If you have an education loan running, paying it back should be your priority. You get a tax benefit under Section 80E for paying the interest back. Also, financial planners suggest prepaying a loan after the moratorium period rather than investing as there will be no prepayment charges. If this your first job and your basic is higher than `15,000, you may even consider opting out of the EPF and instead pay back the loan. It is better better to pay back a loan where you are paying 12-13% interest than invest in an instrument that fetches you 8.7% returns. Prepaying in the earlier years is a tax-efficient strategy as well, when the interest component is higher. This is because there is no cap on how much you can claim under Section 80E. However, you have a time limit of eight years to claim this benefit.
Another benefit that people living with family miss on is HRA. Even if you are living with parents, you can claim a deduction for house rent, provided your parents own the house. They will be taxed on this, but can claim a flat 30% of the annual rent as deduction for maintenance expenses such as repairs, insurance, etc., irrespective of the actual incurred expenditure. So, if you pay `12,000 a month, your parents will have to pay tax on only `1 lakh. Even if this earning is above the the basic `2.5 lakh exempt limit (`3 lakh if they are above 60 and up to `5 lakh if above 80 years of age), you can make it tax-free. The amount above the basic exemption limit can be invested in their name under tax-free Section 80C options
Top 10 Tax Saver Mutual Funds to invest in India for 2016
Best 10 ELSS Mutual Funds in india for 2016
1. BNP Paribas Long Term Equity Fund
2. Axis Tax Saver Fund
3. Franklin India TaxShield
4. ICICI Prudential Long Term Equity Fund
5. IDFC Tax Advantage (ELSS) Fund
6. Birla Sun Life Tax Relief 96
7. DSP BlackRock Tax Saver Fund
8. Reliance Tax Saver (ELSS) Fund
9. Religare Tax Plan
10. Birla Sun Life Tax Plan
Invest in Best Performing 2016 Tax Saver Mutual Funds Online
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