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As we had stepped in to the new year i.e. 2019 everyone is looking for smart investing ways to get tax savings, by investing in better ways the investors can have high tax savings as well as high earnings, what are the tax overflow in 2018? Now we will see which methods of savings are suitable for salary based employees and merchants
1.ELSS tax savings mutual funds
Equity linked savings scheme is the same as mutual funds, we can’t see we will receive profits every time but if the market is good we can receive profit of 12-18%, comparing to all other schemes elss has less lockin period i.e. of 3 years, the investors by selecting dividend rule they can receive income in lock in period too, by taking sip every month investor can get good profits and the investment can be secured from the market unbalances. Every month sip lockin period is 3 years, for example, if you have done sip in 2019 then the lockin period of this sip is upto 3 years, since the investment is for 3 years there will be full tax exemption for the ELSS. The top ELSS funds are axis long term equity fund, Reliance tax saver fund, DSP blackrock tax savers fund.
3.Public provident fund
Ministry of finance is changing interest on every 3 months. In the past, the interest rates on PPF are very high but as time passed these interest rates are decreased, even though these are the best investing parts.
From 2019 the interest rate is 7.6%, the maturity money will have 100% tax exemption, the lockin period is for 15 years, under 80c section the tax exemption will be only for upto an investment of 15 lakhs, from 3rd year to 5th year a customer can take a loan and get a 2% extra interest on the loan. NRI’s are not eligible to open a PPF account, any person could not take a PPF account representing a group of people, it should be invested before 5th of every month.
if he can invest 1.5 lakhs before April 5th you can get full interest of year in this way, in a span of 15 years, this is best for the employees who want save taxes, save for retirement, children studies, for the marriages these are the schemes, PPF is best for protective earning and high profits.
3.Sukanya Samriddhi Yojana
It is fot the welfare of girls, the deposut can be upto 1.5lakhs to a minimum of 1000 rupees, 8.1 percent anual interest, the time period is up to the girl reaches a age of 21 and the investment should be stopped after 15 years and the money can be withdrawn under ceetain conditions.
4.Tax savings bank FD schemes
This is an old method of getting tax savings, in this scheme the tax will be exempted only on the investment and the profit is implemented to tax, after demonitization the interest rates are decreased to large extent and the interest is from 2.5 to 7% and the FD’s which are tax exempted has a lockin period of 5 years.
5.Senior Citizens Savings Scheme
This is the best scheme for senior citizens who are above 60 years, they need to deposit for 3 months and they get interest for year, the interest is of 8.3%,the time period of this scheme is of 5 years, the investment is of a minimum if Rs. 1000 and to a maximum of 15 lakhs, there is no tax exemption for the profits, there is a chance of closing the account after a year with a fine of 1.5% and after two years with a fine of 1%.
6.Voluntary provident fund
Voluntary provident fund is the extra amount that the employee can afford to add to the PF account, the EPF interest rates are applied to these too, the EPF’s annual interest rate is 8.65% and it can be further reduced, this is good scheme to save taxes, this can be done to tax exemption after maturity.
7.New Pension Scheme (NPS)
The NPS is the best for investing for tax savings by section 80c In the last five years, NPS funds have made up to 10 to 15 percent of returns. If you invest in a good NPS fund, you will have to revenue from 12 to 15 per cent. Fund management charges are also very low. It is only 0.0009 percent of investment value. Rs.500 / – per month or Rs. 6,000 per annum. There is no limit to NPS. Investors are likely to have an asset alignment between equity, bonds and gilt funds, NPS can be opened on online or offline.
8.National Savings Document (NSC)
National savings certificate or National savings document can be bought from post office,government will pay interest, need to buy them for 500,1000,5000 and 10,000 rupees respectively, maximum number of papers can be bought and the interest rates are 7.5 fixed annually and tax is calculated on the interest, interest is calculated every 6 months, tax is exempted upto 1.5lakhs under section 60c.
They are mainly for protection to life, the insurance companies have reduced ULIPs significantly after IRDA issuing rules 2010, new ULIPs policies have lower policy rates or operating charges, there is no guarantee that good returns will come initially but gradually it is possible to provide revenue between 5 to 11 percent within 10-12 years you can see good returns, those who do not believe in stock markets and mutual funds can buy them and they provide life insurance along with investment, tax exemption under section 80C is applicable upto 1.5lakhs.
10.Life insurance policies
You have to take good plan with low premium and the low premium can be done providing high coverage, the policy holder will provide financial support to the supporters dependent on him eventually. This provides tax savings including the life insurance and buy the life policy equivalent to 10 to 15 years is good.
11.The original payment of housing
Generally we think of own home and now this can be fulfilled, because interest or principle amount can be remitted, this is one of the path to save the tax.
12.Home loan interest payment
Tax exemption can be made up to Rs.2 lakhs on housing interest payments, Section 24 of the Income Tax Act provides for this lecture and gives exemption from the original household under section 80C, this exclusion applies if you live in a built-in house or rented house.
13.First-time home buyers
If you are one of the first home buyers, you can get tax savings of up to Rs 50,000 in addition to housing interest repayments, section 80EE provides this facility. For example, the first time the housewife paid Rs.2.6 lakh in a year, then Rs.2 lakhs under section 24 and Rs.50 thousand under Section 80EE, a sum of Rs.2.5 lakh can be exempt from tax.
These are revenue after retirement, there are two types of defunct annuity and immunity annuity, annuity should be invested until retirement, upon reaching the retirement, withdrawal can be done up to 60%, the rest should be placed in the annuity fund, this can be a regular Income after retirement, in the same way, investing a large sum of money in the Immediate Annuity.
you can get a pension from next month, these two are for retirement, besides, you can save additional tax on medical insurance, home rent and child tuition fees. Investment in the above mentioned 14 tax saving schemes can be exempted from tax by Section 80C, in addition to those who have bought the house for the first time can get tax exemption up to 4.5 lakh, not all of them are tax exempted one’s and the right choice for your goals and risk taking.
- 1 1.ELSS tax savings mutual funds
- 2 3.Public provident fund
- 3 3.Sukanya Samriddhi Yojana
- 4 4.Tax savings bank FD schemes
- 5 5.Senior Citizens Savings Scheme
- 6 6.Voluntary provident fund
- 7 7.New Pension Scheme (NPS)
- 8 8.National Savings Document (NSC)
- 9 9.Unit linked investment plan
- 10 10.Life insurance policies
- 11 11.The original payment of housing
- 12 12.Home loan interest payment
- 13 13.First-time home buyers
- 14 14.Pension Schemes