Good salary open gates for expectation, expenditure, happiness and the unforgettable ‘taxes’. And tax saving is a crucial task to perform though you might resist saying it’s too early or what’s the need etc. But, one needs to do proper planning instead of reckless spending in order to save taxes. According to section 80C of the Income tax Act, certain investments are deductible from the total income thus lowering your taxable fraction. The upper cap on such deduction is Rs 1,00,000.
PPF – Public Provident Fund
PPF is one of the best and safest long term investment options. It is the first thing that comes to most of our mind when planning to save money. This 15 year investment plan is good for both business and salaried people. With a tax free 8% interest (keeps changing), one needs to submit at least an amount of Rs 500 and a maximum of 1 lakh per year. Placed under Income-tax section 80C, it gives a tax exemption for salaried people.
Lowering your taxable fractions, life insurance premium also come under income tax section 80C. The premium you pay on your life insurance premium is deductible from your taxable income. It is one of the leading tax saving investments under section 80C.
NSC – National Saving Certificate
Yet another investment mode which helps in tax relaxation under section 80C, NSC is for 5 years to 10 years with an interest rate of 8.6 to 8.9%. NSC can be bought online (through few banks) or from post office.
5 year Bank Fixed Deposit
Bank fixed deposits with tenure of 5 years are eligible to provide tax relation under section 80C. You need to ask the bank to provide you a Tax Saver Fixed Deposit and a stamp is put on the FD receipt indicating a lock-in period of 5 years. In this case, you can not avail for loan or premature withdrawal. It provides an interest rate of 8.5%.
Pension fund deduction is labeled under 80CCC which is a part of 80C offering a tax relief for a maximum of Rs. 1 lakh.
5 year POTD (Post Office Time Deposit) Scheme
Just like bank fixed deposits, post office time deposits are also a great way to invest money and get relaxation on tax deduction under section 80C. It give an interest rate of 8.5% and duration may vary from 1 year to 5 years, but tax rebate is only on 5 yr POTD scheme.
SSCS – Senior Citizen Savings Scheme
SSCS is designed for people aged 60 years or above. It offers 9.30% per annum. With a maturity time of 5 years, this scheme can be extended for 3 more years. Once the interest amount crosses Rs 10,000 in a financial year, the interest payable quarterly is subject to TDS and taxable.
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