In this year 2019, taxpayers may be looking at various income tax saving investments to save income tax act. Hence choose a better tax saving investment plan based on time and risk factors. What are the Best Tax Saving Methods available in 2019 in India to save tax?
Which are the tax saving plans available for citizens of India?
Which are the good tax saving investment options in 2019 that help you save tax and provide better returns to you..
Following are Best Tax Saving Plans in India for 2019.
1) Pension Funds
Pension funds provide income after retirement. It has 2 categories, Deferred annuity plan, and Immediate annuity plans.
Deferred Annuity Pension Plans: Deferred annuity means that in keeping with the wishes of the investor the pension payment does not start automatically on maturity but remains deferred for some time. This is ideal for people who keep working even after the conventional retirement age of sixty and plan to do so for some additional years before leaving employment.
Immediate Annuity Pension Plans: These are opposite the deferred, where the payment of pension amounts starts as soon as the policy term ends. Money accumulated over the years through sum assured, bonuses, and guaranteed additions. The insurance company invests this for the generation of a regular income for the policyholder in coming times. In such cases, you do not need to pay a regular premium but instead a one-time lump sum.
2) ELSS Tax Saving Mutual Funds
While tax planning may seem to be a difficult process, Mutual Funds offer you a simple way to get tax benefits, while aiming to make the most of the potential of the equity markets. An Equity Linked Savings Scheme (ELSS) is an open-ended Equity Mutual Fund that doesn’t just help you save tax, but also gives you an opportunity to grow your money.
Tax Benefits: IT benefits u/s 80C up to Rs 1.5 Lakhs per annum. Returns Between 12% to 15%.
3) Public Provident Fund
The Public Provident Fund, popularly known as PPF is the long-term saving scheme introduced by the Ministry of Finance (MoF). The purpose of the PPF is to mobilize the small savings of individual by offering them investments that carry a reasonable return along with the income-tax benefits.
The Public Provident Fund is one of the Best Tax Saving Methods backed by the government of India on which regular interest is paid. The deposits made in the PPF can be claimed for the tax deductions and also the interest accrued on the deposits is tax-free. Public provident fund is one of the most lucrative avenues available in India.
Tax Benefits: IT benefits u/s 80C up to Rs 1.5 Lakhs per annum. Returns 8%..
4) Voluntary Provident Fund (VPF)
Voluntary Retirement Fund is the voluntary fund contribution from the employee towards his provident fund account. This contribution is beyond the 12% of contribution by an employee towards his/her EPF. The maximum contribution is up to 100% of his Basic Salary and Dearness Allowance.
Interest is earned at the same rate as the EPF. Employers are under no obligation to contribute to their employees’ VPF portfolio. Likewise, an employee is also under no obligation to contribute to the Plan. Once the contribution is chosen in VPF, the same cannot be terminated or discontinued before the base tenure of 5 years completed. The interest rate of Voluntary Retirement Plan is by the Government of India at the start of each financial year.
5) New Pension Scheme (NPS)
It is a government-sponsored pension scheme. The scheme allows subscribers to contribute regularly in a pension account during their working life. On retirement, subscribers can withdraw a part of the corpus in a lump sum and use the remaining corpus to buy an annuity to secure a regular income after retirement.
6) Unit Linked Investment Plan (ULIP)
A unit linked insurance plan can be utilized for various benefit payouts including life insurance, retirement, education and more. It is one of the Best Tax Saving Methods. A ULIP offers varying provisions to the investor as benefits. A ULIP is typically an option for an investor seeking to provide coverage for beneficiaries.
It is paid into by the owner in the form of premiums, with the intention of the plan’s worth to be paid out at a specified time frame for a specific purpose. With a life insurance ULIP, the beneficiary would receive payments following the owner’s death. Plans can include varying provisions for triggering payments.
7) Life Insurance Plans
The purpose of life insurance is to provide financial protection to surviving dependents after the death of an insured. It is essential for applicants to analyze their financial situation and determine the standard of living needed for their surviving dependents before purchasing a life insurance policy.
Life insurance agents or brokers are instrumental in assessing needs and establishing the type of life insurance most suitable to address those needs. Several life insurance channels are available including whole life, term life, universal life, and variable universal life (VUL) policies.
8) Home Loan Principal Repayment
Understanding home loan tax benefits are very important as one can take multiple advantages from this if used rightly. Understanding income tax benefits of principal payment under Section 80-C, benefits under a joint home loan, second housing loan etc.