Experts believe the month of April is a good time to plan investments because most companies revise salaries during the same time, so you can decide how to save most from your income.There is no doubt about the fact that tax planning and saving are two important aspects for salaried individuals whose income comes under the ‘taxable slab’. Tax planning helps people channel their income to various investment plans, which thereby helps them to save money. It also gives a chance to easily build a corpus amount for their future goals like saving money for their children’s higher education, marriage, or simply saving for a comfortable post-retirement plan.
Furthermore, for most salaried individuals, the new year begins with the start of the new financial new year, i.e. April 1. It is the time when most of the rules and regulations proposed in the budget become effective. Therefore, experts believe the month of April is a good time to plan investments because most companies revise salaries during the same time, so you can decide how to save most from your income.
Here’s a look at the 4 best tax savings options and all you need to know about them.
1. Sukanya Samriddhi Yojana (SSY)
Launched under the ‘Beti Bachao, Beti Padhao’ campaign, this scheme is aimed at the betterment of the girl child in the country. Tenure of SSY is 21 years from the date of opening of the account or till the marriage of the girl after she attains the age of 18 years. Currently, the interest rate of the SSY scheme is 7.6 per cent and it is compounded yearly.
Under Section 80C of the Income Tax Act, 1961, tax benefits of up to Rs.1.5 lakh are provided for contributions made towards the scheme. The interest amount that is generated is also exempt from tax and tax benefits are also provided for the maturity amount or the withdrawal amount.
2. Public Provident Fund (PPF)
Launched in 1968, PPF is meant to mobilize small savings in the form of investment, coupled with a return on it. It enables one to build a retirement corpus while saving on annual taxes. The current interest rate is 7.1 per cent p.a. which is compounded annually.
PPF falls under the Exempt-Exempt-Exempt (EEE) category. This means that all deposits made in the PPF are deductible under Section 80C of the Income Tax Act. However, the maximum contribution in PPF cannot exceed Rs.1.5 lakh in one financial year. Furthermore, the accumulated amount and interest are also exempt from tax at the time of withdrawal.
3. Equity Linked Savings Scheme (ELSS)
ELSS is a diversified, open-ended Equity Mutual Fund that offers higher returns as well as great tax benefits. The tax exemptions are offered as stipulated under Section 80C of the Income Tax Act. A major portion of the capital is invested in equity funds. The lock-in period applicable to these funds is 3 years and the investors can exit the scheme by selling it after this period.
Tax is not levied on the returns earned from an ELSS. Up to Rs. 1.5 lakh of the investment can be claimed for tax deduction from the gross total income, as per the provision stated under Section 80C of the Income Tax Act.
4. National Pension System (NPS)
National Pension System (NPS) is a retirement benefits scheme introduced by the Government of India to facilitate a regular income post-retirement for all subscribers. There is a deduction of up to Rs.1.5 lakh to be claimed for NPS – for your contribution as well as for the contribution of the employer. 80CCD(1) covers the self-contribution, which is a part of Section 80C. An additional deduction of Rs. 50,000 under 80CCD (1B). This bonus deduction is an exclusive tax benefit for NPS subscribers.
Source: https://english.jagran.com/business/jagran-trending-best-income-tax-saving-schemes-and-plans-in2022-10042611