A lot of money can be saved through various avenues available for income tax savings if planned in a proper way. If you are planning to do your tax-saving investments now it is important that you first ascertain how much you need to invest. Do consider investments and expenses such as employees’ provident fund, life insurance premium, tuition fees, home loan principal repayment, etc as you can claim a deduction of up to ₹1.5 lahks against these under Section 80C. After you have decided on the amount, the next step is to choose the instrument to invest in.
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It is important to understand the various tax-saving options available and choose the ones that best suit one’s financial goals and risk appetite, says Abhishek Soni, Co-founder & CEO of Tax2win, a Fisdom company.
“One of the most often used methods for last-minute income tax minimizeis the 80C deduction. Most taxpayers only need three different tax-saving strategies. The first is medical insurance, the second is term insurance, and the third is equity-linked savings schemes (ELSS),” said Amit Gupta, MD. SAG INFOTECH
If you want to save income tax at the last minute, here are some best options for you.
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Public Provident Fund
A small saving scheme with an investment tenure will suit long-term programs It’s a government-backed scheme and enjoys an exempt-exempt-exempt tax benefit. The amount invested, interest earned as well as withdrawals on maturity are all tax-free. Apart from PPF, NSC, SSY, and SCSS are other options. You can obtain NSC, PPF, SSY, and SCSS from a recognised bank or post office. These programmes offer investors profit guarantees while being fully risk-free, said Amit Gupta, MD. SAG INFOTECH
ELSS
It is always advisable to invest in Equity linked savings schemes or ELSS through systematic investment plan (SIP). ELSS mutual funds invest 80% to 100% of their assets in equity shares of companies and hence are exposed to market risks. Although they have a lock-in of 3 years.
However ELSS exceeds other options in terms of returns, said Amit Gupta
NPS
The National Pensions System (NPS) is an additional well-liked option . The deductions that people who make NPS contributions are eligible for are covered by Section 80CCD of the Income Tax Act.
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Health Insurance
Purchase medical insurance with a ₹100,000 Section 80D deduction cap ( ₹50,000 for self and family if senior citizen and ₹50,000 for senior citizen parents), said Amit Gupta
Home loan
Under this provision, interest on home loans is also eligible for a deduction of up to ₹50,000. Any charity may notify funds or institutions to seek a deduction under Section 80G.
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Tax saving fixed deposits
These are suitable for seniors and also risk-averse investors. An individual gets tax deduction under Section 80C for investment in tax-saving FDs which have a tenure of 5 years. “It is important to understand the various tax-saving options available and choose the ones that best suit one’s financial goals and risk appetite; such as 80C Investments in ELSS funds, Tax saving FDs, PPF, etc., and beyond 80C options like Health Insurance, benefits on monetary donations, and many more. One should use these options to minimize overall tax liability which can help in significant savings,” said Abhishek Soni.
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Other than these, online tax planning tools are available that provide personalized tax-saving reports to their users. But, of course, it would be good if taxpayers plan their tax savings at the right time. After all, it’s all about using their money wisely and meeting financial goals, he added.
