your education loan
▪️You can get a deduction on the interest paid portion of your education loan for a max of 8 years or till the time the interest on the loan is paid(whichever is earlier) under Sec 80E of the IT Act


That's the end of the thread!!

This is just the first 🧵of the Series "Tax Planning for Different Age Groups". More such threads will follow - 
🔸Tax Planning in your 30s
🔸Tax Planning in your 40s
🔸Tax Planning in your 50s

So, stay tuned!!!
THANKS FOR READING....🔐
 👦A.SIVASANKARREDDY,

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