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Tips for last minute tax savers

Tips for last minute tax savers
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March is that time of the year when the accounts department of your organization starts sending out reminder emails to employees for submitting the investment proofs. You had submitted an optimistic investment declaration at the beginning of the financial year, but this is the moment of truth. You probably managed to invest some money in tax-saving instruments throughout the year. Failure to submit the requisite proofs can lead to a deduction in salary over the next 3 months.

What do you do?

Most, if not all of us find ourselves in this spot towards the end of every financial year. This leads to a mad hunt for tax-saving investment options. Investing in haste is never a good idea and may backfire.

Remember: Section 80C of the Income Tax Act, 1961 is your friend

Better late than never. We have managed to collate a list of investments for all last-minute tax-savers.

Public Provident Fund (PPF)                                                                                                   

Many banks offer opening a PPF account online. You might have to submit your documents in person at the branch and transfer funds online through your savings account. This is apt for low-risk investors. You can claim tax deduction of up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act, 1961.

National Pension Scheme (NPS)

Another investment option for low-risk investors, the NPS offers an additional deduction of Rs. 50,000 (under section 80CCD of the Income Tax Act, 1961), over and above the Rs. 1.5 lakhs mentioned above. You might have to visit a branch authorised by the Pension Funds Regulatory and Development Authority to open an account.

Five Year Tax Saving Fixed Deposit (FD)                                                                                

Most banks offer this product and actively promote it, especially during the last few months of the financial year. You can contact your bank for opening this FD. Tax deduction can be claimed up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act, 1961. However, it is important to note that the interest earned on these deposits will be taxable on maturity.

Equity Linked Savings Schemes (ELSS)                                                                        

If you are averse to making recurring payments to be made for investments, ELSS is a good option. If you feel that the fund doesn’t suit your needs, then you can stop investing in the subsequent years. You can invest online through your bank, if it provides the facility to do so. You can claim tax deduction of up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act, 1961.

Life Insurance Policy*                                                                                                              

Investing in life Insurance helps you save tax while being insured. It requires a bit of research to finalise which insurer you want to buy it from. Compare premiums, sum insured and settlement records before investing. Online policies are relatively cheaper as compared to their physical counterparts as no part of your premium is deducted towards an agent’s commission. Tax deduction can be claimed up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act, 1961.

While there is a plethora of options in the market for tax-saving investments, when you are hard pressed for time, choose an instrument that you understand well.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

*This is just for information purpose and should not in any way be construed as any kind of promotion or endorsement of any insurance products by the AMC.

 

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