Investing in plans that offer returns and, at the same time, save tax is a two-in-one deal that you can’t say no to. To select plans that offer tax-saving options, it is essential that you do as much research as you can. Let’s find out some of the best plans that offer great tax-saving benefits.
Almost all taxpayers procrastinate until the last minute, resulting in hurried decisions. But, if you start planning at the beginning of the year, then your investments will be able to compound, and at the same time, it will help you achieve your long-term goals. Remember, tax-saving is not a goal, but it is supposed to be an additional perk. There are a few things that you need to consider before you opt for a policy that works for you and your family.
Make sure you use the following pointers to plan all your tax savings for the year:
Check all the tax-saving expenses that you already have – like children’s tuition fees, home loan repayment, EPF contribution, insurance premiums, etc.
Now, deduct this amount from 1,50,000 rupees to determine how much you need to invest. You are not required to invest the entire amount if the expenses are completely covering the limit.
Select tax-saving investment based on your risk profile and goals. PPF, ELSS funds, NPS, and FDs (fixed deposits) are some of the most popular options.
Here are some plans that offer tax saving options:
The government is encouraging retirement savings; at the same time, the same tax benefits are not offered to all instruments. The pension plans that insurance companies offer do not fill the criteria for the additional tax deduction of 50,000 rupees which is available to NPS U/S 80CCD (1b).
Life Insurance Policy
We firmly believe that life insurance is the backbone of all financial plans because it offers protection to the goals of individuals even when they are not around. But this whole purpose is best accomplished through a term plan which is a form of life insurance policy that offers pure protection. Term insurance plans have no investment component. Hence, the complete premium goes towards the mortality charges. They are also cost-friendly compared to what you pay for a money-back plan or a traditional endowment policy.
Sukanya Samriddhi Yojana (SSY)
It is a government initiative that promotes the “Beti Bachao Beti Padhao” campaign. If you have a daughter below the age of 10, then the Sukanya Samriddhi Yojana is an excellent opportunity to save funds. Among all the small savings schemes, it has the highest interest rate, which is 7.6%. Similar to the PPF, the interest that is earned is tax-free. The annual cap of the same is 1,50,000 rupees on the investment.
SSY accounts can easily be opened in any designated bank or post office. The minimum investment required to open this account is 1,000 rupees. A parent is allowed to open an account for not more than two daughters. The combined investment in both accounts should not exceed Rs 1,50,00 in a year.