The season of tax saving has arrived, and individuals across the country are looking for investment options to save on the amount of tax payable by them. While choosing the right tax saving plan, it is essential to consider various factors like liquidity, returns, and safety on the investment. It is advisable to invest with the aim of generating profits in the long run. Never invest with the sole purpose of saving taxes. Here are tax saving products that will offer maximum savings in A.Y. 2018-19.
- Equity-linked saving scheme: A highly preferred option by investors, the investment in equity mutual funds qualifies for a tax benefit under Section 80C and has a lock-in period of 3 years. Every mutual fund house offers it, and you get an exemption of INR 1.5 lakh from tax.
- Public Provident Fund: A secure and fixed income generating option is an investment in a public provident fund. Being one of the safest options, people love it. Moreover, principal and interest are tax-free. The interest rates change from time to time with a tax exemption for an amount up to INR 1.5 lakh under Section 80C.
- Employees Provident Fund: This is another investment avenue suitable for salaried individuals. An employee’s contribution to this account is 12 percent of basic salary in this account, and the employer contributes a small portion. The contributions made by an employee qualify under section 80C and the interest on the investment is tax-free according to the declaration by the Government.
- Unit Linked Insurance Plan: There are a few fund options in this plan. It can have a duration of 15 to 20 years and has a five-year lock-in The fund value at the time of maturity becomes tax-free, and any switching between the fund’s option is also under tax exemption.
- Insurance Plans: The traditional insurance plans have a fixed term and a fixed return. They also have a savings element in them. The premium on this plan varies depending on the type of cover and the age of the policyholder. The premium amount qualifies for a tax benefit, and the maturity value and the death benefit is tax-free. Online insurance plans offer term plan and a wealth plan to choose. You should purchase an insurance plan keeping the personal requirements in mind since there are several options and plans to pick.
- SukanyaSamriddhiYojana: This is a small deposit scheme meant for a girl child. It has an income tax benefit and fetches an interest of 8.1 percent. You can deposit a maximum amount of INR 1.5 lakh with the advantage to open it anytime after the birth of a girl till she turns 10.
- Home loans: Taxpayers can claim a deduction for interest paid on the home loan, and for the repayment of the principal amount under Section 80C.
- Bank FDs: This is a regular Bank FD with a five-year lock-in and carries a higher interest rate of interest compared to You can deposit up to INR 1.5 lakh. However, the interest remains taxable.
- Health Insurance: Claim a deduction of up to INR 25,000 per year under Section 80D for the medical insurance premium paid. In case the premium is for a senior citizen; this limit goes up to INR 30,000.
- Preventive health checkups: You get an additional tax deduction of INR 5,000 apart from the medical insurance premium. It brings the total deduction amount under Section 80D to INR 30,000 and INR 35,000 for individuals and senior citizens respectively.
It is advisable that taxpayers plan their investment to ensure higher returns and maximise wealth. Investment decisions should be made keeping the long-term financial goals in mind and not with the sole purpose of tax saving. Taxpayers are eligible for a deduction of INR 1.5 lakh under Section 80C and can choose from the above options. To avail an additional deduction, taxpayers can choose from the health insurance plans for the medical insurance premium. Consider the features of the programs when investing and ensure that it provides safety and security in addition to the benefit of tax savings.
References:
https://economictimes.indiatimes.com/wealth/tax/how-to-save-income-tax-here-are-6-investments-with-tax-free-income/articleshow/62567377.cms
https://www.policybazaar.com/income-tax/section80d-deductions/