Do your Investments and Save your tax in a right way

Last Updated On: March 11, 2022, 12:09 a.m.
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HOW TO INVEST AND SAVE TAX?

In the present world, everyone wants to invest just for Tax savings, everybody wants such investment products which not just help us in save taxes but also cater to your need of long-term investment.

 

1. National Pension Scheme (NPS)

The Advantage of Investment in NPS is that you get an additional deduction of Rs 50,000/- over and above the deduction mentioned for 80C of Rs 1,50,000/-. Thus this is an attractive option for saving additional taxes.

The amount invested under NPS will be returned in installment after the person attains the age of 60 years along with interest. The time range for which the person has to be invested in NPS makes this investment product less appealing among youngsters. This investment instrument is one of the best in terms of retirement perspective.

 

2. LIP (Life Insurance Premium)

Life Insurance Premium Paid for the year is allowed as a deduction against your income earned subject to an overall limit of Rs 1,50,000/- under section 80C. The maturity value is exempted on fulfillment of certain conditions

The premium is accumulated and you get the accumulated amount along with interest returned either at the time of maturity or time of death whichever earlier. This investment instrument helps to safeguard your family in times of crisis. 


3. ULIP (Unit Linked Insurance Plan)

ULIP Premium Paid, same as LIP, is allowed as a deduction against your income earned subject to an overall limit of Rs 1,50,000/- under section 80C. The maturity value is exempted on fulfillment of certain conditions 

A portion of the amount of premium paid is invested in capital market securities and thus the maturity value depends on the market conditions. These investment instruments help to counter the inflation aspect which is not looked after by standard LIP payment.

 

4. Investment in House coupled with Housing Loan

There is numerous advantage of buying a house as an investment. First of all the stamp duty and registration charges paid on the same is allowed as a deduction under section 80C. Now if the house is bought via a loan, then the person gets the dual benefit of Instalment paid. The Interest amount of the installment is allowed as a deduction under house property and the principal amount of the installment is allowed as deduction under section 80C. Many people use investment in the house and buying the same on loan as a tax planning tool

Investment in House is considered one of the best investments as the value of the same appreciates year on year. Further the same can be given on rent to achieve positive cash flow. However if the same is used as your stay then the same is not considered as an investment as you will never sell the place where you live.

 

5. National Pension Scheme (NPS)

The Advantage of Investment in NPS is that you get an additional deduction of Rs 50,000/- over and above the deduction mentioned for 80C of Rs 1,50,000/-. Thus this is an attractive option for saving additional taxes.

The amount invested under NPS will be returned in installment after the person attains the age of 60 years along with interest. The time range for which the person has to be invested in NPS makes this investment product less appealing among youngsters. This investment instrument is one of the best in terms of retirement perspective.

 

6. PPF (Public Provident Fund)

PPF paid is allowed as a deduction against your income earned subject to an overall limit of Rs 1,50,000/- under section 80C. The maturity value is exempted on fulfillment of certain conditions.

PPF is a safe bet in terms of investment. The amount cannot be withdrawn for 12 years other than the fulfillment of certain conditions. The Interest rates range from around 6-7%. Minimum Amount of Payment every year has to be Rs 500/- and maximum Rs 1,50,000/- 

 

7. NSC (National Savings Certificate)

The amount invested under NSC is allowed as deduction u/s 80C subject to a maximum of Rs 1,50,000/-.

NSC is another time-bound investment. The interest rates are governed by the government and the same varies between 6-7%. The Interest is accrued and thus not chargeable to tax.

 

8. Senior Citizen Savings Scheme

 The amount invested under Senior Citizen Savings Scheme is allowed as a deduction u/s 80C subject to a maximum of Rs 1,50,000/-.

As the name suggests, the same can be invested only by senior citizens, above 60+ years. The Interest rate is the highest in the case of time deposits. The Interest amount is chargeable to tax.

 

9. Tax Saver Mutual Fund (ELSS)

One of the most attractive ways to save tax nowadays is an investment in Tax Saver Mutual Funds (ELSS). The sane have a time-bound of 3 years, which means you cannot sell the fund before the expiry of 3 years.

ELSS is a mutual fund just with a time-bound of 3 years. As we all know the inherent risk of mutual funds, is that they are subjected to market risk. The amount you will receive on the sale of the fund will depend on the market conditions prevailing at that point in time. A mutual fund is usually known as medium risk medium return in terms of investment.

 

10. Post Office Time Deposits

The amount invested under Post Office Time Deposits is allowed as deduction u/s 80C subject to a maximum of Rs 1,50,000/-. The time deposit has to be for 5 years to be eligible for a tax deduction. Post Office Time Deposit is a time-bound deposit. The Interest rate ranges from around 6-7%. The Interest is accrued every year and you receive the same on maturity. The Interest earned is chargeable to tax.

 

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