If you have not yet invested to save tax: There is now only one and a half month left for the financial year 2020-21 to end. At this time most of all are engaged in doing tax planning so that they can avail maximum tax exemption and pay less tax. Here are seven such schemes wherein one can invest and take advantage of tax rebate with maximum return.
Exemption under 80C
1 Public Provident Fund (PPF)
Public Provident Fund (PPF) is a popular long-term investment option. It is not only considered a safe investment but it also gets better interest. Also, the entire investment made in it is tax free. The PPF account gets an annual interest rate of 7.1 per cent. The interest received is also tax free.
The amount received at maturity is also completely tax free. The PPF scheme comes with a lock-in period of 15 years. However, even after 7 years some amount can be withdrawn from this scheme. Investments under this scheme can be made from Rs 500 to Rs 1.50 lakh.
Receiving 2 Employees Provident Fund (EPF) salary are already investing in this option. Every month 12% of the basic of salary you get is deposited in your EPF account. You can also contribute more voluntarily if you want.
3 Can invest in ELSS
ELSS There are plans to invest in ELSS mutual funds. Its main objective is to save tax and provide good returns. Despite imposing a long-term capital gains tax on returns from April 1, 2018, this investment is good in terms of returns. Only profit of more than one lakh from ELSS will be taxable under LTCG tax.
4 A five-year FD in a Bank
Fixed Deposit Scheme (FD) is the oldest and safest investment scheme to save income tax under Section 80C of Income Tax. Banks are currently paying interest between 4.5% and 7.5% per annum on this. Interest on FD is taxable. If you are investing in FD to save tax, then you have to invest for a lock-in period of 5 years. You will not be able to avail tax exemption on short-term investment. Many banks provide online facility for tax saving FD. After maturity, the amount gets directly into your bank account.
5 Insurance premiums
Can be availed of tax exemption under section 80C on the premium paid on life insurance or insurance policy. You do not have to get a new plan every year to get tax benefits under section 80C. One can get tax rebate on the premium paid every year.
6 Sukanya Samriddhi Yojana
This scheme, launched under the Beti Bachao-Beti Padhao scheme of the Central Government, is a good option to create a large fund for daughters. This account will be matured when your daughter is 21 years old.
One can also avail tax exemption on this. The girl’s parents or legal guardian can invest in Sukanya Samriddhi Yojana. Investment should be made for a girl whose age is 10 years or less. Investments made in this scheme are exempt from tax under section 80C.
For spending on studies or marriage, 50% of the investment amount can be withdrawn after the girl completes 18 years. These accounts can be opened in any government bank or post office. Right now it gets an interest of 8.1 percent. You can invest up to a maximum of Rs 1.50 lakh in this scheme every year.
7 You can get discounts by investing in NPS
tax-deductible. Investment in NPS i.e. National Pension System is also exempt from tax. Under Section 80 CCD (1B) of the Income Tax, a taxpayer can claim tax exemption on investments up to Rs 50,000. That is, you are getting a rebate on investment of Rs 1.5 lakh under 80C and if you also invest in NPS, then you can claim tax deduction on Rs 2 lakh. People who work in the private sector can invest in this scheme. One gets pension after retirement by investing in this scheme.