If you are one of those who push their tax saving investments to the last minute, or are first-time jobbers, here is a reminder that the final date to invest and reduce tax liability is not far.
The tax season can be a bit stressful for those who joined the job market for the first time as they might have just begun to understand the taxation process.
It’s not a daunting task, if you figure out the basics right, which will come with reading and gaining knowledge about different tax-saving products. For starters, you can save tax upto Rs 1.5 lakh under Section 80C of the Income Tax Act. However, there are other sections under which you can invest, create some wealth and save taxes.
Here are some popular tax-saving investments that can help you:
1. Equity Linked Saving Scheme (ELSS): This is one of the most popular tax-saving mutual fund that you can opt for. It is the shortest option that comes with a three year lock-in period. You can save upto Rs 46,800 in tax under Section 80C.
2. National Pension Scheme (NPS): This is regarded as a long-term investment plan that can help you with tax-liability. You can save tax under three different sections--firstly, contributions of up to Rs 1.50 lakh can be claimed under Section 80C; there is an additional deduction of up to Rs 50,000 under Section 80CCD(1b); and if the employer puts up to 10% of the basic salary of the individual in the NPS, that amount is also not taxable.
3. Public Provident Fund (PPF): PPF is one of the traditional methods to save tax under Section 80C. It comes with 15 year lock-in period and tax-free interest. It is a safe, flexible and easy investment.
4. Sukanya Samriddhi Yojana: If you have a daughter below 10 years of age, you can take up the scheme and save tax. The interest rate gets changed as it is linked to the government bond yield. You can open an account for a maximum of two daughters and the combined investment in the two accounts cannot exceed Rs 1.50 lakh in a year.
5. Unit-Linked Investment Plans (ULIPs): This is an investment-cum-life cover plan and you can save tax under Section 80C. Also, they have a lock-in period of five years and the income from ULIPs is tax-free under Section 10 (10d).
6. National Saving Certificates (NSCs): It is a fixed income investment scheme like PPF or a post office FD. They come with two fixed maturity periods—five and 10 years. You can save tax under Section 80C.
7. Bank Fixed Deposit (FD): Under this, deposits made under five years FD only qualify for availing tax benefit. It is one of the safe tax saving instruments that give guaranteed return. You can save tax upto Rs 1 lakh under Section 80C.
These investments can reduce your tax liability. However, it is advisable to plan taxes in advance so that you don’t make hasty decisions that make a dent on your financial planning.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
