Investment

"Do not save what is left after spending, but spend what is left after saving – Warren Buffet"

It’s always a bad idea to rush in investments. Most of your investments should be planned well in advance. It so happens that one considers the investment with the lowest lock-in period, highest returns and easy investments options. But it so happens that taxation can eat up a huge chunk of your maturing returns and one should be assessing how they are being taxed.
There are various schemes that one may find under the tax saving options. These will not only help you in getting tax exemptions
but also a corpus amount can be received on maturity. With proper research and analysis, the best can be opted for.

Here are some of the best saving schemes which can be considered:
  • Public Provident Fund or PPF

Public Provident Fund is one of the most popular tax-saving instruments due to the tax-free earnings one receives at the end of 15 years. An extension of 5 years will not impact the tax-free nature of the interest accruals and payments out of PPF.
  • Employee Provident Fund or EPF

EPF is deducted from our salary and is a type of saving for a salaried employee. This corpus is given without deducting any of the taxes. The only condition that one needs to meet is to complete five years in service to claim a tax-free amount. If this amount is not invested in a recognized provident fund, then the tax-benefit can be snatched away.
  • VPF
The employees can opt to increase their contribution of salary to EPF from 12% to 30%. This will upgrade the EPF into VPF or Voluntary Provident Fund as this increased contribution is voluntary and not mandatory. It has the same benefits that of EPF.
  • ELSS
This is mostly offered by the mutual fund houses. Equity-linked savings scheme (ELSS) has one of the shortest lock-in periods than the other investment options. Gains from equity investments are tax-free and if these shares are held for more than a year, then ELSS funds too can offer tax-free returns as they can be redeemed only after the lock-in of three years cumulative. Also, the dividends received are tax-free.
  • Life Insurance

One of the most popular tax-saving options is life insurance policies. They include traditional and unit-linked insurance plans which offer a tax-free maturity proceed whether offered to investors or heirs. To receive a tax-free maturity amount, one should pay around five premiums and the sum assured should be 10 times the annual premium. 
  • National Saving Certificate
This is one of the highly secured saving schemes which is offered by the postal department and gives the tax-exempt on the maturity amount.
  • Senior Citizen Savings Scheme
This scheme offers tax benefits under section 80C. this interest is taxable which is deducted in the form of TDS if it exceeds a certain threshold.
  • 5 Year Post Office Time Deposit

One friendly scheme is offered by the post offices is that of 5 Year Post Office Time Deposit. It is just like that bank FD. The amount is withdrawn along with the interest at the end of maturity period.
  • 5 Year Bank FD
Any amount that you like can be invested for a tenure of 5 years in Bank FD’s. Under the tax deduction section 80C, one can claim for the tax exempts.  
  • Tax-free Bonds

Infrastructure companies and institutions like NABARD issue tax-free bonds for long-term and offer similar interest rates. Many times, they are mistaken to be tax-free at the time of investment, but the actual benefit is that the coupon earned at regular intervals and at the end of the tenure is tax-free.  There are many tax saving options under the Income Tax Act, but you might fail to claim the tax benefits in case of proper knowledge and procedures. All you need to do is connect with the experts. Financial year end is just around the corner and if  you have any of the above-mentioned investments have them made tax-free. In case you have not made any investments, it’s time to think and invest AND THE TIME IS RIGHT NOW!

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