Did you take a second look into your payslip!!!!

Almost all salaried employees would have got this thoughts atleast once in their mind.The thought of investing pops up in our mind only when we see our pay slips and get heart attack to see the deductions made as Provident Fund (P.F) and most important Income Tax (I.T). Many of us do not really analyse our payslips and take few seconds to see the deductions made.

So what are these deductions actually?
Can we do something to minimise it?
Can we plan our investments accordingly?
Do we need to invest mainly to get the tax exemption?

The above are few questions which will crop up and which ought to be understood by everyone. One need not be a Finance graduate and professional to know these finance related terms. Let us take a look on each of the above.

So what are these deductions actually?
The most common deductions are Provident fund ( which is 12 percent of our basic salary), Income Tax deduction, professional tax, Gratuity, ESI etc.,
Can we do something to minimise it?
Yes we can!!!. Though we cannot reduce our P.F deduction , we can very well minimise the I.T deductions by structuring our salary properly. 
Can we plan our investments accordingly?
Again it is Yes. We can minimise our IT deductions if and only if we plan our investments sensibly. To mention a few ,Life insurance, mediclaim insurance, Public Provident Fund(P.P.F), National Savings Scheme (N.S.S) etc., 
Do we need to invest mainly to get the tax exemption? 

This is the wrong thought which prevails in everyone's mind.Do not go for investment with a mind set to get tax exemption. Investments, be it  Rs.10,000 or Rs.1,00,000 should be done only keeping the long term and short term benefits in the mind.

I have seen many who gets Rs.25,000 deducted as P.F opts for Rs. 75000 in the LIC cover thus summing up Rs.1,00,000 for 80C exemption. Point to note here is opting for Rs.10,000 or Rs.20,000 more in LIC cover would have rendered long term benefit. Though your 80C restricts you to Rs.1,00,000 only.

So never invest with the sole objective to get tax exemption.

If these are the things which need to be avoided and seen , then how to plan for your investment!!!!
Watch this space for more