Planning for saving up on taxes involves long-term thinking and early footsteps in the direction of investments. Last-minute planning is not very advisable here as one is more prone to making mistakes- one can even end up losing money instead of saving. There are multiple ways to save on taxes– one such way is by parking funds in a safe and secure investment vehicle.
Given below is a list of possible options to park funds to earn good returns and to save on taxes-
Insurance
Paying insurance premiums not only provides life cover, but one can also earn tax benefits for the same. Section 80C of the Income Tax Act provides tax benefits of up to Rs 1 lakh and tax exemption on payments made for beneficiaries.
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Fixed Deposits
Fixed Deposits are secure investments that provide guaranteed returns as well as tax benefits of up to Rs 1.5 lakhs to investors. Interest payout frequency for FDs can be monthly, quarterly, bi-annually or annually depending on the needs of the investor.
Public Provident Fund (PPF)
PPFs have a lock-in period of 15 years and tax benefits under Section 80C, which are capped at Rs70,000. Moreover, in case of a Public Provident Fund investment, the amount received at maturity (that includes the amount invested and the interest earned on it over the tenure) is free of taxes.
National Pension Scheme
Under this scheme, a portion of the basic salary (this value is capped at 10%) that goes towards the scheme from the company’s account can be claimed as a tax-deduction.
