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FY18 to end in 18 days! Some last-minute tax-saving methods to invest in


PPF is an old favourite investment option with resident salaried while EPF is one of the smartest investment instruments

It is that time of the year when taxpayers who still have some room for making investments look forward to investing in certain avenues to help save further on their outgo for the year. Besides a saving in income tax, there are other parameters such as returns, liquidity and risks involved, which also play a vital role in determining what to invest in. This article aims at discussing some investment options that can help you plan your investments across a financial year or make a lump sum investment at this point in time of the financial year (FY) i.e. before March 31, 2018, that would help you save taxes (PPF) An age-old favourite investment option available to the resident salaried as well as non-salaried individual is investment in PPF. It is a long-term investment backed by the Government of India and is eligible for tax deduction under Section 80C. The investment cap is Rs 150,000. PPF has a lock-in period of 15 years, which can further be extended by five years. It allows partial withdrawals after seven years of account opening. An investment in PPF yields an interest of 7.6 per cent per annum (currently). Additionally, it gets the EEE “exempt-exempt-exempt” status, which means investment in PPF qualifies for a deduction at every stage of investment and maturity. The contribution made to PPF, the interest earned on it and, above all, even the amount received on maturity are exempt from tax. ALSO READ: Do not let tax saving dictate the choice of financial instrument Equity Linked Saving Schemes (ELSS) ELSS is one of the smartest investment instrument, albeit, with some risk, to maximise your efforts. ELSS involves an investment of a majority of your deposit in equity-related products managed by professional fund managers who are experts in predicting market trends and make sure your money is invested in the right way. Investments in ELSS can be done via SIPs. They come with comparatively high returns between 12 per cent and 15 per cent and a lock-in period of just three years, which is quite low when compared to saving options like PPF, National Savings Certificate (NSC) and tax-saving Therefore, a lump-sum ELSS investment at this time may prove to be a good move to fill in your 80C. ALSO READ: Tax relief for exporters struggling to secure refunds for six months (EPF) Contribution towards an EPF goes a long way in helping a salaried individual not only save taxes as such contributions are eligible for a deduction under 80C of up to Rs 150,000; but also helps build a tax-free corpus for him.

An EPF also enjoys the EEE status. Tax-saving fixed deposits are like regular fixed deposits, but come with a lock-in period of five years and tax break under Section 80C on investments up to Rs 150,000. Different banks offer different interest on tax-saving FDs ranging from 6.5-8.7 per cent. The returns are assured but interest is taxable. This product is best suited for senior citizens who are looking for low-risk avenues to save tax with easy accessibility of funds on maturity. ALSO READ: Tax cloud over IFSC units: DDT waiver on what is paid from current income (SSY) As part of Beti Bachao Beti Padhao Campaign, Prime Minister launched a scheme called ‘Sukanya Samriddhi Yojana (SSY)’, which aims at tackling the major problem associated with girl child —education. It is an account that can be opened by parents or guardian of a girl child below the age of 10 years with a bank or post office, to which they can continue depositing year-on-year to build a corpus for the girl child. Investment in SSY is again eligible for a deduction under 80C up to a maximum of Rs 150,000 and it currently yields an interest of 8.1 per cent per annum. An SSY has also been accorded the EEE status. Investment in a house property by availing a housing loan Availing a housing loan for purchase or construction of a house property has its own tax benefits. The principal component of housing loan repayment can be claimed as a deduction under 80C up to Rs 150,000. The interest component is also eligible for a deduction against the income from house property. Such interest deduction can be claimed up to Rs 200,000 for a self-occupied property, whereas the maximum tax set-off of interest in one financial year is restricted to Rs 200,000 for a rented property. The remaining loss can be carried forward and set off in the future years from house property income. ALSO READ: Now, taxpayers can check return filing status of suppliers on GSTN portal Taking an insurance cover You can also expect some saving on your taxes if you have taken a cover for self, spouse or children. Here, the premium that you pay to maintain the or to maintain an annuity will qualify for a tax deduction under 80C, however, subject to a maximum of Rs. 150,000.

Archit Gupta is the founder & CEO ClearTax

First Published: Tue, March 13 2018. 13:34 IST


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