A sound financial plan is one that starts at the beginning of the financial year. However, with overbooked daily schedules, tax saving often takes a backseat.
Every year as we enter March, hundreds of thousands of individuals, rush to opt for tax saving schemes at the last minute.
If you too have not been able to get your tax saving investments in place, fret not, as there is still some hope for you to salvage the damage.
Here is the list of some popular, tax saving schemes one could consider to reduce the Income Tax burden, at the last-minute.
1. Park your money in an ELSS Fund
Equity-linked saving schemes are one of the best ways to save tax. They do not require recurring payments like ULIPs. This makes it easy for you to invest any surplus funds in it, thereby reducing your tax burden.
What more, you need not pay the following years if there is a change in your financial goals.
Investing in ELSS is quite easy. All you need to do is visit the site of the mutual fund house, provide your KYC documents and get started.
Tax Benefit: You can claim exemptions up to 1.5 lac INR under Section 80C. And, the amount you receive on maturity is free from taxation.
2. Start a PPF and NPS
The Public Provident Fund is best suited for investors with low-risk tolerance. You can open a PPF account at a post-office or via some banks that offer that facility.
All you need to do is submit your KYC documents online, and then make deposits by transferring funds from your linked savings bank account.
The National Pension Scheme offers an extra break of up to 50,000 INR when compared to PPF, but the account opening process is pretty time-consuming and involves lengthy paperwork.
Tax Benefit: You can claim exemptions up to 1.5 lakh INR under Section 80C. And, the amount you receive on maturity from PPF is free from taxations but is taxable under the NPS.
3. Purchase an Online Health Insurance Policy
This is an excellent option for last-minute tax planners. You not only save tax but also protect yourself from massive hospital bills — that’s a double win. If you don’t require any pre-policy medical check-up, you can buy a medical policy online, within a few minutes.
Tax Benefit: You can claim deductions up to 15,000 INR under Section 80D. This amount is 20,000 INR for senior citizens.
4. Opt for a Tax-saving Fixed Deposit
This is one of the most commonly used savings methods and is quite easy to invest in it.
Most banks offer you the advantage of opening a fixed deposit directly from your internet banking account. And, you can transfer funds into it directly from your savings account.
You must file the FD receipt you receive on successful creation of the deposit, for tax claims.
Tax Benefit: You can claim exemptions up to 1.5 lac INR under Section 80C. However, the interest earned is taxable.
Also Read: Why Income Tax Return Filing Is Important
5. Buy a Term Insurance policy Online
Term insurance offers you massive covers for just a small premium amount. And by buying online, you can score a great deal on policies, when compared to the offline policies sold by agents.
The buying process is straightforward and is completed with just a few clicks.
Tax Benefit: You can claim up to 1.5 lakh INR under Section 80C. And, there are no taxes on the maturity amount.
You can save tax even at the last minute by using any of the methods listed above. However, we recommend that you plan your taxes right from the start of the financial year so that you avoid last-minute scuffles as well as unwise investment options in a hurry.