Tax saving investments are done to reduce the tax liability that a person is liable to pay. If you have not made any investment by now, there is nothing to worry about. There are many tax saving options present in the market that help to reduce the tax liability. As per section 80C of Income Tax Act, a person can have the tax savings of Rs. 1.5 lakh in a financial year. A public provident fund, national savings certificate, NPS scheme, employee provident fund, and national saving certificate are some of the tax saving investments available for you under section 80C of Income Tax Act. Check out some of the best 9 last-minute tax saving options that will help you to reduce the tax liability:
1. Public provident fund: PPF or public provident fund is a saving scheme managed by the Indian government. Generally, people invest in a public provident fund for long-term retirement savings. It is quite easy to open a PPF account. You can do so by visiting any branch of the bank that is near to you or post office. Any person can open a PPF account whether salaried or non-salaried. If you want to avail tax exempt-exempt-exempt benefit then you should invest in PPF account for 15 years lock-in period. Public Provident Fund is one of the best tax saving investments. It is known as a savings-cum-tax-saving instrument in India.
2. Unit linked insurance plans: Unit linked insurance plan or ULIP is one of the best tax saving investments. It is a product from insurance company or insurer. It is the combination of insurance and investment. There are dual benefits of investing in ULIPs. A person is eligible to save tax as per section 80C of Income Tax Act. Also, as per section 10(10D) of Income Tax Act, the person gets a tax exemption on the maturity benefit received. Generally, the lock-in period for unit linked insurance plans is 5 years. If you want to earn good returns then you should redeem your money after the time period of 7 years. The insurance company pools money from various policyholders. The portion of the pooled money is used for providing the life cover and the remaining amount is invested into debt, equity, and money market instruments.
3. National savings certificate: National savings certificate or NSC is a known saving instrument that provides guaranteed returns and tax benefits. According to section 80C of Income Tax Act, the investment that a person makes in the national saving certificate is exempted from tax. It is one of the popular tax saving investments. The interest that is earned during a year rolls back to the principal. The interest is not paid that is why it is not taxed. At the time of maturity, the interest that is earned in the last year is taxable. It is the best option for making an investment as it helps to save tax and earn a good rate of interest. You can invest according to your wish as there is no limit on this. As per section 80C of Income Tax Act, you can save upto Rs. 1.5 lakh.
4. Post office time deposit: Post office time deposit is one of the known tax saving investments. If you are not able to find an investment option at any time then in such a situation you should visit a post office near to you to invest in a post office time deposit scheme for a period of 5 years. It is similar to fixed deposits which also has a 5 years lock-in period. Any person can open an account by visiting any branch of the post office in India. It is important that you know that the interest that you earn in this scheme is completely taxable.
5. Senior citizen saving scheme: It is one of the best tax saving investments for those who are retired or have reached an age of 60 years. In senior citizen saving scheme, you can invest up to Rs. 15 lakhs. Though, as per section 80C of Income Tax Act, you are eligible to save your tax up to Rs 1.5 lakh. You can also open your senior citizen saving scheme account in case of voluntary retirement at the age of 55 years provided that you opened the account within a month of the date of receipt to avail benefits of the retirement.
6. National pension scheme: This scheme is generally called as NPS scheme. You are eligible to receive the tax benefit of Rs. 2 lakh including Rs. 1.5 lakh as per section 80C of Income Tax Act and Rs. 50,000 as per section 80CCD (1B) of Income Tax Act. In order to get this benefit, you will have to invest in NPS scheme tier 1 account. You can make this investment via online medium by visiting the website of NPS. The distribution of money is done in percentage when a person takes the retirement, where the money is given in percent partially in lump-sum and the remaining money is given as an annuity. The distribution percent depends on the age of the individual whether the individual wants to take the retirement before the age of 60 years or after the age of 60 years.
7. Bank fixed deposit: If you want to avail tax benefit then you should invest in bank fixed deposits for 5 years. It is one of the best tax saving investments as it provides guaranteed and safe returns. The interest that is earned in bank fixed deposit is deducted at source and taxable.
8. Principal loan repayment: If you have taken a loan in order to purchase a home for yourself then in such a situation you should not worry as you can easily claim the principal repayment of the loan up to Rs. 1,50,000 within the limit mentioned in section 80C of Income Tax Act. You have to be sure that the loan should be availed for the construction or purchase of a new house and the purchased or constructed property should not be sold to anyone within the time period of 5 years from the time of possession of house property.
9. Employee provident fund: Employee provident fund or EPF is a deduction that is made automatically from your salary by your company is covered by the extent of section 80C. You should check the slips of your salary and calculate the amount of tax that is getting saved through this investment option. A person can contribute the complete basic salary towards the employee provident fund account and save more tax under VPF or voluntary provident fund and earn good returns according to the discretion of EPFO made on annual basis. Employee provident fund is one of the famous tax saving investments.
Conclusion:
People look for tax saving investments in order to reduce their tax liability. Many tax saving investments are present in the market to reduce the tax liability. You can have the tax savings of Rs. 1.5 lakh in a financial year according to section 80C of Income Tax Act. You need not worry if you have not made any investment by now as there are many tax saving investments present in the market that you can check and choose as per your requirement. You can make the investment either via online medium or offline medium. A person needs minimum 10 minutes and maximum days in order to make an investment.
Public provident fund, national savings certificate, post office time deposit, unit linked insurance plans, NPS scheme, senior citizen saving scheme, bank fixed deposit, employee provident fund principal loan repayment, and national saving certificate are some of the last-minute tax saving investments present in the Indian market to reduce the tax liability. If you have not made any investment by now then you can refer to these tax saving investments in order to reduce the amount of tax liability. It is important that every person knows and understands as how to save tax by investing in the best tax saving investments.
PPF or public provident fund is a saving scheme run by the government of India. You can get your PPF account opened by visiting the post office or any branch of the nearby bank. It is one of the best tax saving investments done to avail tax exempt-exempt-exempt benefit. In order to avail tax benefit, you should invest in bank fixed deposits for the time period of 5 years. It is also one of the best tax saving investments as it provides guaranteed and safe returns. The interest on bank fixed deposit is deducted at source and taxable. You should not worry if you have taken a loan for the construction or purchase of house property as you can claim the principal repayment of the loan up to Rs. 1,50,000 within the limit of section 80C of Income Tax Act. It is important to assure that the loan that you have taken should be used for the purchase or construction of new house property and the house property should not be sold to someone within the time period of five years from the possession of the house property.
In national pension scheme, you are eligible to get the tax benefit of Rs. 2 lakh. The tax benefit of Rs. 2 lakh include Rs. 1.5 lakh according to section 80C of Income Tax Act and Rs. 50,000 according to 80CCD (1B) of Income Tax Act. You should invest in NPS scheme tier 1 account to get such a benefit. You can make an investment in this scheme by visiting the official NPS website. This is one of the most known tax saving investments that is worth investing. The employer automatically deducts your salary for employee provident fund. The investor can contribute the whole basic salary towards EPF or employee provident fund and save more tax under the voluntary provident fund. Employee provident fund is one of the popular tax saving investments.
If you are retired or have reached an age of 60 years then senior citizen saving scheme is one of the common tax saving investments. According to section 80C of Income Tax Act, you are eligible to save your tax up to Rs 1.5 lakh. You can get your account opened in case of voluntary retirement at the age of 55 years provided that you opened the account within a month of the date of receipt to avail benefits of the retirement. A unit linked insurance product is a combination of insurance and investment. This way policyholder is able to enjoy dual benefits. According to 80C of Income Tax Act, you are eligible to save tax for investing in a ULIP plan. According to section 10(10D) of Income Tax Act, you get a tax exemption on the maturity benefit received.
If you are looking for answers to various questions including:
∙ What are some of the tax saving investments available for you under section 80C?
∙ What is a public provident fund or PPF?
∙ What is unit linked insurance plan or ULIP?
∙ What is national savings certificate?
∙ What is post office time deposit?
∙ What is senior citizen saving scheme?
∙ What is national pension scheme?
∙ What is bank fixed deposit?
∙ What is principal loan repayment?
∙ What is employee provident fund?
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