With proper tax planning, you can save much of your hard-earned income. To begin carefully planning your investments, it is advisable to start by reading all the different schemes and options available to you. A thorough understanding of the various schemes and how they can benefit you is guaranteed to yield fruitful results. Another important thing to keep in mind before investing is to start early and be patient. Hasty and ill-considered investment decisions can lead to unnecessary loss.
To help you save tax and increase your income, here’s a list of investment options to consider.
1) Term life insurance
A life insurance policy offers you and your family a safety net in case something unexpected happens. It is one of the most important investment opportunities as it keeps your family financially secure. The premium paid on a policy qualifies for tax deductions. If a policy is purchased on or before March 31, the policyholder is liable for the same tax benefit.
2) Public Provision Fund (PPF)
Opening a PPF account to save tax has been a popular investment option for years. A PPF account can be opened at any bank or post office. A PPF account falls under the exempt category, therefore the interest earned and the maturity amount are tax-exempt. The lock-in period on PPF accounts is 15 years.
3) 5-Year Fixed Bank Deposit (FD)
A bank deposit with a maturity of 5 years is often considered a safe option to save tax. Opening an FDI is considered a safe investment as the interest rates are set by the bank and the risk is lower compared to investing in stocks and the return is guaranteed. Seniors can benefit from higher interest rates.
4) National Savings Certificate (NSC)
This investment plan is reliable as it is backed by the Government of India. An NSC is a fixed-income investment scheme that allows middle and small income earners to achieve higher returns. NSC investments offer the benefit of tax exemption up to Rs 1.50 lakh. It also offers investors a guaranteed interest rate.
5) Savings scheme for seniors
This is an income tax savings scheme especially for seniors over the age of 60. Investors can invest a minimum amount of Rs 1,000 which is subject to a tax deduction of up to Rs 1.50 lakh. This is a long-term savings option and has a term of 5 years.