5 Tax Saving Options For FY 19-20
There is no denying that taxes are the most dreaded yet inevitable part of an investment plan. While each of us struggles to save taxes each financial year, the rest of us are clueless about the same and end up paying more. The best way to save taxes for this financial year is by investing in a tax saving investment plan. With the help of these tax saving investments, an investor can not only save up more money but also meet his financial goals with ease.
So if you’re wondering about the various tax savings options of investment for the financial year 19-20, go through the following mentioned below. Take a look:
List of tax saving options for FY 19-20:
- Unit Linked Insurance Plan
Since ULIP is one of the most preferred tax saving investments options, a majority of investors purchase a ULIP investment over any other plan. When an investor invests in a Unit Linked Insurance Plan (ULIP), he has to pay premiums on a regular basis in order to keep the policy running till its maturity period. These premiums are applicable for a tax deduction up to Rs. 1,50,000 on taxable incomes. Additionally, the maturity benefits which are received by the nominee on the death of the policyholder is tax-free.
- Equity Linked Savings Scheme
If you’re looking for a mutual fund investment with tax savings benefits, then Equity Linked Savings Scheme (ELSS) is the right choice for you. Investment in ELSS means making way for tax deductions as per Section 80C of the Income Tax Act, 1961. Being an equity-linked product, the policyholder will receive higher returns of investment. While the tax benefit is received up to Rs. 1,50,000, there is no specific limit on the investment in ELSS. ELSS is the lowest as compared to all the other tax savings options present under section 80C of the Income Tax Act, 1961.
- Public Provident Fund
Another one of the tax saving investment options available under Section 80C of the Income Tax Act, 1961 is the Public Provident Fund (PPF). Since PPFs are schemes provided by the government, it is the most trusted option of investment. Under a PPF Policy, there is not a barrier to the value of an investment which is why the investment amount ranges from Rs. 500 to Rs. 1,50,000. Since the rate of interest on PPFs is tax-free, the interest rate is typically assured rather than being fixed. However, the interest rate effective from January/ March 2018 is 7.6%.
- National Savings Certificate
Since the rates of National Saving Certificate (NSC) are settled per year, it is considered as a good tax saving solution for investment. However, the existing rate of interests of NSCs is 7.6%. When you invest in NSC, you can purchase it for the lowest amount like Rs. 100. Moreover, the investors are not bound to invest a particular sum of money as there is no such limit of investment as specified by NSCs. These investments made in NSCs are typically eligible for tax deductions since it comes under section 80C. However, the interest which you earn every year is tax-free, except for the last one that you receive on an NSC investment.
- National Pension System
Since National Pension System is amongst the tax saving investment options of section 80C, any contribution made by an investor towards NSCs is absolutely tax-free. However, the tax deduction cannot exceed more than Rs. 1,50,000. If the investor makes the addition of Rs.50,000 to his NPS, the deduction can be claimed under section 80CCD (1B). In simpler terms, the total deduction of Rs. 1,50,000 and the extra Rs. 50,000 are claimed by two different sections i.e. Section 80C and Section 80CCD (1B).
Now that you know these numerous tax saving options, we are sure you can have a full-proof answer to the question, ‘where should I invest money?’ With the help of these investment plans, the fear of taxes will no longer haunt you. Contact a reputed insurance company in order to start the process of investment immediately. Moreover, you can also compare several policies in order to land up with the best investment policy for the long run.