How to Save Tax by Investing Blogging Income

How can you save tax by investing your blogging income into wealth generating and tax saving resources. It is essential to save your hard earned blog money. Its closing of the tax year and here is how we  save tax.

These tips are mostly targeted at Indian bloggers and show how to save tax in the Indian tax systems. We learnt some great tax saving tips over the years and here they are for you to earn and save more blogging money in India.

Save Tax

1. Public Provident Fund (PPF)

This should be your first tax saving instrument where you can invest upto INR 1,00,000 every year and earn tax free income at 8.7%. The fund lasts 15 years and continues to compound money with huge money gains. You can continue to renew every 5 years after 15 years. You can open an account at post offices or select banks.

It is the best tax saving tool now and can get you maximum deduction under Section 80C upto INR 1 lakh.  Invest here first.

2. Life Insurance

If you are the primary earner in your family and professional blogging is your main job, then life insurance is a must to support your family incase of any life risk event. It is advisable to put money in term insurance (which is just like car insurance –  the yearly premium goes away if unclaimed), which allows you to get a huge life insurance cover.

It is advisable to get a life cover for upto 10-15 times your annual income. So if you earn INR 20 Lakh every year, get life insurance of at least INR 2 Crore. The younger age you apply at, the lower the premium. Choose a reliable company which will last 30 years and pay insurance when needed. You can get deduction upto INR 1,00,000 under Section 80CCC (if you have not filled your PPF limit).

There are other insurance plans which can give yearly income or even return your sum back after number of years, but the cover will be much lower than the term insurance plans, with much higher premiums.

3. Health Insurance

Its is a good idea to get health insurance cover. If you are young, lower is the premium. You can easily get a family floater group health policy to cover illness related cover for your whole family. Usually there is no pre-medical test under 45 years of age and you can get a cover of INR 10 Lakhs for a few thousand rupees and the whole process can be completed online. Since many illnesses get cover after 2-4 years, it is best to start early.

Health insurance premiums are deductable from income under section 80D upto INR 15,000.

4. Tax Free Bonds 

Theses bond are AAA rated bonds from big government companies which are rated safe investments in the long term. This year the government released a bonanza to investors by offering upto 9.01% tax free bonds for 20 years period. Imagine over 9% tax free income being generated every year – all tax free.

Remember such issues come at end of the tax year closing and last only a few days before getting oversubscribed. It is a super investment tool with no risk, and you need to keep a lookout for these every year.

5. Systematic Investment Plans (SIP)

While the stock market is at the top, buying stocks or mutual funds might seem risky. But regular blogging income investment in top mutual funds via SIP or systematic investment plans will generate huge wealth over a period of years. Its best to track best mutual funds, and invest in large cap diversified equity funds over 3-5 years to get back good returns.

SIP can be used to invest a small amount like INR 5,000 every month and harness the power of rupee averaging and compounding to generate wealth. It buys more units when the market falls and less when the market rises for the same amount and over time will increase returns. If you can hold units for over  12-18  months, there will be no tax on profits as it is long term capital gains.

6. Bank Fixed Deposits

These can offer upto 9% pretax returns and are a good way to park money which can be retrieved instantly. Bank fixed deposits are easy to create and redeem online, but the interest is taxed. You can park balance money here. It is better than earning a measly 3-4% in your saving account. Note that upto INR 10,000 interest income is tax free under section 80TTA.

Choose the correct time period before locking your money as they maybe penalties for premature FD closure. Also notice banks may have special periods like 444 days etc. for special higher rates.

7. Business Expenses

You can show all blogging expenses as business income and this will help to cover your profits. This will typically include hosting costs, domain name fees, buying themes/plugins, new software, laptops, gadgets etc.  It is essential to maintain all bills and receipts for proper record processing.

Eventually you pay taxes on profits, and there are many blogging expenses and depreciation costs which can be adjusted – so consult your chartered accountant on how to pay correct taxes on your business income.

8. Donations

Many donations are 100% exempt from income tax without any qualifying limit under Section 80G. If you earn enough though your blogging skills, you can donate to a specific charity, service organizations, relief funds, social causes etc. and claim deduction in income tax. This way you serve the community as well as save tax.

In the end … Its worthwhile hiring a chartered accountant, to correctly assess your blogging income and expenses and help you get proper tax relief, save taxes and file tax returns correctly.

How do you save taxes on your blogging income? Please share in comments.

19 comments on “How to Save Tax by Investing Blogging Income

  1. Raghav says:

    It was nice knowing that you can generate more income through your online income. Thanks for this wonderful article and letting bloggers like us know about the same

  2. Isaac says:

    Nice thinking Chandra, i just started paying my health insurance with my blog income, i have only done it twice but it has reduced burden a little bit. i love blogging

  3. Rohit Yadav says:

    Well, donating your income will save tax but it also of no use. I will rather pay the tax and spend rest of the money, how i want.

  4. Vishal Mishra says:

    It’s nice i will really try it.

  5. YOGI INFOWAY says:

    Awesome thinking…..

  6. ruman says:

    Thank for your nice article and free learning . It is essential to save our hard earned blog money.How can i improve blogging income?

  7. Prateek Pandey says:

    I have been investing my money in PPF from a longs and it’s surely a best way to save income tax.

  8. SSDN Technologies says:

    Hi, Thanks for sharing the blog, this is a nice n simple way to get into tax investing its quite easy too.

  9. Josh says:

    So spending can actually help you save money on taxes? This is quite new to me. But I can see how this can work. Let us try and see what will happen.

  10. Raman Bathina says:

    Nice article chandra. I’ve one doubt if we got much money from Adsense then we need to pay tax for that or not.

  11. Abuzar says:

    That’s is the first thing very blogger should now… so that they can simply understand and plan their blogging income… thanks for sharing this blog post.

  12. Navneet says:

    Thanks you for the tax saving tips , but one must earn enough from blogging to save taxes :)

  13. Kannan says:

    I am not a tax paying blogger, but in the future, surely it will help me lot.

  14. Motoring PRO says:

    Thanks for this well structured article. I’ve been looking all over the web for something like this.

  15. souvik says:

    thanks for this article. its really helpful to save your taxes…

  16. Castor says:

    This is a good article on how to invest your blogging income. I would have never thought of some of these–great tips. I want to learn more about investing!

  17. Anuj Sharma says:

    I think the rule of the game changes when one gets all the income under a company account, correct? Best wishes, Anuj

  18. Pradeep Kumar says:

    These tax saving tips are not only for blogger but for everybody.

  19. Daniel Clark says:

    Great tips for saving tax, it’s really helpful for every blogger. Thanks for sharing..

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