How to Save Tax in Year 2020

July 21, 2021

While working towards your financial goal, tax saving plays a vital role here. A higher tax outgo might be due to the poor money management, which makes it tougher for you to meet you to meet your financial goals. Also, the money you take home significantly decreases because of inefficient tax planning which inturn might affect your regular financial commitments. As we approach to the end of the financial year 2019-2020, it is pragmatic to have a tax saving plan by now. Let us look at some ways that might help us to save tax in year 2020.

Go through the Popular Tax Saving Options First.

Before you get into the lesser-known tax saving measures, make sure that you exhaust the popular options first. If you happen to be looking for investments that provide an opportunity for tax saving, public provident fund, equity linked savings scheme, five year fixed deposits etc can get you the benefit under Section 80C of income tax act.

Insurance can also provide you with the opportunity to save tax. Here you can choose to either go for traditional insurance plans or get a term policy that would avail tax-deducted benefits. Home loans also provide you with benefits on tax. In conclusion, it is always a better idea to first go through what the usual ways are.

Taking a Home Loan Before March 2020 to Avail Additional Tax Benefits

It is advised to take a home loan before march 2020 if you’re planning to buy a house. A tax benefit of 1.5 lakh is provided if you get a home loan in the financial year 2019-2020. So if you are planning to buy a house, you should consider getting a home loan sanctioned before march 2020.

 Tax Deduction through Claiming Medical Expenses for Parents

Buying a new health insurance policy for your parents or senior citizens can be a costly affair. If your parents or relatives {senior citizens} don’t have a health insurance policy you can instead claim a tax-deduction benefit of up to Rs 50,000 against payment of medical expenses for your parents. However, you should keep all the medical bills safely as proofs to claim this tax deduction benefit.

Avoiding Long-Term Payment Commitments to Save Taxes

As you invest in  tax-saving instruments, avoid investing in products that require a very long-term commitment, unless they are in sync with your financial plans. For example, most of us choose to invest in traditional insurance policies as a last-minute tax-saving measure. After a few months, we don’t want to continue the policy due to whatever reasons, but we find it difficult to opt out. Hence, rushing such decisions that affect your financial decisions, one must make sure that he/she is not making any rash decisions to save tax. It is always advised to consult your financial adviser before making such decisions so that you are fully aware of the options that you have and also what suits you the best. It is important to find a balance between tax-saving and achieving your financial goals in time.

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