Tax-Saving Investment: If you want to take a home loan after two-three years, then after taking a home loan, you will find it very easy to save tax, but till then the question of how to save tax for the time being bothers many investors. Tax experts suggest that, you should invest in such a short-term investment product that will help you meet the money requirement for the house after two-three years and keep your income tax free.
According to Income Tax Practitioner CA Mayur Pathak, keeping in mind the age, risk appetite, objective and tax slab, you can choose Equity Linked Saving Scheme (ELSS), Debt Mutual Fund, Unit Linked Investment Plan (ULIP), National Saving Certificate (NSC). ), Senior Citizen Saving Scheme (SCSS), tax-saving bonds, tax-saving FDs and Fixed Maturity Plans (FMPs).
Equity Linked Savings Scheme (ELSS)
ELSS is considered a better option to save tax. With this, your mutual fund investments also remain diversified. These are also called tax-saving funds. On investing in it, your money remains public for 3 years, but after that you can withdraw the invested money. ELSS is the only mutual fund scheme, from which the investor gets tax exemption under section 80C.
Unit-linked Investment Plan (ULIP)
ULIPs are market linked plans, under which the investor gets the benefit of protection along with investment. Premium up to Rs.1.5 lakh per annum is eligible for deduction under section 80C. You are still entitled for tax-free return under section 10(10D) if your annual premium is less than the limit of Rs 2.5 lakh. In case of death of the insured under ULIP, the life insurance cover received by his family is tax-free under section 10(10D).
Debt-Based Mutual Funds
This is the best option for fixed returns and safe investments. These are debt-based short-term investment schemes, through which you can invest in instruments that generate fixed interest. Such debt mutual funds include corporate bonds and government securities. Debt funds are also called fixed-income securities or short-term investment plans, as you get interest up to a pre-determined rate offered by the issuers of these funds. Capital gains from debt funds are taxed on the basis of the holding period, so it will not help in saving tax, but it is a good option for investors who are afraid of taking risks.
Tax-saving fixed deposit
Tax Saver Fixed Deposit is a tax saving investment plan that offers tax benefits under Section 80C of the Income Tax Act. You can get a maximum tax deduction of Rs 1,50,000 by investing in these short term investment schemes with a lock-in period of five years. However, the interest you get will be counted as taxable. Compared to savings account, short-term investment plans have the potential to deliver higher returns.
Fixed Maturity Plan (FMP)
FMPs are close-ended debt funds with a fixed maturity period. Their tenure ranges from 30 days to 5 years. As a tax saving investment plan, they are quite different from fixed deposits. When you invest in these investment schemes for a tenure exceeding one year, you can benefit from indexation to effect your tax liability against inflation rates. You can also invest in them for asset allocation through FMPs.
