Tax planning is one of the primary tasks that people often ignore until the tax season is just around the corner. If you are wondering how your fellow ends up saving even after paying all the taxes on time, you have landed at the right place.
With proper planning, it is possible to save something from your hard-earned money after deducting all the tax. So it is wiser to plan early rather than making wrong decisions, which will make you regret later. To achieve financial goals, one needs to focus on framing some tax strategies suitable for them.
It is always good to look for new tips, which can help you in this matter. Even if taxes are hard to avoid, there are still some helpful ways. So here are some of the top tips that can shield you against unwanted financial stress.
What Are Best Investment Options Under Tax Strategies?
Public Provident Fund (PPF)
Under Section 80C, one of the most considered long-term ways to save tax is the PPF. It is one of the options with the minimum tenure of 15 years, plus five years of extension if someone wants. Since the PPF enables the customers with sufficient returns and attractive tax benefits, it has gained popularity over the years.
For the investors, PPF is providing a convenient way, and one can open an account on their name. Even if one wants to open an account for a minor, they can. Note that if you want to keep the account active, then the minimum annual amount is Rs 500, whereas that maximum can go up to Rs 1.5 lakh.
Equity-Linked Saving Schemes (ELSS)
Another tax strategy available for you is by investing in the equity. It is essential to learn that Equity-Linked Saving Schemes is the only mutual-fund category in India that can qualify the tax deduction under act 80(C).
Moreover, there are two options in ELSS funds, one is the dividend, and another is growth. In the dividend option, you can only get the payout once the dividend gets declared by the fund. On the other side, after maturity, you get the fixed amount in the growth option. One more vital aspect that you must know about this investment is that there is a lock-in period of 3 years, and before that, one cannot withdraw the amount.
Senior Citizens’ Saving Scheme (SCSS)
Investments play an important role in old age. Therefore tax planning is one of the critical things that we have to do. The best option available for older people is the Senior Citizens Savings Scheme, a non-risky tax-saving investment.
It is one of the long-term investment options, and best suitable for the citizens of 60 years and above. One cannot deposit more than 15 lakhs in their account, and the minimum deposit starts from just Rs 1000. Here the maturity period is five years, and if someone wants to extend it, they can add three more years.
National Savings Certificates
Yet another perfect instrument to save the tax is by investing in the NSC. It comes with a maturity period of five years, and one can buy it for just Rs 100 without and limit the amount of investment. It is one of the fixed-income investments provided by the Government of India.
One can conveniently visit the post office near them and can invest in this scheme. Remember that there is access to premature withdrawals only if the policyholder has passed away, or the certificates have been fortified.
Home Loan Repayments
You must know that the EMI you pay for a home loan has two components. One is ‘Principal,’ and the second is ‘Interest.’ Under Section 80C, the principal qualifies for the deduction, so on the other hand, interest can help you save tax. Therefore it is also a fantastic tax strategy that you can adopt.
Thus, if you own a fabulous home in your name, then you can claim the principal as a deduction under Section 80C.
Conclusion
As obliged citizens, we have to pay tax every year, and there is no escaping scope. But there is a bucketful of ethical ways that can help you out in this situation. One must not wait for the day when they ultimately have to pay the tax. Instead, they should build some effective tax strategies earlier.
There is no doubt that, along with selecting a tax-saving instrument, it is also essential to learn about the risk factors that come along. Individual needs differ; therefore, the same strategy doesn’t have to apply to all investors.
The best way to find out which scheme best fits you, it is vital that you keep on checking the updates. Furthermore, you can also confer above given options and pick the one you think is most convenient for you.
