BEST TAX SAVING OPTIONS: HERE IS A COMPARISON OF 10 INVESTMENT OPTIONS

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Come near end, and all investors – new or old enter the panic mode of choosing the right tax saving investment options for their investment portfolio. Investors are always on the lookout for the right tax saving investment that caters their investment needs. To avoid choosing investment options at the last moment that do not align with your investment needs, it is advised to not wait till the last moment to choose the right tax saving investment option for your portfolio. In this article, we will understand the various investment options that can help to save tax.

Investment options to save tax

Tax saving investments, or Section 80C investments provide investors with a tax benefit of up to Rs 1.5 lac per annum. Here is a list of a few tax saving investment options that can help an individual to save tax on their investments:

  1. Equity-Linked Savings Scheme (ELSS) –ELSS funds are the only class of mutual funds that allow individuals to save tax up to Rs 1.5 lac per annum. These tax saver mutual funds not only helps individuals to save tax on their investments but also enjoy the superior potential of earning substantial returns. Thus, they provide investors with dual benefits of capital appreciation and tax saving investment opportunities. ELSS mutual funds have a mandatory lock-in duration of three years.
  2. National Pension Scheme (NPS) –Backed by the Indian government, NPS schemes mature as soon as an individual turn sixty. Investors are mandated to invest not more than 75% of their assets in equity-oriented funds, and the remaining is allotted to fixed-income instruments. Apart from the usual Rs 1.5 lac tax deduction under Section 80C, NPS schemes provide an additional tax benefit of up to Rs 50,000 per annum u/s 80CCC (1B).
  3. Unit-Linked Insurance Plan (ULIP) –ULIPs are a combination of investment plus insurance in a single investment scheme. These investment options offer investors with a prospect of generating capital on their investments while also offering them with a life cover. ULIPs allow investors to switch between their funds around three to four times every year.
  4. Public Provident Fund (PPF) – PPF schemes score high on taxability, flexibility, and safety among tax saving investments. As these investments are backed by the Indian government, an investor enjoys fixed and assured returns on PPF investments. You can open a public provident fund account either in a designated branches of PSU banks or in a Post Office branch. The investment duration of PPF schemes is 15 years. An investor can extend this further by 5 years.
  5. Senior Citizen Savings Scheme (SCSS) – Backed by the government of India, these schemes are available to all Indians above the age of 60. The investment duration of SCSS investment scheme is five years. However, an individual can choose to further extend by three years. The interest rates on these tax saving investments are predetermined by the government and declared at the time of purchasing these tax saving schemes.

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