Best Tax Saving Instruments

Here are top 5 best tax saving investments: – 1. Public Provident Fund (PPF): PPF has a long-term tenure of 15 years. The compounding interest and income tax exemption of Rs 1.5 lakh in PPF, makes it one of the best choices at present. Currently, PPF has a return of 7.1 % p.a. 2. Senior Citizen’s Saving Scheme (SCSS): The best option for retirees, as only senior citizens, can invest in this scheme. SCSS can be started with any post office or a bank by anyone above 60 years of age. It comes with a five-year tenure, which can be extended by three years after maturity. Currently, SCSS offers 7.4 per cent interest per annum, payable quarterly and is fully taxable. 3. National pension scheme (NPS): NPS is a long tenure retirement-savvy investment option managed by the Pension Fund Regulatory and Development Authority (PFRDA). It is a component made up of equity, fixed deposits, corporate bonds, liquid funds and government funds, etc. NPS is launched by government to save for the retirement. For opening NPS account please visit www.npscra.nsdl.co.in. NPS gives returns approx. 9.5% p.a. (Source – www.valueresearchonline.com/nps/) 4. Invest in health insurance: If you are relying on your corporate health insurance plan or do not have one at all, health insurance is one of the crucial investments you need to make right away. Right health insurance plans not only enable you to save tax under Section 80D of the Income Tax Act, but also provide you financial protection at time of hospitalisation. Section 80D allows you a deduction of up to Rs 25,000 for premiums paid and Rs 50,000 to people above the age of 60 years. 5. Don’t just limit yourself to Section 80C and 80D: Your investments should not be limited to only the aforementioned sections. There are multiple lesser-known investment options that allow you to save on income tax. Under Section 80TTA, tax deduction benefit of up to Rs 10,000 is allowed on interests on your savings bank account. Under Section 80TTB, tax deduction benefit of up to Rs 50,000 is allowed on interests on your savings bank /FD / RD account. Additionally, you may claim tax deduction benefits on expenses on medical treatment, donations made to NGOs or political parties, as well, under Section 80G, 80GGA, and 80GGC. (Source: Taxguru)