With proper tax planning, you can save up on a lot of your hard-earned income. To begin planning your investments carefully, it is advisable to begin reading about all the various schemes and options available for you. An in-depth understanding of various schemes and how they can benefit you is guaranteed to bear fruitful results. Another important thing to keep in mind before investing is to start early and be patient. Investment decisions taken in a hurry and not well-thought-out can cause unnecessary loss.
In order to help you save tax and increase your income, here is a list of investment options for you to consider.
1) Term Life Insurance Policy
A life insurance policy provides you and your family with a safety net in case of any untoward incident. It is one of the most important investment options, as it secures your family financially. The premium paid on a policy qualifies for tax deductions. If a policy is purchased on or before March 31, the policyholder is liable for a tax benefit in the same fiscal.
2) Public Provident Fund (PPF)
Opening a PPF account to save tax has been a popular investment option for years. A PPF account can be opened with any bank or at the post office. A PPF account falls under the exempt category, hence, interest earned and the maturity amount are exempt from tax. The lock-in period on PPF accounts is 15 years.
3) 5-Year Bank Fixed Deposit (FD)
A 5-year bank fixed deposit account is often considered a safe option to save tax. Opening an FD is considered a safe investment as the interest rates are decided by the bank and the risk is lower as compared to equity investments, and returns are guaranteed. Senior citizens can avail a higher interest rate.
4) National Savings Certificate (NSC)
This investment scheme is reliable as it is backed by the government of India. An NSC is a fixed-income investment scheme that enables middle and small-income investors to earn higher returns. NSC investments provide the benefit of tax exemption up to Rs 1.50 lakh. It also provides investors with a guaranteed interest.
5) Senior Citizens Saving Scheme
This is an income-tax saving scheme designed especially for senior citizens above the age of 60 years. Investors can invest a minimum amount of Rs 1,000 which is liable for a tax deduction of up to Rs 1.50 lakh. This is a long-term saving opportunity and has a maturity period of 5 years.