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3 Tax Savings Schemes That Are Attractive
Who doesn't want to save tax? Tax saving schemes are the best way for making investment options to save tax. Various tax saving schemes are available for investments that allow you to save tax under the provision of the Income Tax Act, 1961.
Tax-saving investments are essential for financial planning and growth since they provide tax benefits under Sections 80C and 80CCC of the Income Tax Act, as well as serving as a safety net for unforeseen bills and crises. Here we will explain 3 tax saving schemes that are attractive in a sense of returns and most promising among the taxpayers.
Public Provident Fund (PPF)
Investment in PPF is best among the tax saving scheme u/c 80C. PPF is best for taxpayer who wants to put their money in funds for retirement savings. It promises to generate a return that is mostly in line with inflation. PPF could start with a deposit of Rs 500 per financial year with a maximum deposit of Rs 150000 lakh. 15 years is the maturity period of the PPF. However, after 5 years the amount can be withdrawn if certain conditions are met. Without any doubt, PPF is the best investment scheme when it comes to tax saving. The interest under the PPF is also exempt from tax, which is another big benefit. The only drawback for the scheme is that one has to hold for the longer term, though the interest is fantastic on the same.
5 year Bank Fixed Deposit
This is among the best tax-saving investment scheme offered by the banks. 5 yeas bank Fixed Deposit offers high return and saves tax as well. This scheme comes under section 80C of the Income Tax Act, 1961. In this, scheme, the amount invested cannot be withdrawn before 5 maturities. Although there are various types of FDs available in this tenure range, this one is best for tax saving. Various banks offer this scheme but the interest offered by the Yes Bank is highest among all that is 6.75% for a period of 5 years. The interest earned on the investment is eligible for tax exemption under section 80C.
Equity Linked Saving Scheme (ELSS)
ELSS is one of the tax-saving investment schemes under section 80C of the Income Tax Act, 1961. ELSS allows you to receive a tax credit of up to Rs 1,50,000 a year and save up to Rs 46800 in a financial year. It has the shortest lock-in period of all the options, at just 3 years. During the lock-in period, the dividend can be used to earn a consistent return. The capital gains and returns up to Rs 1 lakh are tax-free and after that LTCG (Long-Tern Capital Gains) tax is applicable at 10%. The deduction can be simply claimed under section 80C of the Income Tax Act, 1961. ELSS is one of the best tax-saving investment schemes for any taxpayer who is planning to save tax with a higher return.
Other tax saving scheme
Other than these 3 attractive tax-saving investment schemes, various other schemes are there that offer a good return and save tax. United Linked investment Pla, Premium Life Insurance, National Pension Scheme, and Senior Citizen Savings Scheme (SCSS) are a few of them.
