8 Best Ways To Save Taxes At The Last Minute

SOURCE : NEW18 NEWS

Last Updated:January 15, 2025, 16:11 IST

One can opt for investment options like ELSS, PPF, Fixed Deposits and Senior Citizen Savings Scheme to save taxes. These should align with individual choices and financial goals, promoting wealth growth

The end of the financial year 2024-25 is fast approaching. While finance experts recommend tax planning at the start of the financial year, many taxpayers seek investment options for tax savings towards the year’s end. Several options are available that not only offer tax benefits but also present opportunities for substantial returns.

From investment schemes like ELSS, PPF, Tax Saver FDs, and the Senior Citizen Savings Scheme, one can not only save tax by choosing the right plan according to their needs and financial goals but also grow their wealth.

Investing in Equity Linked Savings Scheme (ELSS) offers tax advantages and potential financial growth. These schemes provide tax exemptions up to Rs 1.5 lakh under Section 80C of the Income Tax Act. With a minimum investment requirement of just Rs 500, ELSS funds are accessible to a wide range of investors.

While these funds come with a three-year lock-in period, they present an opportunity for potentially favourable returns. Moreover, there is no upper limit on the investment amount, allowing individuals to align their investment strategy with their financial goals.

The National Pension System (NPS) presents a valuable opportunity for tax savings and wealth accumulation by the end of the financial year. It not only generates returns but also secures a future pension. By consistently investing until the age of 60, investors can withdraw a portion of their accumulated corpus, while the remaining amount is disbursed as a regular pension.

Furthermore, under Section 80CCD (1B), individuals can claim an annual tax deduction of Rs 50,000 on their NPS contributions. This deduction is in addition to the existing tax exemption limit of Rs 1,50,000 available under Section 80C.

A Unit Linked Insurance Plan (ULIP) offers a trifecta of benefits: life insurance coverage, tax savings, and the potential for favourable returns on investment. ULIPs come with a lock-in period of five years. One of the most significant advantages of ULIPs is the tax-free nature of investments, returns, and withdrawals. Moreover, if you maintain your investment in the scheme for the full five-year term, you are eligible for deductions on your taxes up to Rs 1.5 lakh under Section 80C of the Income Tax Act.

The Senior Citizen Savings Scheme (SCSS) presents a valuable investment opportunity for senior citizens, offering an attractive annual interest rate of 8.2%. Furthermore, investments made in the scheme qualify for tax exemptions under Section 80C of the Income Tax Act. Individuals can invest a maximum of Rs 30 lakh in this scheme.

Term life insurance, or term plan premiums, are eligible for tax exemptions under Section 80C of the Income Tax Act. Policyholders can also avail of tax exemptions on renewal premiums paid each year.

Tax Saver Bank FDs, with a lock-in period of five years, present an excellent investment option for tax saving. Under Section 80C of the Income Tax Act, investments in tax saver FDs qualify for a tax exemption of up to Rs 1.5 lakh. It is important to note that withdrawals from these bank FDs are not permitted during the five-year lock-in period.

Investments in the Public Provident Fund (PPF) qualify for tax exemptions under Section 80C. Additionally, both the interest earned and the maturity amount are tax-free. The combination of excellent returns and the absence of investment risk makes PPF a highly attractive investment option for many individuals.