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What Are The Various Schemes To Save Tax?

save-taxes

Paying excessive tax? Every individual wants to invest in funds that don’t extract much tax. Even though every salaried person needs to pay a fixed tax, there are exemptions on certain incomes. Are you aware of the number of schemes available through which you can pay less tax?

Here are a few of them

Through Mutual Funds:

Income earned through mutual funds is exempted from any tax under SEBI. The best funds to invest in would be ELSS mutual funds. A good ELSS fund can build wealth for investors if held for a long term. Also, it has a potential of higher return. Also, you can get some of the investment back if you opt for the dividend option.

Through Pension:

National Pension Scheme is beneficial for individuals having risk volatility, looking to set aside money towards retirement. Maximum annual investment: Rs 1, 50,000. The aggregate limit of deduction under all the sub-sections of Section 80C, like 80CCD, 80CCC does not exceed Rs 1.5 lakhs. This is a tax-saving tool since it offers an additional tax deduction of Rs 50,000.

Through Insurance:

This includes life and ULIP (Unit Linked Insurance Plans). IULIP’s are extra cheap and offer flexibility. It gives a tax exemption of INR.100, 000 per year. Here, the premium gets deducted with initial charges while the rest of the amount is invested. Maturity earnings from ULIPs are exempted from tax.

Through Fixed Deposits:

The maximum exemption for FD is INR.100, 000 annually. The rate of interest varies from one bank to another. It can’t be linked to a savings account. It will be best suited to taxpayers in the 10% bracket (taxable income of less than Rs 5 lakh a year) However, tax saving option is available only if the amount is invested for a period of 5 years.

Through PPF:

It allows a maximum deduction of INR.1, 50, 000 per year. The amount cannot be completely withdrawn until the completion of 15 years. No tax is levied on the earned interest. Income on the interest of PPF and the final amount is considered to be tax free.

Make the best decision and invest in a tax saving scheme today! Happy Savings, Happy Investing!

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