Smart ways to use your Tax Return Money

Use your tax refund amount to settle debt, reinvest or build a retirement corpus. Being smart about your money can have the biggest impact on your finances. Here’s a step-by-step guide on how to use your tax return money.

While filing for Income Tax Return (ITR) is mandatory in India, there are ways to maximise your returns and utilize those funds. A delay in filing can leave you with a penalty and impact your loan or Visa applications. Whether you are filing personal or a business ITR, take a look at these money saving tips:

1. Stash it away in a Savings Account:

Once you get a tax refund, deposit the money in a Savings Account. This prevents unnecessary expenditure and keeps enough room to withdraw funds during emergencies.

2. Pay off debt:

Use your tax refund amount to pay off debt. It’s a good idea to pay Credit Card dues or repay any other debt, thereby reducing your financial burden.

3. Fund your retirement:

Invest your tax return amount in the National Pension Scheme (NPS), in a Fixed Deposit (FD) or in any other pension plan and benefit from compounded interest. This is a great way to save money and plan a sizeable retirement fund.

4. Savings for children:

Invest your tax refund money in your child’s education or in a comprehensive health plan. Some of the best investment plans offered by ICICI Bank are the Systematic Investment Plan (SIP), Sukanya Samriddhi Yojana (SSY), debt fund and Public Provident Fund (PPF).

5. Invest in the stock market:

Another option is to invest your tax refund in the stock market. Pick individual stocks or select an index fund that moves with the market and minimize your risks.

6. Prepay your mortgage:

When you prepay the mortgage, you make extra payments on your principal loan balance, thereby cutting down on the interest rate. If you have a Home Loan or any existing loan with ICICI Bank, you can opt for the prepayment option and save money for the long run.

These are some of the ways you can put the tax return to good use. If the tax refund amount is huge, use it to renovate your home, buy life insurance, start a business or pay for your kids’ higher education.