Investments To Enhance Tax Saving In The New Financial Year

By Kishore Sabareeshan | April 3, 2019

Want to optimise tax savings this financial year? Here are a few neat investment ideas for you.

Investments to Enhance Tax Saving In The New Financial Year

While topics such as tax and investment may not necessarily possess an inviting ‘come hither’ quality, it helps to know your way around these aspects, because let’s face it, they affect your finances to a considerable extent. As April 2019 ushers the beginning of a fresh financial calendar, it’s the best time for you to devise a smart tax-saving strategy via investments. Ready? Let’s go!

Public Provident Fund (PPF)

While you’ve heard of the Employees’ Provident Fund (EPF) which is specific to those employed in a company, the PPF is available to anyone, employed, self-employed or unemployed. All you have to do is visit your neighbourhood post office and open an account with a minimum amount as small as Rs. 500. The upper limit for a PPF account is Rs. 1,50,000 per annum. With an interest rate of 8%, a PFF account can really help with your savings and also cut down on the tax that you pay because your PPF account is eligible for a rebate under Section 80C of the Income Tax Act up to Rs. 1,50,000 per annum.

Home Loan

Planning to buy a house? Go in for a Home Loan because whatever interest you pay with every EMI during the year can be claimed as a tax deduction under Section 24 up to a limit of Rs. 2 lakh per annum.

Additional Reading: Tax Deduction Myths Busted For You

Equity Linked Saving Schemes (ELSS)

There’s no surprise why ELSS has become quite the buzzword in the world of investments today. This scheme is basically one that has to do with mutual funds linked to equity, and yes, it qualifies for tax rebate under Section 80C as long as you meet the lock-in period requirement of three years.

Additional Reading: The Layman’s Guide to Investing In ELSS

Fixed Deposit

If equity is not your scene, you can always consider one of the safest tax saving investment methods available to you; a Fixed Deposit scheme. The State Bank of India’s FD scheme offers a tax benefit up to Rs. 1.5 lakh under Section 80C, and there are many more such schemes available today.

Insurance Policy

Whether it’s a Life Insurance plan or a Health Insurance policy, any premium you pay during the financial year qualifies for a tax rebate under Section 80C, which we’re guessing by now, is your new crush.

National Pension Scheme (NPS)

A lot of us only associate pension to old age. However, investment towards a pension scheme can start even today. Take the National Pension Scheme for instance; your contributions towards this scheme qualify as a tax deduction under the charming Section 80C.

National Savings Certificate (NSC)

Since you’re anyway planning to make a trip to the neighbourhood post office for your PPF account, why not get a National Savings Certificate too? Commonly called NSC, this scheme doesn’t have an investment limit and can be taken up either for a 5-year or 10-year time period. It only mandates a minimum amount of Rs. 500 to get the ball rolling. With an 8% return over a period of five years, this investment option is another safe and reliable avenue, and yes, it qualifies under Section 80C for a tax rebate up to a maximum amount of Rs. 1.5 lakh a year.

Apart from the above investment options, you can also pay attention to little things that can make a big difference to your tax saving ability, such as:

Reimbursement Of Medical Bills

Yes, don’t just throw away your medical bills, they may help you save on taxes. As per Section 80DDB, a deduction for medical expenses incurred on self or dependents can be claimed. Do note that this deduction can be claimed only be a resident individual or a member of the HUF.

House Rent Allowance (HRA)
If you stay at a rented house, make sure you maintain a record of all your rent receipts and your rent agreement; thanks to HRA, you can reduce your annual taxable income up to an extent. For more information about HRA, click here.

Additional Reading: Offbeat Tax Saving Tips

Well there you go – we’re confident that the above suggestions will make your financial year very fruitful when it comes to tax savings as well as investments. Want to look up some awesome Credit Card and Personal Loan offers too?

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