Almost everyone aspires to create wealth so they can give their family all the good things that they deserve. It is for this reason that you look for opportunities where you can build wealth easily and securely. You are also prepared to face a certain level of risk, but what you often worry about is paying a huge sum of money in the form of taxes.
As per the Income Tax Act 1960, paying taxes is a mandatory requirement, if you fall in the tax bracket. However, to make things easier then the same law also has provisions that offer tax-saving benefits.
Several smart investments exist that can not only help you make your money work for you but will also give you tax-saving benefits. From ELSS investment to provident fund, you can have many such investments in your portfolio to reduce your tax liability to a great extent. Some investments you can consider purchasing are as follows-
1. Unit Linked Insurance Plan
One of the best investment plans to consider is the Unit Linked Insurance Plan, which is an insurance cum investment plan. This plan will not only offer your family a security cover upon your demise but will also provide investment benefits. It is because a part of the premium that you pay will get invested in different fund options, helping you earn returns.
This plan is covered under Sec 80C of the Income Tax Act and allows a deduction of up to Rs. 1.5 lakhs on the premium money paid by you annually. If your policy had been issued on or after 1st April 2012, you would get a benefit of 10% deduction on your sum assured. If you are suffering from any ailment and disability, then your deduction will be equal to 15% of your sum assured, as per Section 80 DDB and 80U, respectively. Also, you will receive tax exemption on your maturity amount and death benefit, whichever may be the case, as per provisions of Sec 10(10D).
2. Public Provident Fund
PPF is a government savings instrument that will help you build wealth over time by way of interest receipts that you get on your invested money. This instrument too offers you tax saving benefits like a few other instruments, it is covered under Sec 80C of the Income Tax Act. So, if you have a PPF plan, then you can receive deductions of up to Rs. 1.5 lakhs in each financial year on the money that you deposit in this plan. Here is how you can check your provident fund balance online.
It’s a long-term investment with a maturity period of up to 15 years and can be started with a deposit as small as Rs.100.
3. Health Insurance
A part of creating wealth is also about saving money the right way. Health expenses involving hospital care can often escalate, leading to a huge financial crisis for you and your family. Importance of health insurance in India is a lot for lot of known reasons. Purchasing a health insurance is an investment option that will help you secure yourself against unexpected medical costs by providing financial support. This plan is covered under Sec 80D of the Act and allows you a deduction of Rs. 25,000 from your taxable income on account of the premium that you pay towards this policy when the same is in your name or that of your spouse, dependable children, or your parents who are below the age of 60.
If your parents are senior citizens, and you have a health insurance plan for them, then you will get tax-saving benefits of up to Rs. 50,000.
ELSS investment, which is also known as tax saving mutual funds, makes for another smart investment. By purchasing this investment plan, your money will get invested in equity and equity-related securities, helping you earn high returns in the long run. This plan is covered under Sec 80C of the Income Tax Act and will help you enjoy tax deduction benefits up to Rs. 1.5 lakhs thus, reducing your tax liability to a great extent. This investment instrument is one of the best as it has the lowest lock-in period and offers one of the highest returns. However, this investment is a good option for those who are risk-averse, as these have a slightly higher degree of risk involved.
Put Your Tax Worries at Rest
Worrying over taxes won’t help, but planning will. You must figure out which investment plan aligns with your specific needs and enables you to save tax at the same time. If your objective is to secure your family, while getting tax benefits, then you should first consider purchasing health insurance or a term plan. Along with this, you can also go for an investment plan that helps you earn high returns to enable you to build your wealth. ELSS investment, ULIP, and PPF are only some of the plans you can consider purchasing for reaping both investment and tax-saving benefits.
If you feel that planning all these matters is a tough nut to crack, then financial advisors like FinEdge can help you understand all available plans and suggest the best one. They can assist you in selecting the right plan which best aligns with your needs.
So, don’t fret, purchase the right smart investment and say goodbye to tax worries.