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Myth about Tax Deductions

By: Makemymoney

We are aware of tax and the best part is we are running in the months of paying tax. We often notice people talking about tax and tax saving schemes. But how many times our approach seems positive. Why we always just talk about investments but in the end we fail to implement our investment plans drastically. Let’s learn more about tax saving investments and clear myth about tax deductions.

I have just started earning, why should I save?

Many of us always live with this myth that because I have just started earning and my salary is low so I won’t be able to do the saving. Don’t say it like this in fact young age is the best time to start with your saving. This is the time of your life when you are young, active and looking forward to various challenging opportunities. So promise yourself that you will start doing financial planning by investing in low-cost schemes.

PF Contribution goes in EPF account is tax deductible:

Clear your doubt, the contribution in EPF account as an employee is tax deductible but the share of the amount contributed by an employer is non-deductible. This is the major reason of misconception and due to this we often look after for other options of investments. Considering that we have made it with EPF account which is enough.

Total house rent is deductible:

Another misconception or a myth about the tax deduction. Deduction of rent is completely based on your salary’s House Rent Allowance components. In case, there is no HRA provision in your organization then rent amount can be claimed under section 80GG.

Total EMI amount of home loan is not tax deductible:

This misconception leaves the room for confusion. Don’t live with this myth that your Home Loan total EMI costing is tax deductible. It’s just a principal repayment amount that’s eligible for tax deduction. And the deduction is up to of Rs. 1, 50,000/- per annum under section 80C.

Why should I make the investment right now with limited wages?

It’s not an applicable statement for any of the person who is earning or just started earning. But still, we can expect such sort of statements from fresher, not from those who have been earning and experienced. But again it’s a misconception that there is a scheme which can only be afforded by those who are earning good surplus income. But this is not true there are many schemes that will necessarily not burn a hole in your pocket.

There are many investment plans that are good from an investment perspective like health insurance, mutual fund, term life insurance etc. Also, there are many government schemes which are tax deductible like PPF, fixed deposit, NSC etc.

 

So, folks, it’s all about your approaches. Misconception and myths are endless and keep us distracted from knowing the truth. And the truth is, empower yourself by educating and seeking for right information through knowledge. Learn more about investment plans and start investing at a young age.

 

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