Best Tax Saving Options & Plans | Tax Saving Investments

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

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

Also read: How to file your income tax return (ITR) online

Also read: Documents needed while filing income tax return in India

Also read: Aaykar Setu App | An App by Income Tax Departmnet

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Best Tax Saving Options & Plans | Tax Saving Investments