Tax-saving investment schemes: Investment is an essential part of wealth creation for an earning individual. Another purpose that investments, not all, serve is that they help taxpayers save some money on their tax outgo. There are multiple tax-saving investment instruments available for individuals that not only help them save on taxes but also build their wealth corpus. Unfortunately, in a country like India, due to various reasons, a majority of people are not investing. Some of them have genuine reasons like low income, lack of awareness about various financial products available in the market nowadays, safety concerns regarding new products, etc. But there are also people who earn well and keep planning every year to start some investment plans, which they never do. Some of them have this complaint that they don’t have time due to a hectic work schedule and that’s why they are unable to explore and buy any savings instruments. There are so many investment-cum-tax savings plans available online for which you don’t need to visit any office or approach any agent.
Following are some of the popular tax-saving investment schemes that can be subscribed online without any physical paperwork:
Tax-saving bank fixed deposit:
The most hassle-free online tax-saving investment is the five-year tax-saving fixed deposit (FD). You just need to have a know-your-customer (KYC) compliant bank account and access to Internet banking. Then you can easily invest in the five-year tax-saving bank fixed deposit. You can get tax deductions of up to Rs 1,50,000 under Section 80C of the Income Tax Act of 1961 for investment towards a fixed deposit.
All you need to do is log in to your net banking account and invest from there. While making an investment, do ensure that you have not enabled the auto-renewal option (unless you want to) or else on the day of the maturity your tax-saving bank FD will get auto-renewed for the next five years. Once the in-vestment is done, premature withdrawal is not allowed in the case of a tax-saving FD. If the auto-renewal option is not selected, then maturity proceeds come directly into your bank account.
Life insurance policy
An individual can buy a life insurance policy online. An online life insurance policy comes with all the benefits that you would get when you buy it offline through an insurance agent. Further it has other benefits – advantages of no paperwork, no delays, and no agent commission. Many online life insurance policy providers also give discounts for making online payments. The maximum limit for exemption for life insurance premiums under Section 80C is Rs 1.5 lakh.
ULIPs
ULIPs or unit linked insurance plans can be easily purchased online in a hassle-free manner. Visit the official website of the Ulip plan provider and explore the multiple products listed on the website and choose the one that aligns with your financial goals. Under Section 80C of the Act, there is a tax deduction of up to an upper capping of Rs. 1.5 Lac on the payable premiums towards a ULIP.
Equity Linked Savings Scheme (ELSS)
Investing in an ELSS scheme is very easy and similar to any mutual fund scheme. You can download a fintech app and start investing money online in an ELSS scheme. Another easy way is through an Online Investment Services Account. You can invest either as a lump sum or via the SIP (systematic investment plan) route. You can save up to Rs 1.5 lakh a year in taxes by investing in ELSS, which is covered under Section 80C of the Income Tax Act.
PPF and NPS
To open a PPF account online, log into the portal of the bank or visit the branch with documents and make a deposit with a minimum amount of Rs 500. To open an NPS account, a subscriber should visit the eNPS website through PAN and bank details.
Deposits to a PPF account are exempted from the taxation up to a maximum of Rs 1.5 lakh in a fiscal year under Section 80C of the Income Tax Act. Similarly, a tax exemption of Rs 1.5 lakh can be claimed on the employee’s and employer’s contribution towards the National Pension System (NPS). Under the Corporate NPS scheme, employees get additional tax benefits on investment routed through their employer.
