Salaried individuals often end up paying too much tax. Astonishingly, a lot of these investors pay more than they are liable to since they are unaware of the Income Tax Act and various tax saving investment options available to them. Let’s look at some of the popular tax-saving investments offered to salaried individuals:
National Pension Scheme (NPS)
It is a retirement-focused scheme which matures when you turn 60 years old. Among various options under NPS, an investor can invest a maximum of up to 75% in equity funds and the balance in debt funds.
Tax saving mutual funds – ELSS
Equity Linked Saving Schemes, also known as ELSS funds, is the only tax saver mutual funds with the lock-in period of just 3 years. A lot of individuals invest in ELSS as they offer dual benefits of capital appreciation and tax deductions. You can save up to Rs.46,800 each year by investing in ELSS mutual funds.
Public Provident Fund (PPF)
Backed by the Government of India, PPF offers safety and attractive returns to its investors that are also fully exempted from tax. The scheme aims to muster small savings by providing an investment which is endowed with reasonable returns combined with income tax benefits to individuals.
Tax saving bank fixed deposit (FD)
Tax saving FDs are offered by banks and carry a fixed interest rate. The investment tenure of an FD is 5 years and it does not permit any partial withdrawal before the lock-in period ends.
Planning taxes isn’t rocket science. However, individuals should try and not take it lightly, either. After all, it is your hard-earned money which is withheld, an amount that could have been used for a better and more significant purpose. What’s more, if you succeed to invest your money wisely, you might be able to reap some profits from it too. Invest if possible, it could be better than paying taxes. Happy investing!