Best Tax Saving Options & Plans | Tax Saving Investments
ELSS Tax Saving Mutual Funds
ELSS (Equity Linked Saving Scheme) is a kind of equity-linked mutual
fund. The ELSS enjoys tax benefit under section 80C of the income tax act. ELSS
funds have a lock-in period of 3 years,
the lowest amongst the options available. You can invest up to Rs 150,000 in ELSS funds either as a lump sum or
through SIP.
Public Provident Fund (PPF)
PPF (Public Provident Fund) is
a good option if you are looking for an option with certain returns. Currently, PPF investments earn interest at the
rate of 7.10%. The PPF matures in 15 years which is extendable by 5 years at a
time. You can also partially withdraw from the PPF balance from the sixth year
of deposit. You can invest in PPF through a bank or Post Office.
Also read: Things you should know about PPF account
Also read: Things you should know about PPF account
Employee Provident Fund (EPF)
EPF (Employee Provident Fund)
is a retirement saving instrument. For salaried employees, this is a forced
saving which is eligible for deduction under section 80C. It is typically
deducted from your salary every month and it includes 12% of your Basic salary
+ DA. The interest on EPF is decided by the government every year.
National Savings Certificate (NSC)
NSC (National SavingsCertificate) is a small saving scheme by the government of India. The Scheme is
specially designed for Government employees, Businessmen and other salaried
classes who are Income Tax assesse. The
NSC gives tax benefit under section 80C. You can invest in NSC via your local
post office.
Sukanya Samriddhi Account
Sukanya Samriddhi Account is
a government-backed saving scheme
targeted at the parents of girl children. The objective of the scheme is to
promote the welfare of girl child. A natural/ legal guardian on behalf of a
girl child can open the account. The minimum amount of deposit is Rs 1000 per
annum. You can avail income tax benefit under section 80C for an investment
of Rs 1.5 lakh. This scheme encourages parents of the female child to build a fund for their higher education and
marriage expenses.
National Pension Scheme (NPS)
NPS (National Pension Scheme)
is a voluntary defined contribution pension system in India. NPS
is a low cost, tax efficient and flexible pension scheme started by Government of
India for the unorganised sector and
working professionals to have a pension after retirement. You have to contribute
a minimum amount of Rs.1000 per year. You can choose from different NPS plans
as per their risk profile. You can avail income tax benefit under section
80C for an investment of Rs 1.5 lakh in your NPS account. You are also allowed
an additional deduction of Rs.50,000 from your gross taxable income for
investing in NPS under Section 80CCD(1B). This deduction is over and above the
maximum tax deduction of Rs. 1.5 lakh under Section 80C.
Bank Fixed Deposits (FD)
Bank fixed deposits (Bank
FDs) or tax saver fixed deposits are the safest option for investment. These
FDs have a lock-in period of 5 years. Investment in these FDs qualifies for
deduction under section 80C of the Indian Income Tax Act, 1961. You can claim a
deduction of a maximum amount of Rs.1.5 lakh by investing in these bank fixed
deposits. The returns on these FDs are guaranteed and you will get a fixed
return after the maturity. However, the interest earned is taxable. Presently, different
banks offer different interest on these FDs.
Life Insurance Premium
Buying life insurance policy
is a good way of saving tax. Life insurance is the most common and effective
tax planning instrument in India. The policyholder
is eligible for tax benefits under section 80C for the premium paid. Other then
the tax saving, life insurance also ensures that your family will get financial
support when you are no longer around to care for them. There are various
life insurance plans like term plans, Endowment plans, ULIPs, and money back plans.
Health Insurance
Health insurance is
popularly known as Mediclaim. It covers the cost
of an insured individual's medical and surgical expenses. Health insurance is an important investment and hence you can
enjoy tax benefits under Section 80D of the Income Tax Act.
Also read: 10 Tax saving options other than Section 80C
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Best Tax Saving Options
& Plans | Tax Saving Investments
Very good and detailed information!
ReplyDeleteThanks Neeraj, I'm glad you liked it.
Deletethanks for sharing information about fixed deposits and insurance with detailed info.
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