- December 24, 2018
- Posted by: moat_admin
- Category: Blogs, Tax Planning
Taxes are an integral part of our life. Tax is used by the government to provide certain basic provisions to citizens. Individuals who earn i.e. have income more than a certain amount are expected to pay taxes, as per the existing Income tax slabs. The government also provides certain provisions wherein one can save tax. Tax deductions can help one reduce the taxable income, lowering their overall tax liability and thereby helping them save on taxes.
Every year most of us struggle to save taxes. While most of us have an idea about commonly known options but tax saving can be challenging for a young newly recruited employee.
Investment options under section 80C are as follows
- Investment in PPF
- Employee’s share of PF contribution
- National Saving Schemes
- Life Insurance Premium payment
- Children’s Tuition Fee
- Principal Repayment of home loan
- Investment in Sukanya Samridhi Account
- Unit Linked Insurance Plan
- Equity Linked Saving Schemes – Tax Saving Mutual Funds
- Sum paid to purchase deferred annuity
- Five year Fixed Deposit scheme
- Senior Citizens savings scheme
- Contribution to notified Pension Fund set up by Mutual Fund or UTI.
- Contribution to notified annuity Plan of LIC
- Subscription to notified bonds of NABARD
Popular tax saving options available under section 80C
|Available Option||Minimum Investment (Rs.)||Lock In||Returns||Taxability|
|ELSS – Tax Saving Mutual Funds||500||3 years||Market Linked||LTCG Tax @10%|
|PPF||500||15 years||8.00%||Interest rate free|
|NSC||100||5 years||7.60%||Interest Taxable|
|Bank Saver Tax Deposit||1000||5 years||6.85%||Interest Taxable|
|ULIP||5 years||Market Linked|
Out of all the tax saving options, we strongly recommend Equity Linked Saving Schemes- ELSS because the advantage it has over other tax-saving investment options been their short lock-in period of just three years as compared to alternatives which has longer lockin period example PPF has 15 years lockin period. Moreover, ELSS funds are majorly equity-oriented and deliver better returns in the long-run.
One should invest in ELSS funds only if they have longer investment horizon as it can be volatile in short term. It is a good, tax-saving choice for investors who want to earn higher returns through equity exposure. In long term of more than 7 years one can expect conservative returns in the range of 12%-15%.