FY2019-20: show prudence at the last moment, choose these best investment options for tax saving

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Taxpayers should make all their tax saving investments before the last deadline of the financial year (2019-20) to avoid last-minute hassles, but the truth is that many people end their tax at the last moment due to many reasons. Saving measures. If you are also one of them, then you can look at some tax saving investment products mentioned here, but before we prepare their list, let us first discuss some important things that you need to do at the last moment. Must be kept in mind while choosing products.

Tax saving should be the second major goal of your investment.

Tax saving investment should be done exclusively according to your financial goals. That is to say, you should choose tax saving investment products keeping in mind your risk appetite, need of money, commitment period for investment, expectation of return, etc. There are various types of tax saving products in the market whose returns are low and the commitment period is quite long, that is, after starting the investment, you have to keep investing every year for a long time. It is better to stay away from such tax saving products. Let us now try to find out some attractive tax saving investment options that can be selected at the last moment in the market.

1. EPF / VPF

Employees’ Provident Fund may be an attractive option if you are a big concern when investing in tax saving investment at the last minute. EPF is a very safe instrument currently earning interest at the rate of 8.6% per annum, which is much higher than the interest available on many popular tax saving products such as public provident funds. You get Rs 1.5 lakh under Section 80C of the Income Tax Act. You can invest the remaining amount in it to take full advantage of the tax deduction benefit.

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More investment than the minimum investment limit under EPF can be done by investing in Voluntary Provident Fund (VPF). Both EPF and VPF get the same return benefit. In addition, the investment in EPF / VPF falls under the EEE category in terms of taxation, that is to say, the amount to be invested in it, the interest received and the return amount at the time of maturity, all three But there is no tax. Apart from this, you can invest up to 100% of your basic salary and dearness allowance in VPF.

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But keep in mind one thing that EPF Amount has only special needs before retirement such as being unemployed for a long time, own, your children’s or brother / sister’s marriage, your or children’s higher education, building a house, a medical emergency, Etc., if you meet other terms and conditions.

2. ELSS

If you are ready to take some investment risk and your investment horizon is quite long, then it may be a good idea to invest in Equity Linked Savings Schemes (ELSS). Young taxpayers with greater risk appetite can choose to invest in a higher rated ELSS scheme. While investing, you can diversify your investment by investing your money in two or three types of ELSS funds to reduce your overall risk.

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You can also start a Systematic Investment Plan (SIP) in selected ELSS funds to meet your tax saving and financial goals in the next financial year as well and also avail rupee cost averaging. But, keep in mind one thing that in the long run, 1 lakh rupees from ELSS investment. Long Term Capital Gains (LTCG) tax is levied at a rate of 10% on profits of more than Rs. The ELSS investment has a lock-in period of just three years, which is the lowest as compared to other tax saving investments.

3. NPS

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If you have already invested up to the investment limit available under section 80C, then you can get a separate amount of Rs 50,000 under the National Pension Scheme (NPS) under section 80CCD (1b) to get the most out of your tax deduction benefit. Can invest. But, remember that NPS has to be invested for a very long time. Therefore, invest in NPS only if you are not in urgent need of the money to be invested and if it suits your retirement goals.

4. Use Your Home Loan Repayments

If you are repaying a home loan, then you do not have to make a separate investment at the last minute to reduce your tax burden as a home loan is one of the biggest tax saving investments in this case. Where on the one hand, on repayment of the principal amount of your home loan, you get Rs 1.5 lakh under section 80C. Tax deduction benefit of up to Rs 2 lakh can be obtained on the other hand under section 24B. Claims can be made for tax exemption on interest payments of up to Rs.

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The biggest thing is that if your home loan is sanctioned in FY2016-17, then you can get a separate amount of Rs 50,000 under section 80EE on interest payments. You can claim up to tax deduction benefit if you meet other eligibility criteria. And if your loan for a cheap house has been tested in FY19-20, then you can get 1.5 lakhs on interest payment separately under section 80EEA. You can claim for tax deduction benefit if you meet the property’s value and other criteria related to the property’s carpet area. The best part is that Union Finance Minister Nirmala Sitharaman has announced in her Budget 2020 speech that the last deadline of 80EEA benefit has been extended for one more year, that is, you can take this benefit till 31 March 2021 Can take advantage of

buying a term plan is better than getting a home loan insurance

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In addition to the things mentioned above, you should also focus on using different types of perks given by your employer as this can also save your tax. If the interest of education loan taken for yourself or for your children is yet to be paid, you can pay it under Section 80E to avail deduction benefit. There is no upper limit for claiming deduction under section 80E for payment of interest under education loan.

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Finally, it is pertinent to note that the Finance Minister recently proposed to introduce a new and optional tax system from FY20-21 under which taxpayers benefit from discounted tax slab rates by abandoning most of the traditional tax exemptions. May get a chance to lift. This means that from the next financial year, if you decide to use the new tax system after calculating your tax well, then you will not be able to claim for tax deduction under section 80C, which includes some of the investments mentioned above. Options such as EPF / VPF, ELSS, and even home loan principal repayments are included, while doing so may help you reduce your tax liability but do not close your important investments and insurance just for this reason Now that you cannot get any tax benefit on them.

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In fact, due to the new tax system and tax savings, you should be able to invest and buy insurance independently, without worrying about saving tax and depending on your financial goals and risk appetite. Because investing is necessary to create adequate wealth, it is very important to take insurance to protect the financial interests of your family from the uncertainties of life.

(Its author is the CEO of BankBazaar.com and his personal views)

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