Secure Your Finances with These 4 Tax Saving Instruments Before March End

Key Takeaways:

• There are some great tax saving investment options including PPF, health insurance, and NPS.
• By investing in tax-saving schemes, you can secure your financial future as well.

If you are worried about paying hefty taxes while filing for income tax at the end of this financial year, don’t worry, we have your back. Although paying income tax is inevitable, you can minimise your financial burden by making smart investment choices. This article explores the different investment instruments that work well for individuals as well as families.

4 Tax Saving Investments to Consider Before Year End

Here are some great last-minute tax savings options for you to consider:

1. Public Provident Fund (PPF)

PPF is considered a steady and reliable investment opportunity that offers impressive returns in the long run. It is a government-backed scheme with a lucrative interest rate of about 7.1%. Your total contribution towards PPF in a financial year is eligible for tax exemptions under Section 80C; the maximum investment limit for tax exemptions under PPF is at about ₹1.5 lakhs.

Did you know that PPF is a completely tax-free investment opportunity? The maturity amount, principal amount, and interest earned on your PPF account will not be taxed. Although PPF has a lock-in period of 15 years, you can make a partial withdrawal upto a specified limit. All these factors make PPF one of the best investment options.

2. Health Insurance

Under Section 80D, tax deductions can be claimed while filing income tax returns on health insurance premiums. You can claim tax deductions up to ₹1,00,000 if your health insurance covers your family, including your spouse and children, and your parents who are senior citizens.

You can consider getting a health insurance plan before the financial year ends on 31st March if you don’t have one already. Paying your annual premium at once can be beneficial in saving tax.

3. Pension Schemes

It is crucial to plan for your retirement and ensure a steady cash flow in your old age, but pension schemes can also help you save on taxes. For example, with the National Pension System (NPS), you can avail up to ₹1.5 lakh under Section 80C. Additional deduction of ₹50,000 can also be availed under Section 80CCD(1b). Employers can contribute up to 10% of your basic salary to your NPS account, which provides a boost to your investment funds.

4. Equity Linked Savings Schemes (ELSS)

ELSS has a high growth potential than traditional saving options, like Fixed Deposit, in addition to offering tax benefits. It can be defined as a type of diversified equity scheme, and it allows you to avail tax deduction of up to ₹1.5 lakh under Section 80C.

The lock-in period for ELSS is just 3 years, which makes them an ideal option for people who don’t want to get stuck with an investment option for a long time. Use our simple ELSS Calculator to see how much you can make with ELSS.

Conclusion

The investment options mentioned above will not only help save taxes while filing income tax return, but also help you save money in the long run.

If you haven’t had the time to look at your tax breakup yet, this is your sign to make smart choices with your money today and reduce your tax burden. Start investing now with Upstox to make right investment choices easily.