Finance

Published: Feb 1, 2023
Updated: Feb 1, 2023

Last-Minute Tax Planning: Top 5 Investment Options for Maximizing Savings

As the tax filing deadline approaches, many individuals are scrambling to find ways to maximize their tax savings. While it may seem like a daunting task, there are still several investment options that can help you reduce your tax liability at the last minute. In this article, we will explore the top 5 tax-saving investments that can help you minimize your tax bill.

Equity-Linked Saving Scheme (ELSS):

Equity-Linked Saving Schemes (ELSS) are a type of mutual fund that invests primarily in equities. These funds offer tax benefits under Section 80C of the Income Tax Act, and have a lock-in period of 3 years. The returns on these funds are also generally higher than traditional fixed deposit options.

Public Provident Fund (PPF):

Public Provident Fund (PPF) is a long-term investment option that offers tax benefits under Section 80C of the Income Tax Act. The investment made in PPF qualifies for tax deductions and the interest earned is tax-free. The lock-in period for PPF is 15 years, and it offers a fixed interest rate.

National Pension System (NPS):

National Pension System (NPS) is a long-term investment option that offers tax benefits under Section 80C and 80CCD (1B) of the Income Tax Act. The contributions made to NPS qualify for tax deductions, and the returns are tax-free at the time of withdrawal.

Tax-saving Fixed Deposits:

Tax-saving fixed deposits (FDs) are a type of fixed deposit that offer tax benefits under Section 80C of the Income Tax Act. These deposits have a lock-in period of 5 years, and the returns on these deposits are generally lower than other tax-saving options.

National Savings Certificate (NSC):

National Savings Certificate (NSC) is a fixed deposit offered by the government, which offers tax benefits under Section 80C of the Income Tax Act. The investment made in NSC qualifies for tax deductions, and the interest earned is taxable. The lock-in period for NSC is 5 years.

Always be aware of the tax saving Avenues

As the tax filing deadline approaches, many individuals are scrambling to find ways to maximize their tax savings. While it may seem like a daunting task, there are still several investment options that can help you reduce your tax liability at the last minute. Equity-Linked Saving Scheme (ELSS), Public Provident Fund (PPF), National Pension System (NPS), Tax-saving Fixed Deposits, and National Savings Certificate (NSC) are some of the top tax-saving investments that can help you minimize your tax bill.

Start tax planning at an early stage

It's always a good idea to start tax planning early, but for those who haven't, it's not too late to take advantage of these tax-saving options. It is also important to consider your financial goals and risk appetite before investing in any of these options. An individual should always consult with a financial advisor to determine the best investment options for their specific situation.