With proper tax planning, you can save a lot of your hard earned money. To start planning your investments carefully, it is advisable to start by reading about all the different plans and options available to you. An in-depth understanding of the various schemes and how they can benefit you is guaranteed to yield meaningful results. Another important thing to keep in mind before investing is to start early and be patient. A hasty and thoughtless investment decision can lead to unnecessary losses.
To help you save tax and increase your income, here is a list of investment options you should consider.
1) Term Life Insurance Policy
Life insurance policy provides you and your family with a cover of protection in case of any untoward incident. It is one of the most important investment options, as it makes your family financially secure. The premium paid on the policy is eligible for tax deduction. If a policy is purchased on or before March 31, the policyholder is liable for tax benefits in the same financial year.
2) Public Provident Fund (PPF)
Opening a PPF account to save tax has been a popular investment option over the years. PPF account can be opened in any bank or post office. A PPF account comes under the exempt category, hence the interest earned and maturity amount is exempt from tax. The lock-in period on PPF accounts is 15 years.
3) 5-Year Bank Fixed Deposit (FD)
A 5-year bank fixed deposit account is often considered a safe option to save tax. Opening an FD is considered a safe investment as the interest rates are fixed by the bank and are less risky than equity investments, and the returns are guaranteed. Senior citizens can take advantage of higher interest rates.
4) National Savings Certificate (NSC)
This investment plan is reliable as it is backed by the Government of India. NSC is a fixed income investment scheme that enables medium and small income investors to earn high returns. NSC investment offers the benefit of tax exemption up to Rs 1.50 lakh. It also provides guaranteed interest to the investors.
5) Senior Citizens Savings Scheme
It is an income tax saving scheme specially designed for senior citizens above 60 years of age. Investors can invest a minimum amount of Rs 1,000, on which tax exemption is available up to Rs 1.50 lakh. It is a long term savings opportunity and has a maturity period of 5 years.