The income tax return filing season is here and the tax saving brigade is booming. Tax payers everywhere, including salaried as well as non-salaried taxpayers are in the market are looking for tax saving options before the financial year ends.
The prime motto of every tax payer is to save as much money on taxes as possible and also gain some returns on the money invested which should be tax free. For each person who looks to saving taxes, it is very important to choose the right tax saver, which involves screening various factors like safety, liquidity, returns, investment horizon etc. There are various investment options where the return generated is taxable, so it is always better to look for investment options where the return is tax free.
We bring to you some of the best tax saving plans, which not only help you in saving your taxes but also help in generating tax free returns. And as the standard disclaimer goes, it is important to check each investment scheme for all the features and returns before planning any investment.
Planning retirement while saving on taxes- National Pension Scheme (NPS)
The NPS is amongst the best tax saving scheme because it provides tax exemptions under three different sections. The contribution of up to 1.5 lacs can be claimed under Section 80C of the IT act. Under section 80CCD one can also get additional deduction of up to INR 50,000. Also, if 10% or more of the basic salary of any employee is contributed in the NPS, then the amount is not taxed.
Protection from uncertainties and tax savings - Unit Linked Insurance Plan (ULIP)
ULIP is a tax saving instrument which provides the dual benefits of tax savings combined with high returns over a long period. It offers a combined benefit of insurance and investment, and one can get the benefit of taxability of income on the premium paid under section 80C of the IT Act. ULIP however, has a lock in period of 5 years.
Provident Fund for all - Public Provident Fund (PPF)
PPF is the most popular tax saving scheme amongst Indian taxpayers. It helps the investors to sav money on taxes and at the same time, creates a financial aid for retirement planning. PPF has a maturity period of 15 years, which can be further extended for 5 years. A minimum amount of INR 1.5 lacs can be claimed for exemption under Section 80C of the IT Act. PPF is probably the safest investment instrument which offers the benefit of returns on long term investments.
These are some of the leading tax saving schemes which can be opted in order to save money on taxes and at the same time, also help in generating extra income. There are various other investment options too, like the Sukanya Samriddhi Yojana, Bank Fixed Deposits, Insurance etc. which are exempted in Income Tax and can also provide tax free returns over long periods.
However, it is very important to go through all the aspects of the investment plan for investing your money. Each scheme is targeted at a different group of investors, and thus what is beneficial for one will not necessarily provide you the same benefits.
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