How Can You Save Taxes by Investing

Saving taxes is an integral part of one's life. Believe it or not, the best way to save taxes is by investing the money you own. Tax savings investments offer tax deductions under section 80C or 80CCC. Considering these investments, people frequently wish to invest. However, due to low returns and other associated risks, people are not keen to invest.

For every earner, tax savings season kicks off from April 1st. As a smart investor, one should always be on the lookout for tax-saving investments. There are many ways to enjoy the benefits of tax savings investments. However, people often consider tax planning is a do it later affair. A good way is to start investing early in the financial year. This way one can get time to sensibly plan and avail maximum benefits from different tax-saving instruments.

Let us now look at some of the tax-saving investments:

ELSS: Equity-linked saving scheme is a comprehensive mutual fund. The main two features of ELSS are the amount invested is eligible for tax deduction up to Rs.1.5 Lakh and the investment has a lock-in period of 3 years. These funds offer an interest rate of 15-18% depending on the scheme. However, the returns are not fixed. It varies according to the market performance. Investing in ELSS funds offers flexibility and liquidity in investment. It is good for individuals who have a high-risk appetite.

NPS: The best thing about this investment instrument is that it offers tax exemption under three different sections. An investment up to Rs.1.5 Lakh can be claimed as a tax deduction. Additionally, one can claim a deduction of up to Rs.50 Thousand under section 80CCD (1b). Besides these, if 10% of the salary is contributed towards NPS, then the amount is non-taxable. The trio benefits have increased the number of NPS investors.

PPF: It is a long-term tax-saving investment plan. It incorporates the feature of tax-saving investments to help the investors in creating financial backup post-retirement. The interest rate on PPF is reset quarterly. PPF enjoys EEE status. It means exempt, exempt, and exempt. It means interest earned, maturity proceeds, and investment made are all tax exempted.

Senior Citizen Saving Scheme: It is a government-backed investment plan which is exclusively designed for people above 60 years of age. It allows tax deduction up to Rs.1.5 Lakh.

Hence, if you invest money in a combination of ELSS mutual fund, NPS, PPF, and Senior Citizen Saving Scheme, if applicable, can help you save a lot of money.  

Disclaimer

ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. PFRDA registration numbers:  POP no -05092018. AMFI Regn. No.: ARN-0845. We are distributors for Mutual funds and National Pension scheme. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Please note, Mutual Fund and NPS related services are not Exchange traded products and I-Sec is just acting as distributor to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism.  The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein mentioned are solely for informational and educational purpose.

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Created on Aug 24th 2021 03:12. Viewed 399 times.

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