Smart tax planning allows individuals to save on tax as well as make better investments for the future.
Public Provident Fund (PPF)
Unit linked insurance plans (ULIPs)
Fixed Deposit (FD)
National Savings Certificate (NSC)
National Pension Scheme (NPS)
Senior Citizen Savings Scheme (SCSS)
Tax Saving Mutual Funds
The start of the financial year on April 1 marks the beginning of the tax saving year for individuals who are on salary or those who are non-salaried tax payers.
For single unmarried people in their 20s or 30s, or single income couples or single income parents where only one family member is earning can invest in the below tax saving options:
1. ELSS or Equity Linked Savings Schemes
2. Market-linked investment options with EEE benefits, such as ULIP, ELSS, Child Plans etc.
3. ULIPs or Unit Linked Insurance Plans
4. PPF or Public Provident Fund
5. Term insurance cover (with over 20 times of annual income as sum assured)
A family with double income sources can claim over INR 8.5 lakh in deductions by making prudent investments and insurance. The options include:
1. The couple can together save up to INR 3 lakh under 80C
2. Can buy term plans individually with SI equal 20 times of their annual salary
3. Can allocate 20% income annually towards market-linked investment with EEE benefits such as ULIPs, ELSS, Child Plans.
4. Can invest in Public Provident Fund (PPF)
5. Invest minimum 10% of income in pension plans such as NPS and other Pension schemes.
Here are some tips to remember:
1. Parents may note that they can claim tax deduction on school fees
2. Parents must start investing in child plans
3. Investing in property is another option for tax savings. You can avail tax benefits on home loan
4. Also, mediclaim or health insurance cover is another option that allow tax deductions
Here are some points to remember:
1. Senior citizens can opt for annuity schemes for regular flow of money after retirement, which are tax saving options, such as SCSS
2. They can opt for annuity plans to save tax and generate income
3. ULIPs also serve as a option for fund generation after retirement and allows exemptions under Section 80C and 10(10D)