Want To Save Some Of Your Money Instead Paying It In Tax, Money is earned with difficulties and saving it is not bad but if you have yet not planned for saving Income tax than plan it right away. Income Tax Act Section 80C allows certain investments and expenditure which is to be deducted from total income up to the maximum of 2.5 lac and an additional amount of 20,000 Rs/- dedication is allowed by doing investment in Infrastructure Bond under section 80CCF.
Here are Some Options Want To Save Some Of Your Money Instead Paying It In Tax:
- PPF, EPF Investment:
Public Provident Fund is known as PPF this is a Long Term Debt Scheme by Govt. of India on which interest is paid. This scheme is open for any individual which means any Individual can invest and earn a good tax-free return. The Public Provident Fund is the most favorite tax saving option. One can get deduction on income for the investment done in this scheme. As this scheme is launched and governed by government of India it is totally safe investment.
This scheme has a period of 15 years. Minimum investment amount required in PPF account is Rs. 500 to a maximum of Rs 1 lakh per year.
Anyone can open PPF account in the bank and deposit up to 1 lac in year to avail tax benefit. Apart from tax benefit you will also paid with 8.6% interest compounded annually.
For Salaried people EPF is deducted compulsorily from the monthly salary. Contribution made by employees is eligible for tax deduction under Section 80C.
- Life Insurance Premium:
Want To Save Some Of Your Money Instead Paying It In Tax, Payment made in lieu of insurance policy is eligible candidate for tax deduction under 80C. Life insurance is way to provide protection to family against any undesirable event. Life Insurance provides the dual benefits of savings and security.
Insurance policy available in market are many, selection has to be done by you considering your requirement.
If you have yet not taken any life insurance it is advisable to go for “Term plan” which will provide you good risk cover at low premium.
ELSS is known as Equity link saving scheme and it is most suitable tax saving option for everyone. Investment made in this scheme for the long term can provide best returns. ELSS has lock in period of 3 years meaning one cannot withdraw money before 3 years.
If you want to invest in ELSS always then do it via SIP route don’t make one time lump sum investment. As investment made in ELSS is exposed to equity & risk is involved in doing so.
- Fix Deposit:
Want To Save Some Of Your Money Instead Paying It In Tax, Investment made in Fix deposit for 5 years and above in scheduled bank can be claimed for tax deduction under 80C.
Interest rates offer by most of the bank now a day is around 9 %, which makes this option good for investment but remember that return on this FD is taxable which means that on maturity one has to pay tax, which cause return less than 9%.
- Housing Loan:
If you have yet not purchased any house for living and you are planning to purchase please do that and while purchasing please take Home loan. It will not only reduce your initial investment burden also provide you advantage in saving tax.
Home loan principle is accepted for deduction in income tax under 80 C not only that Interest paid on a housing loan up to Rs 150,000 per year is exempt from tax.(Excluding Rs.1,00,000/p.a. u/s 80c Saving).
- Infrastructure Bond:
If investment made in section 80C are not sufficient for you can get more tax benefit by Investing in Infrastructure bonds under 80CCF.
Maximum limit of investment in Infrastructure bond is Rs. 20,000. This bond provides you fix return currently 8.7%.