Tax planning in your 20s

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

ЁЯФ╕Here is on Everything you need to know about 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

ЁЯФ╣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

ЁЯФ╣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.

ЁЯФ╣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).

ЁЯФ╣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

ЁЯФ╣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.

ЁЯФ╣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

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