This is a good opportunity for you if you work and want to start investing. You can invest in government-issued plans where the government offers the benefit of tax-saving plans if your wage falls within an income tax bracket and you pay taxes simultaneously.
Today, such schemes in the country allow you to invest and reduce your tax liability. Here, we'll go over three tax-saving strategies you can use to invest and benefit from tax exemption while building a solid future fund.
Public provident fund
PPF is a fantastic way to invest in a secure environment and save on taxes. Any investor may deposit up to Rs 1.5 lakh under this plan, with a minimum commitment of Rs 500. The PPF has an annual interest rate of 7.1%. The unique feature of this plan is that the money invested, the interest earned on the money invested, and the maturity amount is all tax-free.
Sukanya Samriddhi Yojana
The investor receives a 7.6% interest under this plan. With this program, you can make yearly deposits to your daughter's account ranging from Rs 250 to Rs 1.5 lakh. For 14 years, money is deposited here. The investor receives the whole amount invested plus interest after the daughter turns 21. The daughter's age must be less than ten years to invest in this.
Fixed Deposit
Besides PPF, you can also invest in FDs. By investing here, you're also excluded from paying taxes. But it's important to remember that this strategy has a 5-year lock-in term. In other words, money cannot be withdrawn before five years. The interest rates offered on FDs also fluctuate often.
Senior Citizen Saving Schemes
SCSS is a beneficial savings program for retirees. SCSS accounts can be opened at a post office or bank. This can accept annual investments up to Rs 1.5 lakh. It currently receives interest payments at a rate of 7.4% per year.
National Pension System
A government retirement savings program is the NPS. Besides saving Rs 1.5 lakh under section 80C, this also offers a benefit of up to Rs 50,000. That means you can receive a total income tax exemption of Rs. 2 lakh by investing in NPS. The minimum investment amount is Rs. 1,000 each month. Any Indian citizen between 18 and 65 age may open an account under this program.
Equity Linked Savings Scheme
Equity funds include the Equity Linked Savings Scheme (ELSS). Only this mutual fund is eligible for an exemption under section 80C of the Income Tax Act of up to Rs. 1.5 lakh. In ELSS, returns and profits up to Rs 1 lakh are not subject to taxation. ELSS offers the best tax-saving investment options with the shortest lock-in period of 3 years.