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Here’s What You Need To Know About The Best Tax saving investments Under 80C In India

Mithlesh Singh
Mithlesh Singh Oct 25 2021 - 5 min read
Here’s What You Need To Know About The Best Tax saving investments Under 80C In India
Tax planning is one of the ways an individual can save money on taxes while also increasing the salary. The yearly tax act assigns deductions to various investments, tax saving options, and expenditures made by the taxpayer over a given fiscal year.

Just when an individual starts earning and falls under the tax bucket, they must pay their taxes. The good news is that there are some instruments that can help you save taxes. Therefore, it is worth investing in tax saving instruments.  When we talk about tax saving investments, it might be common for a phrase to strike your mind – ‘a penny saved is a penny earned.’

 

                                                               Image Courtesy: Shutterstock

Tax planning is one of the ways an individual can save money on taxes while also increasing the salary. The yearly tax act assigns deductions to various investments, tax saving options, and expenditures made by the taxpayer over a given fiscal year. We’ll look at a few of the roadways that can help an individual save money on taxes.

Before that, learn that it is impossible to overstate the significance of the long-term investment. These are the main arch to compounding power. Although compounding provides a profit from the principal and regular returns, investing more money results in better returns!

Long-term investment has the important benefit of instilling a propensity for regular reserve cash and making anyone a skilled investor. Moreover, maintaining a long-term investment helps an individual understand market cycles that he may leverage to his pros by booking benefits or implementing a suitable venture strategy to reduce risks based on his life stage and financial objectives.

Financial Tools

There are several kinds of long-term financial tools that help you save money on taxes and can also assist in generating high returns:

1.The Financial Instrument: Public Provident Fund (Ppf)

A PPF is actually tax-free. It is an investment instrument that energizes traditional, but limited long-term savings as well as tax saving options. PPF is also supported by our government which makes it a safer option.

Advantage: This is covered by the Exempt (Investment, Partial Withdrawals, Pay-outs) classification, this means that an individual will not be taxed at any point during the investment made.

While the PPF rate and return fluctuate according to the government’s plan, an annual rate of 7.1 per cent is now available (as of April 1, 2020.)

2.Financial Instrument: Sukanya Samriddhi Yojana (Ssy)

The Sukanya Samriddhi Yojana (SSY) program was launched by Narendra Modi, India’s Prime Minister, so as to encourage households to set up money for a small child. In addition, its goal is to assist guardians in covering the costs of extra training, marriage, and other expenses.

Advantage: The sum paid under Section 80C may be eligible for tax benefits in the same way other tax-saving investment strategies are. Both the interest paid, and the sum received at the development is tax-free. It thus acts as a tax saving option for candidates.

 

                                                            Image Courtesy: Shutterstock

3.Financial Instrument: National Pension Scheme (NPS)

The National Pension Scheme (NPS) is a defined contribution, voluntary annuity scheme administered by a Pension Fund’s Regulatory and Development Administration (PFRDA). Its goal is to provide people with sufficient financial security during their retirement years.

Advantage: Under Article 80CCD, employees can deduct up to a small portion of their compensation. Under Section 80CCD, non-representative is allowed to deduct up to 20% in their gross absolute compensation.

An extra allowance is also taken into account in area 80CCD(1B), which is more than the Rs. 1,50,000 outlined in segment 80CCE. This is also a reasonable allowance.

Methods for reducing taxes under Sections 80C, 80D, and 80EE are suggested below :

  • Make a Rs 1.5 lakh investment under Sec 80C to reduce the taxable income. By investing in NPS under 80CCD, an individual can claim an extra allowance of Rs 50,000. (1b)
  • Under Section 80D, the maximum deviation allowed is Rs. 1,00,000 (Rs. 50,000 for self and family if senior resident, and Rs. 50,000 for senior resident guardians).
  • Section 80EE provides a guaranteed allowance of up to Rs 50,000 on home loan interest.

Wrapping Up

Under Section 80C, an individual has the following tax-saving investments options:

Section 80C of the Income Tax Act, which includes several investments and charges he can guarantee allowances on – up to the farthest reaches of Rs.1.5 lakh in a financial year, is the most popular tax-saving investment available to individuals

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