Tax Saving PlanningTax Saving Option & Planning
A strategic and intelligent tax planning can serve the dual objective of helping individuals to meet their targeted financial goals as well as it saves tax.
There are multiple tax savings investment avenues, one can choose according to one’s own financial situation.
Some of the tax saving investment options
Premiums paid in life insurance policies are tax exempt under section 80C and claim amount is exempt under section 10 10(D).
Amount invested under ELSS also known as equity-linked savings scheme of the mutual fund is exempt under section 80C up to a maximum of 1.5 lakhs per financial year for an individual. Investment under these schemes can be done in many ways i.e. Lump sum & SIP – Systematic Investment Plan.
Creating a list of potential qualified prospects for your service or product can be daunting when you’re beginning your business. However, this needs to be considered as a follow up on your Target Market Analysis so you can hit the ground running.
Premiums paid under health insurance policies are exempt under section 80D. Insurance premium paid up to Rs. 20,000/- for senior citizens and Rs. 15,000/- for the general public are eligible for tax benefits.
One of the most popular investment nowadays under section 80C is in tax savings mutual fund i.e. ELSS also known as equity linked savings scheme.
Equity-linked savings scheme offers investors to get benefits out of equity markets and enjoy benefits of tax savings as well as capital appreciation.
ELSS has a lock-in of 3 years from the date of investment i.e. an investor cannot withdraw money from ELSS before the end of 36 months or 3 years from the date of unit allotment. In case of SIP – Systematic Investment Plan, each installment has to complete 36 months or 3 years to get free from lock-in period and only after that an investor is free to redeem or switch the funds from ELSS.
As compared to other tax saving options ELSS is more famous among investor due to its lock-in period. ELSS offers 3 years lock-in period as compared to PPF investments are locked in for 15 years and NSC is locked in for 6 years and tax savings bank fixed deposits are locked in for 5 years from the date of investment.
One of the unique benefits of ELSS is at the time of investment the investor gets benefits under section 80C and after completion of lock-in period of 3 years, the amount which investors withdraw is also tax-free. Also, the scheme does not invest in only one place. The portfolio under ELSS is normally diversified so as to minimize the risk factor and optimize the return of the scheme.
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