The deadline for filing your Income Tax Return (ITR) is approaching fast, with July 31st, 2024, as the last date.
If you’re looking to save on taxes through investments, there’s still time to do so.
Know about five schemes in which you can invest and save income tax
1. Five-year bank FD
Fixed deposits (FDs) are widely regarded as one of the safest investment options. Your invested amount remains secure, and you can earn a fixed return on it.
A five-year FD is also known as an Income Tax Saving Fixed Deposit, where you cannot withdraw the investment before the completion of five years.
If early redemption is necessary, the tax exemption benefits might be adjusted accordingly.
2. Public Provident Fund (PPF)
Investing in a Public Provident Fund (PPF) is another effective method to save on income tax.
You can also benefit from tax exemptions by investing in PPF accounts for your spouse or children.
PPF accounts have a maturity period of 15 years, and tax exemptions are applicable on investments, interest earned, and withdrawals upon maturity.
3. Equity Linked Savings Scheme (ELSS)
Investing in Equity Linked Savings Scheme (ELSS) allows you to claim a deduction of up to Rs 1.5 lakh under Section 80C.
ELSS has a lock-in period of three years. Any profit earned on selling the units is not subject to income tax, and dividends received are also tax-free.
You can invest in ELSS either through a lump sum or via Systematic Investment Plan (SIP).
4. Unit Linked Insurance Plan (ULIP)
With ULIPs, you receive tax exemption on the full premium amount under Section 80C of the Income Tax Act. ULIPs combine life insurance and investment components.
A portion of your premium contributes to life insurance coverage, while the remaining is invested in a fund.
5. National Savings Certificate (NSC)
The National Savings Certificate (NSC) is also widely used as a tax-saving scheme.
It matures in five years and provides a tax exemption benefit of up to Rs 1.5 lakh under Section 80C. However, tax is applicable on the interest earned from it.
The interest earned in the initial years is treated as an investment in NSC, making you eligible for tax exemption under Section 80C.
