Income Tax: Let’s take a quick look at the popular tax saving tools for effecrively managing your tax.
Income Tax: Effective tax planning directly impacts your savings. Salaried-class people often juggle between their income and tax savings. This is because they find it difficult to manage their expenses and investments to save taxes. There are multiple tax-saving options available in the market that promise guaranteed returns and also tax benefits. Let’s take a quick look at the popular tax saving tools for effecrively managing your tax.
Read More: How to change your PAN card address using Aadhaar? A step-by-step guide
Public Provident Fund (PPF): Public Provident Fund (PPF) remains one of the most preferred investment tools for both salaried and non-salaried. PPF deposits qualify for deduction under Section 80C of Income Tax Act. The interest earned from PPF and the maturity amount is also exempted from tax.
Employees Provident Fund (EPF): EPF is a tax-saving instrument for salaried individuals. EPF is covered under EPF law. An organisation is required to pay 12 per cent of the basic salary of an employee. An employee also makes a similar contribution. The EPF account also has a lock-in period till retirement.
If the EPF contribution exceeds Rs 2.5 lakh in a financial year, then the interest earned on excess contributions will be taxable for the employee. The maturity amount received from the EPF account is exempted from tax.
Senior Citizens Savings Scheme (SCSS): This scheme is only for employees above 55 years of age and below 60 years of age. At present, SCSS offers an interest rate of 8 per cent. The locking period of this scheme is 5 years. The scheme has the option of premature closure. The interest received from the scheme is taxable. However, a senior citizen can claim a deduction under section 80TTB for the interest earned.
Read More: 5 high interest rates paying government schemes. Details here
Tax-saving fixed deposits: As the name suggests, this scheme is tax-free. People can opt to invest in tax-saving fixed deposits at a bank or a post office. The deposit has a lock-in period of 5 years. Taxpayers can open a tax-saving fixed deposit with a minimum amount of Rs 100. The maximum of Rs 1.5 lakh. The interest received from tax-saving fixed deposits is taxable in the hands of the individual.
Sukanya Samriddhi Account (SSA): This scheme is specially designed for girls. Parents can opt for Sukanya Samriddhi Yojana to save tax as well. The current rate of interest is 7.6 per cent per annum. The account can be opened with a minimum deposit of Rs 250. The minimum deposit in an FY is Rs 250 and the maximum deposit can be made up to Rs 1.50 lakh. Parents can open a Sukanya Samriddhi account in a bank or post office. The account will mature after 21 years of opening.
