With proper tax planning, you can save on a large chunk of your hard-earned income. To start carefully planning your investments, it is advisable to start reading about all the different plans and options available to you. A thorough understanding of the different diets and how they can benefit you will ensure successful results. Another important thing to keep in mind before investing is to start early and be patient. Hastily and poorly thought out investment decisions can lead to unnecessary losses.
In order to help you save taxes and increase your income, here is a list of investment options for you to consider.
1) Term life insurance policy
A life insurance policy gives you and your family a safety net in the event of an unfortunate incident. It is one of the most important investment options because it provides financial security for your family. The premium paid on a policy is eligible for tax deductions. If a policy is taken out by March 31 at the latest, the policyholder is liable for a tax benefit during the same financial year.
2) Public provident fund (PPF)
Opening a PPF account to save tax has been a popular investment option for years. A PPF account can be opened at any bank or at the post office. A PPF account falls under the exempt category, therefore the interest earned and the amount at maturity are tax exempt. The blocking period on PPF accounts is 15 years.
3) Fixed bank deposit (FD) at 5 years
A 5 year fixed bank deposit account is often viewed as a safe option for saving tax. Opening a FD is considered a safe investment because interest rates are decided by the bank and the risk is lower than investing in stocks, and returns are guaranteed. Seniors can benefit from a higher interest rate.
4) National Savings Certificate (NSC)
This investment program is reliable because it is backed by the Indian government. An NSC is a fixed income investment program that allows middle and small income investors to earn higher returns. NSC investments offer the benefit of tax exemption up to Rs 1.50 lakh. It also offers investors guaranteed interest.
5) Savings plan for the elderly
This is an income tax savings scheme specially designed for seniors over 60 years old. Investors can invest a minimum amount of Rs 1,000 which is subject to a tax deduction of up to Rs 1.50 lakh. This is a long term savings opportunity and has a maturity of 5 years.