FINANCE SPECIAL/ INDIAN INCOME TAX SAVING ....Are you looking for last minute options to save taxes?

INDIAN INCOME TAX SAVING ..Are you looking for last minute options to save taxes?

From ELSS to NPS, PPF, Sukanya Samriddhi Yojana, bank FDs and insurance, you could select one or more of these financial products

In the next 10 days, as the financial year ends, a large number of people will be in a rush to invest in tax-saving financial products to lessen their overall tax burden. This is also the time, since they are in a rush, they are often left confused about which financial product is the best for them.

Here are some of the popular tax saving options under section 80C of Income Tax Act to select from:

1. Equity Linked Savings Schemes (ELSS)

These are mutual fund schemes run by fund houses which are also approved by the government to save on taxes. These come with a threeyear lock-in. Meaning if you withdraw the amount invested to save on taxes within three years from start, you have to forego your tax benefits. You could opt for growth and dividend options. These are completely market linked products and so rates of return can not be predicted. However, in the last five years, the average yearly return in the ELSS category has been about 18.5%, data on Valueresearch website showed. Given an investor's risk profile that allows him/her to invest in ELSS, financial advisors prefer these funds over most other tax saving options. That is because ELSS combines expert investment option at a low-cost, have the shortest lock-in among competing products and can inculcate an investing discipline if an investor opts for monthly systematic investment plan (SIP).

2. National Pension Scheme (NPS)

In addition to the section 80C benefits that allow NPS contributions to be clubbed with other approved investment products, one can also avail of a Rs 50,000 deduction by investing in this product that is under direct government supervision. So in a way by investing the Rs 50,000 in NPS, you could avail of total tax benefits for Rs 2 lakh per year.

3. Public provident fund (PPF)

With the government guarantee, relatively higher tax-free rate of return and available tax deductions, PPF is one of the most popular fixed-income tax saving options in the market. Of late the government has linked the retur n to yields in the gover nment securities market, which has taken some sheen off this product. According to financial advisors and planners, PPF is among the best tax saving options.

4. Sukanya Samriddhi Yojana (SSY)

This is a scheme that is aimed especially at the girl child. Run by the government, investments in SSY are tax free, so are the returns. An SSY account could be opened in the name of a girl child till she turns

10. Currently it fetches about 8.1% rate of return, which is the highest among similar fixed income tax saving products.

5. Tax saving bank deposits

There are some designated fixed deposits in banks which are allowed as tax saving products by the government. These deposits come with a five-year lock in and pre-mature withdrawal is not allowed. Most of the government-run and private banks offer this product. One can also invest in these FDs through post offices.

6. Insurance plans

Most of the insurance plans available in the market qualify for tax deductions under section 80C. These include unit linked insurance plans, term plans as well as traditional plans. Here the money spent to buy an insurance, the maturity benefits as well as the death benefits are tax free.

This article has been exclusively created for UTI SWATANTRA

TOI20MAR18