The year-end is a good time to review your portfolio and plan your next year’s investments. For many taxpayers, this is also a time to submit investment proof for tax-saving purposes. If you are searching for tax-saving investments, which can also give you good returns, here are some popular options.
Public Provident Fund (PPF)
PPF is one of the most preferred long-term tax-saving investments available today, offering tax benefits under Section 80C of the Income Tax Act. You can invest a maximum of Rs 1.5 lakh in this scheme annually via multiple instalments during the year or a lumpsum investment. With the diversification of your investment, this investment scheme can be very useful and give you good returns in the long term. At present, the interest rate applicable on PPF investment is 7.1% per annum.
Tax-Saving Mutual Funds
High returns and tax benefits make equity-linked saving schemes (ELSS) another attractive option for investors. These market-linked schemes offer tax-saving benefits under Section 80C and are also known as tax-saver mutual funds. You can claim a tax rebate of up to Rs 1.5 lakh a year by investing in ELSS mutual funds.
National Pension System (NPS)
NPS is a government-sponsored tax-saving scheme suitable for risk-averse investors looking to build a retirement corpus. This scheme allows for a maximum tax deduction of Rs.2 lakh under Section 80CCD – Rs.1.5 lakh under Section CCD (1), and an additional Rs.50,000 under Section CCD (1B).
Insurance Plans
Life and health insurance form an indispensable part of a balanced portfolio, shielding your assets from unexpected losses. Moreover, premiums paid towards these policies are tax-deductible under specific sections of the Income Tax Act.
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Provident Fund (PF)
Another tax-saving scheme that is geared towards retirement planning is the Provident Fund. Employees contributing to the Employee Provident Fund (EPF) qualify for a tax rebate under Section 80C.
Adhil Shetty, CEO, BankBazaar.com, says, “Investment and tax planning are key to successful wealth creation. PPF, Sukanya Samriddhi Yojna, equity-linked saving schemes, and tax-saving fixed deposits are some popular options catering to different financial goals.”
Tax saving has a significant impact on your investments in many ways. It can lower your tax liability and boost your returns, thus aiding you in your wealth-creation journey.
