Are you aware of these lesser-known investment avenues for tax saving? Check out

Are you aware of these lesser-known investment avenues for tax saving? Check out

 

Tax saving is a continuous process. However, not everyone plans it well through the year. It often ends up being a last-minute rush. The last quarter of this financial year is here and if you have already reached out to the more popular investment options, let's look at some of the lesser-known investment options that can give you a tax break.

Withdraw and reinvest old tax-saving investments

Sometimes, there s no need for you to invest more money. You can liquidate old tax saving investments which have completed the lock-in period and re-invest them further for tax benefits. Schemes such as PPF allow partial withdrawals upon finishing seven years from the time of investment. Tax-saving ELSS, on the other hand, comes with a three-year lock-in period, which can then be withdrawn entirely or partially to reinvest.

Pre-school fee deduction u/s 80*C

This is not as known as the deduction on school fees. Tuition fees for pre-school, i.e. pre-nursery and nursery, are eligible for deduction under Section 80 (C). However, the benefits are restricted to two children. So each parent can claim for deduction on the fees for two children.

Saving tax with the help of parents"Saving tax with the help of parents"

If your parents are senior citizens, you can transfer funds to their fixed deposit (FD) accounts and earn tax-free interest up to Rs 50,000 in a financial year from each of their accounts. Your parents can also invest the transferred fund in other tax-saving schemes eligible for deduction under Section 80 (C) such as SCSS to earn attractive ROI.

If you are buying a house on loan and you finance part/entire of the cost by borrowing from the parents, you can claim tax deduction benefits under Section 24B for the interest payment to your parents. However, take proper interest certificate from your parents as proof of interest payment.

If you live in a house owned by your parents, you can pay rent to them and claim HRA deduction to lower your tax liability. However, you do need to have a proper rent agreement and rent slips from your parents to avoid trouble in the event of any scrutiny from the IT department.

Premium payment for senior citizen parents Medical expenses are only going up with time and you must have a medical insurance in place to take care of these expenses, especially when it comes to senior citizens. And if you are paying premium for their health insurance, you can claim a deduction of Rs 50,000 under Section 80 (D). If a senior citizen pays for the premium of his very senior parents, he/she can claim for an additional deduction of Rs 50,000.

This apart, if you are paying for the expenses on medicine for your senior citizen parents, you can avail deduction up to Rs 50,000 under Section 80 (D). However, the tax benefits in this case can only be availed if the expense is not covered under health insurance. Keep a record of all the bills and prescription safely for submitting proof.

 

 

Best investment options for salaried class: What they are and how you can benefit from them

 

Best investment option for salaried, mutual funds, fixed deposits, investment tips, Bank fixed deposits, Gold investment, company fixed deposits, PPF, Public Provident Fund, Stock Market Investment, real estate, NPS, National Pension Scheme,More

From equity mutual funds to fixed deposits (FDs), gold, real estate, PPF, and NPS, there are multiple options for investment today. Hence it may seem a little confusing to decide which one to pick. While some of the schemes like NPS and PPF are risk-free, other avenues like the stock markets and mutual funds are subject to market risk and require knowledge or expert help. Generally, the choice of investment instruments is dependent on the individual s risk profile, age, and various other factors. However, for a salaried individual, some of the investment platforms play a better role than the others.

If you are looking to invest, consider these investment avenues:"If you are looking to invest, consider these investment avenues:

Public Provident Fund:

 Because of its safe and secure nature for long-term investments along with guaranteed returns that are fully exempted from tax, PPF is one of the popular investment schemes. PPF comes with a lock-in period of 15 years which enables you to earn higher interest on your investments. You can additionally extend your investment time-frame, with 5 years block after the maturity of fifteen years. The minimum period of investment, however, is 6 years after which you can withdraw your investments. The minimum amount you’ll be able to invest during a fiscal year is Rs.500 and the maximum is Rs1,50,000. You can additionally take a loan on the balance of your PPF account, in case of any monetary emergencies. The current interest rate on PPF is 8 per cent per annum compounded annually.

Mutual Funds

It is commonly known that mutual fund investments generate higher income over a period of time. This money is invested in equities, bonds, and other market instruments. The best approach is to invest in MFs through systematic investment plans (SIP) or in a lump sum. Mutual fund schemes, aside from close-ended and ELSS schemes, don’t have a minimum investment period. The risk profile, however, depends on the funds you invest in. While the debt funds invite less risk and are appropriate for risk-averse investors, the risk is comparatively higher in equity funds and are suggested for investors who can take the risk.

National Pension Scheme

For those with a very low-risk profile, this government-sponsored scheme is one of the best modes of investment. As it is backed by the government, the risks of your investment are cut off. Investing in the NPS gives you additional tax benefits under Section 80CCD.

Gold investment

It is one of the most popular and sought-out investment options in India. For investing in gold, you can either buy through a gold deposit scheme, gold ETF (exchange-traded fund), gold MFs or gold bars. Gold mutual funds and ETFs are a highly liquid investment as they allow investors to hold the gold in a paperless form and sell them in stock exchanges.

Bank fixed deposits

If you are looking to invest for a short or medium duration, you can opt for a bank fixed deposit. Ideally, for one year, these give the highest rate of interest. FDs have attracted the maximum investment, because of their fixed returns. Though you can make a premature FD withdrawal with an interest deduction, you cannot break a tax-saving FD that is locked in for a period of five years.

Real Estate

It is an ideal investment avenue especially for long-term investment for those with the money for it. Since the last few years, the industry has become well regulated because of the Real Estate Regulation and Development Act (RERA) which came into practice in 2016.

Stock Market Investment

Though this offers the best returns, this also comes with high risks. Experts suggest those with the proper knowledge of the market should opt for this instrument or should take the help of experts. The Budget 2018 made the long-term capital gains taxable. However, it still appears to be tax-friendly to investors. In the stock markets, you can choose from various small, mid and large cap stocks. You can also invest in all of them to create a balanced portfolio.

Happy investing