As the end of financial year draws near, most people remember their taxes then they start hunting down options to save as much as possible. People make the wrong investment decisions at the last minute.
These 5 options help you to save your tax
1. Equity Linked Saving Schemes (ELSS)
ELSS investment option are very effective and specially made for saving taxes. It has given you very high returns compare to PPF. It is one of the two tax saving schemes in India that are based on equity. The other scheme is ULIP. ELSS can be done through tax saving SIP, it is the one of the main advantages of ELSS.
Under Section 80C of the Income Tax Act, you can earn tax deductions on investments up to Rs. 1.5 lakh per annum. Also, ELSS funds come with a lock-in period of just three years. This is much lesser than most other tax saving options available to you. This means you have the freedom to move your funds more efficiently based on your financial requirements.
2. Public Provident Fund (PPF)
Public provident fund is the most popular investment scheme for investor when it comes to tax saving. PPF is a safe investment with zero risk plus its also provides decent returns if not very attractive.
Investor can avail loan facility against their PPF investment. Each year, you can save up to Rs. 1.5 lakh by investing in PPFs. This comes under Section 80C of the Income Tax Act.
3. Unit Linked Insurance Plans (ULIPs)
Unit linked insurance plan (ULIPs) is a hybrid product, a combo of investment and insurance. Being on insurance, this means that a part of the premium you pay is utilized to provide insurance cover and the remaining is invested in various equity and debt schemes.
Investment in ULIPs is eligible for tax benefit up to a maximum of Rs 1.5 lacs under Section 80C of the Income Tax Act
4. New Pension Scheme (NPS)
New Pension scheme is one of the very few options for tax saving. The investor needs to deposit a minimum amount of Rs. 500 and a minimum of Rs. 6,000 every year. Investors have the choice to opt for allocation of equity, bonds, and gilts.
5. Sukanya Samriddhi Yojana Returns
This is the very best option for taxpayers who is having daughter below 10 years. The interest rate of Sukanya Samriddhi Yojana Returns is 8.1% but it still higher than what PPF offers. Interest rate earned is tax free and there is an annual cap of Rs 1.5 lakh on the investment.
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