Invest in PPF, NPS, SSY, SCSS, and ELSS before March 31st to save taxes. Also avail tax benefits from Health Insurance, Tax Saving FDs, and ULIPs.
Tax Saving: The current financial year is ending, and the new tax year begins on April 1st. Most taxpayers are now engrossed in their financial planning. If you haven't yet planned for tax savings and are wondering how and where to invest your hard-earned money, this news is for you. Here, we are informing you about some excellent options to save taxes, allowing you to save on taxes and earn better returns.
Why is investing before March 31st necessary?
Timely investment for tax savings is crucial to provide the Income Tax Department with investment proof as documentation. By investing in certain specific schemes by March 31, 2024, you can claim deductions by choosing the old tax regime while filing your ITR. For this purpose, you can invest in various government saving schemes. These schemes not only offer tax savings but also provide better returns.
Some of the most popular tax-saving schemes include PPF, Sukanya Samriddhi Yojana (SSY), NPS, Senior Citizen Savings Scheme (SCSS), and ELSS.
5 Major Investment Options for Tax Savings
1. Investing in PPF (Public Provident Fund)
PPF is a long-term investment option that is most preferred for tax savings.
Interest Rate: Currently 7.1%
Tax Deduction: Up to ₹1.5 lakh annually under Section 80C of the Income Tax Act
Lock-in Period: 15 years
Security: Government-guaranteed investment, no risk of losing money
If you want a secure and tax-free investment for the long term, PPF is a good option.
2. Investing in NPS (National Pension System)
NPS is a government retirement savings scheme that offers additional tax benefits on investments.
Tax Deduction:
Up to ₹1.5 lakh under Section 80C
An additional ₹50,000 under Section 80CCD (1B)
Total tax deduction: Up to ₹2 lakh
Minimum Investment: ₹1000 per month
Age Limit: 18 to 65 years
Where to open an account: Any bank
Investing in NPS not only saves taxes but also helps in creating a better fund for retirement.
3. Sukanya Samriddhi Yojana (SSY) - Best for your daughter's future
This scheme is run by the government to secure the future of daughters.
Interest Rate: 8.2%
Maximum Investment: ₹1.5 lakh per year
Tax Deduction: Under Section 80C
Lock-in Period: Until the daughter turns 21
Where to open an account: Post office or bank
If your daughter is under 10 years old, this scheme is not only an excellent tax-saving option but also financially secures your daughter's future.
4. Senior Citizen Savings Scheme (SCSS) - Secure investment for senior citizens
SCSS is an excellent savings scheme for senior citizens (above 60 years of age), where tax benefits can be obtained by investing.
Interest Rate: 8.2%
Maximum Investment: ₹1.5 lakh per year
Tax Deduction: Under Section 80C
Where to invest: Bank or Post Office
This scheme is a secure investment option for senior citizens, offering good interest and tax savings.
5. ELSS (Equity Linked Savings Scheme) - Higher returns along with tax savings
If you want tax savings with high returns, ELSS can be the best option.
Tax Deduction: Up to ₹1.5 lakh under Section 80C
Lock-in Period: Only 3 years (shortest compared to other schemes)
Returns: Higher than other traditional investment options
If you want higher returns with a short lock-in period, ELSS can be a great option.
Other Tax Saving Options
1. Health Insurance - Tax deduction under 80D
If you buy health insurance for yourself or your family, you can avail of tax benefits.
Deduction under Section 80D
For self, spouse, and children: Up to ₹25,000
For parents (if they are senior citizens): Up to ₹50,000
This not only provides security in medical emergencies but also saves taxes.
2. Tax Saving FDs and ULIPs
Tax Saving Fixed Deposit: Deduction under Section 80C with a 5-year lock-in period
ULIP (Unit Linked Insurance Plan): Double benefit of insurance and investment
