Vijay C Roy
Tribune News Service
Chandigarh, March 16
As the current fiscal comes to end on March 31, salaried individuals who have not made investments so far to save tax are scrambling for making investments. Besides cutting down their tax liability, they also want better return on investment.
According to wealth advisers, before rushing to make investments for FY 2019-20, the individuals should check whether they need such investments or not. The most common investments fall under Section 80C. Taxpayers can claim deduction up to Rs 1.5 lakh under Section 80C. The Tribune takes a look at several financial instruments that fall under Section 80C.
Public Provident Fund
A long-term retirement savings scheme, Public Provident Fund (PPF) is a secured financial tool offered by the government with a lock-in period of 15 years. One can invest up to Rs 1.5 lakh per annum under this scheme.
Life insurance premium
Life insurance policy plays a crucial role to protect family and cover mortgage and personal loans. Also, it is one of the best options to avail rebate under Section 80C for the premium paid against life insurance policy.
National Savings Certificate
This investment scheme is designed to save taxes with a lock-in period of 5 years. Under Section 80C of the Income Tax Act, taxpayers can claim tax benefits and enjoy guaranteed returns.
Tax-saving fixed deposit
Fixed deposits are the easiest and hassle-free way to build a tax-saving investment with five-year lock-in period. It is also an efficient way to save on taxes.
Equity Linked Savings Scheme
The investments made under ELSS qualify for tax deductions under 80C. Minimum 80% of the corpus is to be invested in equity-based funds, and the returns are market-linked.
Taxpayers can also claim deduction on tuition fee paid for a maximum of two children within the overall limit of Rs 1.5 lakh under Section 80C. However, any payment towards development fee or donation to institutions is excluded.
National Pension System
NPS — a financial instrument open for both salaried and self-employed — helps individuals to save tax. One can claim a tax deduction of Rs 2 lakh — Rs 1.5 lakh under Section 80CCE and Rs 50,000 under Section 80CCD (1B), according to Ankit Agarwal, managing director, Alankit Ltd.
One can also claim deduction on health insurance premium under Section 80D. For health insurance premiums towards self, spouse, children and parents, the maximum deduction that can be availed is capped at Rs 25,000 a year, provided the age of the individual is not above 60.
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