Worried about choosing the right kind of tax saving provision at the end of the FY 2018? We explore some options for you at this juncture.
Taxpayers are worried about choosing the right kind of tax instrument before budget 2018 as they have limited time left. They should refrain from postponing tax-saving investments till the last few days before the budget. A reason for this is that they might not be able to claim the tax benefits because of the technical issues pertaining to cheque clearances. But, here are some financial instruments that make for financial prudence even in the late stages.
Equity Linked Savings Scheme
Equity Linked Savings Scheme (ELSS) funds can provide you a tax benefit under Section 80 C of the Income Tax Act for investments of up to ₹1.5 lakh. The advantage of ELSS over other funds is that it comes with the lowest lock-in period of three years.
Investments in Tax Saving Fixed Deposits
Tax saving fixed deposits come with a lock-in period of 5 years and provide tax benefits under section 80 C of the Income Tax Act for investments up to ₹1.5 lakh. Interest rates on the tax saving fixed deposits vary from bank to bank, which ranges from 7-9 %. The best thing about fixed deposits is that it offers 100% protection and the returns are guaranteed.
Public Provident Fund
Tax benefits could be availed on PPF account under Section 80 C with an annual interest rate of 8%. The tenure of PPF is 15 years and within that tenure, premature withdrawals are not allowed. However, the account holder can take a loan against the corpus in their PPF account.
Sukanya Samruddhi Yojana
The core objective of this scheme is to promote awareness about providing financial protection to the girl child. Needless to say, that the government has taken necessary steps to offer tax exemptions on both deposits and withdrawals in this scheme. Taxpayers can deposit an amount of up to ₹1.5 lakh in Sukanya Samruddhi Yojana and avail an interest rate of 8.6%. The best thing about this scheme is that the interest rate is compounded annually and is fully exempt from tax. Post maturity, the receipts are also exempted from tax.
Senior Citizen’s Savings Scheme
The Senior Citizen’s Savings Scheme (SCSS) is designed exclusively for the senior citizens. It has a maturity period of 5 years and offers an interest rate of 8.6% per annum. Tax benefits could be availed on the investments of up to ₹1.5 lakh under section 80 C of the Income Tax Act.
*Source: Economics Times
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