Investors looking for last-minute savings tools to save income tax can opt for tax-saving bank fixed deposits, public provident funds, National Savings Certificate.
Besides, contributions to employees' provident fund, life insurance premiums, tuition fees, home loan principal repayment, and others.
A tax giver can claim a deduction of up to Rs 1.5 lakh by investing in tax-saving tools under Section 80C.
One can save tax by investing in tax saver Fixed Deposits which can fetch you tax deduction under section 80C of the Indian Income Tax Act, 1961.
Most tax-saving FD schemes have a lock-in period of 5 years. But the interest earned on these schemes is taxable. The rate of interest usually ranges from 5.5 - 7.75 per cent.
Public Provident Fund is a popular investment vehicle for saving tax. One needs to open a PPF account at the post office or designated branches for investments.
It's a government-backed scheme and enjoys an exempt-exempt-exempt tax benefit.
The amount invested, interest earned as well as withdrawals on maturity are all tax-free.
Apart from PPF, the government has a couple of similar small savings investment schemes.
National Savings Certificates are a savings bond scheme, which can help investors save income tax under Section 80C.
If you have a Savings account with a Bank or a Post Office, you can buy NSC certificates in e-mode
NSCs can be bought by an investor for themselves or on behalf of minors.
Pension Plans are another form of life insurance. Contributions towards pension are covered under Section 80 CCC of the Income Tax Act.
An investor can invest a maximum of Rs 1.5 lakh in such schemes.
Health insurance or Mediclaim offers tax benefits under Section 80D. Insurance premium up to Rs 20,000 for senior citizens and Rs 15,000 for others are eligible for tax benefit.
Investors can invest in equity-linked savings schemes or ELSS through systematic investment plans (SIP). ELSS mutual funds invest 80 per cent to 100 per cent of their assets in equity shares of companies, therefore can fluctuate due to market volatility. These schemes have a lock-in of 3 years.
Sukanya Samriddhi Yojana has become one of the most popular tax-saving schemes. Investing in Sukanya Samriddhi Yojana also qualifies as an eligible deduction under Section 80C of the Income Tax act. The interest rate on SSY scheme is 7.6 per cent.
The scheme comes with a lock-in period of 21 years and will mature after the expiry of 21 years. A minimum deposit of Rs. 250 is required to be made per year for 15 years.