With each new financial year, a whole list of concerns gets renewed along with the calendar. Working professionals, particularly, have quite a big concern to address—tax payments.
This is usually the time when employers come knocking, looking for receipts for tax-saving investments you’ve made during the year. This is also the time when panic hits and you scour the internet to find the quickest tax-saving plan.
But what you may not realise, when you make the purchase, is that your investment might really be a waste of money as it doesn’t yield the returns you thought it would.
So, what do you do then?
Instead of juggling between checking Home Loan EMI calculators and looking at different options to transfer Home Loans, find out some of the best ways to save on taxes.
Maybe an investment that isn’t just a passing trend would be your best bet. Here are 5 of the best tax-saving instruments you can go for in order to save your hard-earned money.
1. Public Provident Fund (PPF)
A PPF not only helps you save tax but also gives you a return of 8.7% on your investments. Also, the minimum recurring investment required is just Rs.500 per month, and a maximum of Rs.1.5 lakh per year. The only real downside (if you can call it that) is that you’ll have to bear with a lock-in period of 15 years.
2. National Pension System (NPS)
The NPS is one of the easiest tax-saving ventures you can opt for, especially if you fall under the higher bracket, with a salary of Rs.10 lakh per annum. Under this, you get tax deductions of up to Rs.50,000 according to Section 80CCD of the Indian Income Tax Act on top of the Rs.1.5 lakh available under Section 80C. Also, if you fall under the 30% tax bracket, you get an additional Rs.15,000 tax-cut.
3. Equity-Linked Savings Scheme (ELSS)
Investing in an ELSS with a lump-sum payment can guarantee a lot of tax savings under Section 80C of the Income Tax Act. In case, you don’t have enough funds to make a full payment, you can spread the payment over 3 months so that you can accumulate more units as compared to investing through an SIP. Also, if you are satisfied with the investments, you can convert it into a regular SIP and move forward.
4. Tax-saving Bank Deposits
This is one of the easiest investment options, one that is free of risk and extremely simple to maintain. Although the returns are more impressive for senior citizens, who get better interest rates and exemptions, they certainly help save a lot money, albeit after paying taxes. However, it is better than investing in an endowment plan that goes on for 15+ years and requires a lump-sum payment.
Now that you’ve found a couple of easy ways apart from saving on Home Loans to save taxes, you needn’t worry when the financial year comes to an end every March.
Arwind Sharma is a financial advisor with an experience of more than 7 years. He has worked for topmost financial firms in India and has been a visiting faculty at many reputed institutes in India. Currently based in Pune, Arwind Sharma is a name to reckon with when it comes to financial management for big brands. A post-graduate in business economics, he is an alumni of Princeton University, USA. During his free time, Arwind teaches children from marginalised sections of society and also work on his blog.