Tax Saving Investment: As important as it is to invest for the bright future of children, it is equally important to choose the right tax-saving plan. Under Section 80C of Income Tax, investors can avail tax exemption of up to Rs 1.5 lakh annually
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Tax Saving Investment: As much as it is important to invest for the bright future of children, it is equally important to choose the right tax-saving scheme. Under Section 80C of Income Tax, investors can avail tax exemption of up to Rs 1.5 lakh annually. There are many schemes like PPF, Sukanya Samriddhi Yojana, NSC, FD, ELSS and ULIP to take advantage of this exemption. By choosing the right scheme, not only tax can be saved, but a strong financial base can be prepared for the future of children. By adopting these smart tips, parents can create a big fund for their children.
Sukanya Samriddhi Yojana
Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) are government schemes with safe and attractive interest rates. Under Section 80C of the Income Tax Act, investments made in them get the benefit of deduction of up to Rs 1.5 lakh. Also, there is no tax on the interest and maturity amount received from these schemes. However, Sukanya Samriddhi Yojana is only for daughters.
National Savings Certificate (NSC) and Post Office Saving Scheme
NSC is a good tax-saving option, in which deduction of up to Rs 1.5 lakh is available under Section 80C. However, the interest received in it is taxable. On the other hand, post office savings account gives tax exemption on interest up to Rs 10,000 per annum.
Equity-Linked Savings Scheme (ELSS)
If you want higher returns and also want to save tax, then ELSS mutual fund can be a good option. Investing in it gives a deduction of up to Rs 1.5 lakh under Section 80C. However, the lock-in period in it is three years and it is also linked to market risk.
Unit Linked Insurance Plans (ULIPs)
ULIPs not only provide an opportunity to invest, but also provide insurance cover. In this, deduction of up to Rs 1.5 lakh is available under Section 80C. Also, maturity and death benefits are also tax free.
Tax free bonds and NPS
Tax free bonds give fixed returns. There is no tax liability on these. On the other hand, investing in NPS scheme gives an extra exemption of Rs 50,000 under section 80CCD (1B).
Investment in the name of children and education loan
According to experts, tax benefits can be availed by getting relatives to invest in the name of children as a gift. Apart from this, taking an education loan for higher education is also beneficial, because tax exemption is available on its interest payment under section 80E.
