Want to save big on tax in 2019? Here are some smart investments that will help you a great deal!
Thinking of getting your investment plans in place for the New Year? You may want to consider tax benefits while choosing between various options. To make the process easier for you, we’ve listed down some of the top tax-saving investments that will surely save you a few good bucks.
Additional Reading: Follow These Rules For Successful Investing
ELSS or Equity Linked Saving Schemes
These schemes are basically diversified Mutual Funds that qualify for tax benefit as per Section 80C of the Income Tax Act – the benefit limit is Rs. 1.5 lakh a year. The investment amount under this scheme has a 3-year lock-in period. One thing to note is that ELSS returns are not a sure thing – they purely depend on the share market.
PPF or Public Provident Fund
If there’s an investment option that has truly stood the test of time, it has to be the Public Provident Fund Scheme – a favourite among many since the late 1960s. You can easily open up a PPF account with just Rs. 500. The maximum limit that can be deposited into your account within one financial year is Rs. 1.5 lakh. PPF schemes are ideal for those who do not prefer volatile returns.
Additional Reading: All About The Public Provident Fund (PPF) Scheme
EPF or Employees’ Provident Fund
If you’re a salaried individual, you’re mostly already saving tax through this scheme. Typically, an employee contributes 12% of the basic salary on a monthly basis towards his or her EPF account. The employer also contributes to the employee’s EPF account (only partially). The former qualifies as a Section 80C tax benefit.
While tax savings should not be the primary motive for one to get insured, premiums paid towards insurance plans do qualify for tax benefit. Depending on your age at the time of kick-starting your insurance policy and the tenure, the premium amount is determined and paid out annually until your policy matures. You can declare the annual amount to enjoy tax benefit. What’s more? The maturity amount, as well as the benefit in case of death, are both tax-free!
Additional Reading: What To Check After Buying Your Insurance Policy
SSY or Sukanya Samriddhi Yojana
This a deposit scheme specially launched for the girl child. It can be opened any time after a girl child is born with the upper limit being 10 years of age. With a humble minimum deposit of Rs. 1, 000, you can easily open this account. It will be operational for 21 years or until the day the girl gets married after turning 18.
NPS or National Pension Scheme
Perhaps the biggest advantage of the NPS is its low cost of fund management. With a mere 0.01% charge on returns, your investment can go without a hitch. What’s more? In 2018, the maturity corpus for NPS was declared partially tax-free to the extent of 40% of the corpus amount.
Additional Reading: Why Investing In NPS Is A Good Idea
The original amount you deposit into a tax-saver FD account is exempt from taxation under Section 80C of the Income Tax Act up to Rs. 1.5 lakh. Do keep in mind that you need to maintain your Fixed Deposit account for a minimum period of 5 years in order to save on tax.
Additional Reading: Everything You Need To Know About Fixed Deposits
Now that you know some of the many tax-saving investment options available to you, you can see what suits your personal finances best and go ahead.
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