Best Investing Options Eligible For Saving Income Tax

With the arrival of New Year, the Narendra Modi’s government is all set to lure the middle class through the income tax benefits. Here, in this article, we present you five options for investing that can offer you income tax saving.

Tax Saving Mutual Funds or ELSS

The tax saving season has just kicked off. Many mutual fund investors are searching for the best Equity Linked Saving Scheme that can help them to save tax under section 80C. As we all know that the investment in tax saving mutual funds or tax deductions up to Rs 1.5 lakh is available in a financial year. But, there are a few pointers that you need to consider before you proceed, don’t invest in ELSS just because they have a potential to offer superior returns, invest in it only if you have a risk appetite.

These investments have mandatory lock in period of 3 years. Also, it is an ideal investment for long term financial goal. You may hold on to these schemes as long as they are offering optimum returns. Adding too many of tax saving mutual fund may defeat the purpose and make it difficult to track them, hence it is better to invest in diversified ELSS scheme rather than having multiple ELSS in your portfolio.

Public Provident Fund – PPF

If you don’t have risk appetite, do not invest in equity saving schemes. Remind yourself that these investments invest majorly in stocks. So, it is better to sacrifice those extra perks and be satisfied with traditional methods of tax saving like PPF, 5 year bank deposit, etc.

Post Office Deposit Scheme

There are various post offices that offer various deposit schemes, popularly known as small saving schemes to the investors. The benefit of this scheme is it is backed by a sovereign guarantee and some of the schemes offers tax-saving benefits under section 80C of the Income Tax act. For example senior citizen saving scheme, sukanya samriddhi yojana, NSC VIII issue.

Investment in Housing Sector

The government affordable housing initiative and claim a deduction on stamp duty and registration fees while buying a home have proven to be an excellent tax saving instrument. The maximum permissible deduction under 80C is Rs 1.5 lakh and it is important to ensure that the claim is made in the financial year of purchase and cannot be availed after that.

Other unique tax saving instruments are you can avail under group health insurance cover, for parents treatment, the deduction for pre-nursery. Meanwhile, other tax saving options such as HRA is available for salaried employees which can be calculated using HRA calculator.

These investing instruments will definitely help you to save tax and will result in savings of the entire family.