Tax Saving in 2017

Who doesn’t think of saving taxes? Of course everyone! But the question is how? Saving taxes can become difficult if you have not planned out things properly. You often come across situations where you wish, you had someone who could advise or guide you to save taxes.

Below are some tax-saving investment options which help to avail tax benefits under different sections of the Income Tax Act.

• Mutual Fund: Mutual funds pool money from different investors and invest it in shares and securities. Capital gains earned from mutual fund schemes having equity exposure of 65% or more are completely tax-free. The lock in period is for 3 years. Mutual funds are not required to pay the dividend distribution fee, which makes dividend earned from equity schemes tax-free. Therefore, a single investment in a mutual fund can give you multiple tax benefits.
• Public Provident Fund (PPF): Investment in PPF account of up to Rs. 1,50,000 qualifies for Income Tax Rebate. The tax benefit can be taken under section 80 C of the Income Tax Act. Apart from the tax benefit, you get 8% interest per annum. PPF has a lock-in period of 15 years. Minimum investment required in PPF account is Rs. 500 and maximum investment that can be made is Rs. 1,50,000. Any amount invested beyond Rs. 1,50,000 would be refunded in your account but without any interest on it.
• Tax Saving Bank FD Schemes: Fixed Deposit is the most common and popular mode of investment to save taxes. The tax benefit of FD schemes can be availed under section 80 C of Income Tax Act. The lock-in period is 5 years.
• Unit Linked Insurance Plan (ULIP): ULIP provides life insurance to the person taking the policy. The tax benefits under ULIP can be availed at the time of investment as well as at the time of maturity. Deduction under section 80 C i.e. life insurance or 80 CCC i.e. pension can be availed under the Income Tax Act. Maximum deduction allowed is Rs. 1,50,000. The tax benefits can be availed only if the premium is paid regularly for the ULIP scheme.
• National Saving Certificate (NSC): NSC’s are issued for a period of 5 years by the Post offices. The investor gets 8% interest on the money invested. There is no threshold limit on the amount of investment. The tax benefit can be claimed against the interest income under section 80 C of the Income Tax Act.
• Sukanya Samriddhi Account Scheme: Parents or Guardian having a girl child can make a deposit of Rs. 1, 50,000 under Sukanya Samriddhi Account Scheme . The interest rate under this scheme is 8.6% for the FY 2016-17. The deposits can be made to the girl child reaches the age of 15 years. No further deposits can be made from 16th to 21st year. The scheme gets matured when the girl child reaches the age of 21 years. The interest received upon maturity is tax-free.
• New Pension Scheme (NPS): NPS is a low-cost tax saving scheme. There is no threshold limit of investment. However, the maximum tax exemption that can be availed by investing in Tier-I scheme is Rs. 1,50,000 under section 80 C and additional Rs. 50,000 exemption can be availed under section 80 CCD of the Income Tax Act.
• Rajiv Gandhi Equity Saving Scheme (RGESS): Under RGESS, an investor can avail the tax benefit by investing money in BSE100 stocks or RGESS Mutual Funds. To be eligible to claim benefits under RGESS, the investor must earn up to Rs. 12,00,000 per annum. The tax benefits are one time. The tax exemption can be availed on 50% of the invested amount under section 80 C of the Income Tax Act.
• Tax-Free Bonds: Investment in Tax-Free Bonds provides the benefit in form of tax-free interest income. The interest income on Tax-Free Bonds does not form part of total income. The tax benefit on interest income can be availed section 10 (15) (iv) (h) of Income Tax Act.

Evaluate the different tax saving schemes and accordingly make an investment in them. As a smart investor avail the tax benefits given to various schemes. Saving today will make your tomorrow happier.