Tax filing season has started, it is always advised to file
tax at the earliest and get back the tax refund. Rupee today is more valuable
than rupee tomorrow. Mentotax has recommended the following ways to utilise the
tax refund.
Boost the Emergency Corpus:
It is always recommended to have emergency corpus equivalent
to 6 month salary/expenses. Emergency corpus plays a vital role in financial planning.
Every year our salary grows, so you can utilise the tax refund to boost the
emergency corpus.
Pay Credit Card Bills:
Employ your tax refund to pay off the credit card dues. Using
credit cards will never help you to attain financial freedom. It eats your
future income and savings. Mentotax advises to use the tax refund to pay off
the credit cards.
Park Your Funds in PPF/NPS/ELSS:
You can park the tax refund in any of the tax saving instruments
like PPF/NPS/ELSS. Tax Refund is like extra income to you. Mentotax recommends utilising
the funds to reduce the tax burden and thereby increase the return from
investments. Your direct return from investments will be up to your tax slab
plus return from (PPF/NPS/ELSS) investments.
If you are in 20% Tax bracket and parking funds in PPF, your
return from investment will be (20% + 8% =28%).
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