Smart Ways to Use Your Tax Returns 2024.

While filing an ITR (Income Tax Returns) you can utilize those returns in various investment plans, or debt repayment plans. Use your tax fund to settle debts, pay off your mortgage, education loan that will save your money in the long run and reduce interest rates or investment plans for your children or a retirement plan for yourself and your family.

Here is a systematic & step by step guide to use your income tax returns wisely. 

1. Deposit it into Savings Account: 

After you receive your tax refund, depositing the returns in a Savings account is the safest option as it prevents an individual from unnecessary expenses and impulsive purchases. Not only the amount remains safe but you do receive a certain percentage of gains on the deposited amount which you can easily withdraw during any emergencies. 

2. Pay off debt: 

You can use your tax returns to pay off your debt , be it credit card bills, education loan, home loan or any other loan for that matter would be a great decision. Paying off your debt timely ensures a good cibil score while later on helps you whenever you are in need of any kind of loan.  

3. Build Your Retirement Fund: 

Investing those tax returns in a FD (Fixed Deposits), SIPs (Systematic Investment Plans) or pension schemes such as NPS (National Pension Scheme) will prove to be very beneficial as these investments do provide  compound interests. 

4. Save for children: 

An individual can opt for investing these returns in their children’s education plan or saving these returns in their account/ long term invest schemes such as Sukanya Samriddhi Yojana, SIPs (Systematic Investment Plans) or debt funds, PPF (Public Provident Funds) 

5. Purchase Stock Market Investments: 

Investing the returns into stock markets by selecting stocks with high dividend or returns history or selecting individual Index Funds that minimise the investment risk in the market. 

6. Make Advance Mortgage Payments: 

When you start repaying the mortgage you can make extra payments on your principal loan balance which helps in reducing the interest rates. In case you have any home loan or any mortgage loan you can select the prepayment option in your respective banks and save your money in the long run . 

These are a few ways you can use your income tax returns wisely for a better future and avoiding high interest loans in the long run. If the returns amount is very high you can use it for funding your child’s higher education as well as primary options such as renovating your house or starting your own business

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Author- Ayush Naik  

Ayush Naik is an expert in personal finance with an MBA in Finance. With over five years of experience working alongside stock market traders, Ayush has a deep understanding of market dynamics and investment strategies. His practical insights and analytical skills have helped many individuals navigate the complexities of financial planning and investment. Ayush’s professional background and commitment to educating others make him a valuable contributor to our personal finance blog.