There are several solutions for saving taxes and these may help you meet several financial goals in the long run. You can invest up to Rs. 1.5 lakh in tax savings solutions under Section 80C of the Income Tax Act. In case you are in the 30% slab, you can save taxes up to Rs. 46, 350 and the investment made for a particular year can be highlighted and claimed as a deduction under Section 80C for that year only.
You can opt for ELSS (Equity Linked Savings Schemes) and investing in these mutual funds will give you higher capital appreciation and help you meet financial targets. These schemes come with 3 years as a lock-in period and the returns are linked to market performance. The schemes are also tailored according to asset classes. Tax saver FDs (fixed deposits) taken for a period of 5 years may help in getting good returns and also saving on taxes payable for the year. You can also invest in Public Provident Fund or PPF which offers tax exempted benefits and has 15 years as the lock-in period. Life insurance is another way to save taxes under Section 80C. ULIPs may also help in growing investments and ensuring greater protection.
You can also invest in the NPS (National Pension System) which will give you a lump sum amount and regular incomes at the time of retirement. This ensures an extra benefit of investing Rs. 50,000 under Section 80CCD (1B) of the Income Tax Act. Any individual can invest up to a maximum of Rs. 2 lakh for the NPS account and get savings of up to Rs. 61,800 for those in the 30% tax bracket. Taxes are also levied on the deferred annuity that is received at the time of retirement. You can also invest in NSC (National Savings Certificate) since these investments will also be eligible for deductions. You can also use the certificate as collateral for availing of a bank loan.
You can also invest in the SCSS (Senior Citizens Saving Scheme) if you have touched 60 years of age. In case an employee is taking VRS (Voluntary Retirement) then he/she can easily set up the SCSS account at the age of 55 as well but the account should be set up within just one month of the receipt date in order to get the retirement beenfits. The cycle of maturity is 5 years in this case and it can be increased by 3 more years if required.