Tax is something that bothers to the working individuals and those who fall under the taxpayer’s bucket. Today, several tax saving instruments are available through which you can show your investments and save on taxes. Life insurance and loans are some of the trending options. However, traditional instruments such as tax saving schemes are also popular among the people.
Following are some of the tax saving schemes available in India. Bank Fixed Deposits We all know that banks offer fixed deposit certificates through which you can keep some amount in the bank for a fixed tenure and earn interest on it. This also allows you to save on taxes if the fixed deposits are held for five years or more. However, the interest earned on the FD is taxable. Public Provident Fund or PPF The public provident fund is the government offered instrument through which you can get tax exemption under Section 80C of the income tax act. People usually invest funds in PPF in order to get returns for their retirement. The lock-in period for the public provident fund is marked to 15 years, within which for the first five years you cannot withdraw the money even partially. The government has set a slab for PPF as Rs. 1,50,000. National Pension Scheme In December 2018, the government of India made National Pension Scheme entirely tax-free. The lock-in period of three years is applied to NPS. The slab of 1.5 Lakh is also referred to NPS. Equity Linked Saving Scheme ELSS or Equity Linked Saving Scheme is another instrument which allows you to get an exemption on taxes. ELSS are nothing but mutual funds but linked to the equity market. In this instrument, the investments are made in equities in order to get significant returns as of 15% in the long run. ELSS are non-guaranteed plans which may or may not give you expected returns. However, proper forecasting and the study shows the returns are achievable. The lock-in period applied for ELSS is of three years, and you can also opt for dividend which gives you regular returns even all through the lock-in period. Senior Citizens Saving Scheme This instrument is designed primarily for those who have crossed 60 years of their age. The regular interest gained is taxable; however, can be covered in the exemption limit. The senior citizens have the provision of investing up to Rs. 15 Lakh in SCSS, and the lock-in period is of 5 years. To conclude, these are the popular five tax saving schemes in India. You can choose the best suitable for you and invest in it to avail benefit of tax savings.
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