The smartness of an investor lies not in the amount of the income or investment. Rather, it is in finding ways to reduce your taxable income and liability. Tax deductions are possible through deductions under Section 80C of the Income Tax Act, 1961. There are several ways through which you can reduce your taxable income. It is possible to have tax exemption up to Rs.1.5 lakh every financial year.
The National Pension System is one of the popular ways of voluntarily saving tax. It is a form of retirement scheme where the investment reduces your tax liability. Equity-linked savings scheme is a type of mutual fund which can also help in investing in tax-free deposits. Another popular source is Public Provident Fund which is managed by the government with a maturity period of fifteen years. National savings certificate is further another public source which can reduce the taxable liability. It provides an interest rate of up to 8% per annum with the advantage being no upper limit for investment. Unit Linked Insurance Plans, which are special hybrid products, offer a life cover like mutual funds.
The recently launched Sukanya Samriddhi Yojana allows you open a deposit for your girl child where the minimum investment is Rs.250. This account matures 21 years after the opening of the account. The post office and bank saving fixed deposit with lock-in period of five years also help in claiming tax deductions.
Find the best investment scheme that suits you and your family and save tax easily.
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