Tax Saving Investments

Taxes saving investment plans are a great way of achieving financial goals. There are a plethora of Investment schemes available in the market that provides tax exemption and deductions. You can choose from many tax-saving mutual funds to claim tax exemptions or tax deductions under section 80c or section 80ccc.

There are some investment avenues that provide a further tax deduction. Let’s have a look at the best tax-saving investments under section 80C of the IT Act.

Best Tax-Saving Investments under Section 80C

Equity-Linked Saving Scheme

ELSS scheme is eligible for tax exemption up to Rs.1.5 lakh under the Income Tax Act and This ELSS scheme has 3 years lock-in period.

National Pension Scheme

Under this scheme, a Maximum of Rs.1.5 lakh can be claimed for tax exemption and one get an extra deduction of up to Rs.50,000.

Unit Linked Insurance Plan

ULIPs not only provide tax exemption benefits but also help to gain high returns on investment.

Public Provident Fund

It helps investors to create a financial cushion post-retirement. The interest rate is reset on a quarterly basis.

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How to Plan the Tax-saving Investments?

The best time to plan the tax-saving investments is at the beginning of the financial year. Because the investments can multiply over a long-term period and can help the individual to fulfill their goals. The tax-payers can follow these pointers to plan the tax saving for the year:

  • Check your tax-saving expenses which pre-exist like insurance premium, the contribution in EPF account, children’s tuition fees, home loan repayment, and many more.
  • If tax-saving expenses cover up to Rs.1.5 lakh then you don’t need to invest the entire amount.
  • Choose tax-saving investments like PPF, Bank FDs, and ELSS funds.

Payment Applicable for Tax Saving Deduction U/S 80C

  • Life Insurance Premium Payments
  • Children’s Tuition Fees Payments
  • Home Loan Repayment

Frequently Asked Questions

Here are some methods to reduce your taxable income:

  1. Claim deductible expenses
  2. Donate to charity
  3. Create a mortgage offset account
  4. Delay receiving income
  5. Hold investments in a discretionary family trust
  6. Pre-pay expenses
  7. Invest in an investment bond

Section 80C is the most preferred section where one can save tax by investing or spending a maximum of Rs 1.5 lakh in a specified financial year.

The age below 60 years is liable to pay income tax if their income is more than Rs 2.5 lakhs.

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