Tax payment can play a significant role in your lives. Typically, you can be eligible to pay your taxes after you start earning. Paying taxes on time can be your contribution to the nation. When you pay the taxes before March 2020, you can save more money and reduce your tax liability. For savings taxes, you can choose various types of investment options mentioned below before March 2020:
Unit linked Insurance Plan (ULIP)
A ULIP plan has undergone various changes, which have been made by the Insurance Regulatory and Development Authority (IRDA). The dual-benefit product that club’s investment and insurance under a single integrated roof has re-emerged in the market with better costs and returns. Additionally, it can provide tax efficiency since it falls under Section 80C and Section 10(10D) of the Income Tax Act, 1961. While Section 80C can let you claim a deduction of Rs. 1,50,000 on your taxable income, Section 10(10D) can offer a tax-free payout on the maturity date of your ULIP policy.
Senior Citizens Savings Scheme (SCSS)
The SCSS Scheme is a government-backed plan that can provide guaranteed returns and a regular flow of income to you. Due to solid government backing, it can be one of the safest and liquid tools of investment. Typically, the withdrawals can be made based on specifications and conditions set by your insurer. Besides, you should pay the interest every quarter. As an investor, you can earn an interest, which can be tax-free up to Rs. 50,000. The tax-efficiency of the SCSS Scheme can make it the right choice for senior citizens.
Public Provident Fund (PPF)
One of the most popular tax-saving investments can be PPFs. Since it is a part of the investment market since 1968, many of you might choose PPF for its longevity. A PPF account can be a type of tool that can aim to mobilize your investments along with returns. Under PPF, the interest rate is tax-free, unlike other investment options, such as bank deposits. Apart from tax-saving benefits, a PPF account can also be known for its liquidity, flexibility, and security. As an account holder, you can withdraw your funds partially after the completion of the fifth year. If you face a financial crunch during the on-going tenure, you can withdraw your money and reinvest it in a PPF account.
Equity Linked Savings Scheme (ELSS)
The ELSS Scheme is a market-linked type of investment tool that can involve relatively high market risks. Although it might not be suitable for everyone, you can invest in an ELSS scheme for its tax benefits. Under ELSS, the gains up to Rs. 1,00,000 can be tax-free, while the regular harvesting gains can allow you to avoid taxes on Long Term Capital Gains (LTCG). However, you shouldn’t opt for ELSS if you don’t wish to stay invested for three years. An ELSS scheme can have a lock-in period of three years that can allow you to achieve your short term goals, such as buying a house or a car, traveling, and so forth. Such goal-based investing always work out to your advantage.
Sukanya Samriddhi Yojana (SSY)
SSY is an investment option that has been specifically designed for the safety of your daughters. Typically, you can opt for SSY for your daughter, who is below 10 years. Under SSY, the interest rate can be connected to the government bond yield, which is why it can change every quarter. Although it might not be possible that the government can cut rates in the current scenario, the interest rate can be 8.4% until March. Additionally, the interest earned can be tax-free, while there can be an annual cap of Rs. 1,50,000 on the investment.
In a nutshell, there are can be numerous tax-saving investments in the market. Hence, you might be confused about where to invest money to grow your wealth and reduce your tax liability at the same time. These top five investment avenues mentioned above can allow you to save more taxes before March 2020. Therefore, choose the right tax-saving investment options for you before starting the new financial year to save you from last-minute chaos.