Finance

Do You Know Your Tax Slabs? Review Your Investment Plans Now!

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Your investment plan can help you earn money as well as save taxes. Furthermore, you can ensure better returns by creating a portfolio that suits your tax slabs.

If you are wondering how to create an investment plan based on your taxability, then read this article.

While creating an investment plan, one thing that you need to keep in mind is your taxability. You need to understand the various tax slabs. That would help you to create a portfolio that can help you save taxes as well as earn profits.

The total income derived after deductions and exemptions is taxed based on the income tax slabs. Furthermore, every taxpayer is entitled to a basic exemption limit. This exemption limit differs from one individual to another based on their age.

Let’s take a look at the various income tax slabs-

Income Tax Slabs FY 2019-2020 for Individuals Below 60 Years of Age-

Income Tax Rate
Up to Rs. 2.5 Lakhs Nil
Between Rs. 2.5 Lakhs and Rs. 5 Lakhs 5%
Between Rs. 5 Lakhs and Rs. 10 Lakhs 20%
Above Rs. 10 Lakhs 30%

Income Tax Slabs FY 2019-2020 for Individuals Between 60 to 80 Years of Age-

Income Tax Rate
Up to Rs. 3 Lakhs Nil
Between Rs. 3 Lakhs and Rs. 5 Lakhs 5%
Between Rs. 5 Lakhs and Rs. 10 Lakhs 20%
Above Rs. 10 Lakhs 30%

Income Tax Slabs FY 2019-2020 for Individuals Above 80 Years of Age-

Income Tax Rate
Up to Rs. 5 Lakhs Nil
Between Rs. 5 Lakhs and Rs. 10 Lakhs 20%
Above Rs. 10 Lakhs 30%

Now that you know the income tax slabs, here are a few ideal investment plans based on different categories-

For Single Individuals

Most single individuals below 30 years are not serious about saving or investments. However, this is the right age to start investing. By investing from a young age, a person can accumulate a huge corpus by the time he/she retires.

One of the best investment options at a young age isULIP. A ULIP is an insurance plan that allocates a part of the premium for investments in equity and debt instruments. Whereas, the other part of the premium is allocated for life insurance. Furthermore, the premium paid towards such a policy is eligible for a tax deduction under Section 80C.

For Married People

A married person has many financial responsibilities. It is of utmost importance for such a person to consider investing in term insurance. Term insurance provides a sum assured in case a policyholder passes away during the tenure. A policyholder can claim a tax deduction on the premium paid towards such a plan.

A married individual should also consider purchasing a family floater health insurance. Premium paid towards health insurance is eligible for a tax deduction under Section 80D.

People Who are About to Retire

Most people meet their financial goals by the time they are about to retire. However, they can financially secure their post-retirement life by investing in a Guaranteed Savings Plan. Furthermore, people in this group should re-look at their health insurance. This is because health risks increase significantly in this age.

Read more: 5 Factors to Consider When Applying for Credit Cards in Canada

In conclusion, it is of utmost importance to create a financial plan based on your taxability and age. This way, you’ll be able to save taxes and earn profits.

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