The following article is an initiative of NSE FInWiz and is intended to create awareness among readers
Saving income tax has never been so easy. Today, we will take you through the five best ways to save tax under section 80C of the income tax act.
First, let’s look at pension provident fund. A simple option to save tax which will help you retire in peace. By investing a maximum of Rs 1.5 lakh every year for 15 years in PPF, at an average interest rate of 7.6 per cent, the corpus becomes nearly Rs 42.5 lakh
Employee provident fund and voluntary provident fund are transparent options which can be availed by salaried employees. Additional to EPF, VPF is also an excellent tax saving option that helps the subscriber amass a sizable savings portfolio and provide a long term savings option.
Tax saving fixed deposits are also suited for taxpayers. The maximum amount is, of course, Rs 1.5 lakh in the financial year and these deposits have a lock-in period of 5 years.
ELSS is riskier than the fixed income alternatives available for tax-saving under section 80C but has the shortest lock-in and offers the potential of growth via equity. Young earners who are starting to save for retirement can look at ELSS to achieve this as well as save tax.Last but not the least, retirement mutual funds. This is a tax saving option that ensures that your retirement dreams are well met. If you've established your goals, next, look for funds with low expenses, consider an auto-pilot solution, and determine what type of investment and withdrawal strategy you are going to use.