If there’s something this global pandemic taught us, it’s not taking anything for granted. And that includes your financial planning and mutual fund investments. The way one responds to a crisis is quite important. Planning well in advance for your future is something you can do to feel the sense of gaining control of your lives. And investing your finances in tax-saving investments is one way to do it. With so many types of investments available to an investor, this article focuses on tax-saving investments and how one can use it to their advantage. Read on to know more.

Equity Linked Savings Scheme (ELSS)

ELSS tax saving mutual funds are a type of mutual funds that invest majorly in equity and equity-linked securities. Investments in these tax-saving mutual funds enjoy a tax deduction of up to Rs 1.5 lac under section 80C. These mutual funds have a lock-in tenure of three years. This also happens to be the shortest lock-in period under Section 80C tax-saving investments. Thus, investments in ELSS mutual funds offer investors with twin benefits of tax-saving attributes and capital appreciation. However, one must not invest in these mutual funds with the sole purpose of saving tax.

Unit Linked Investment Plan (ULIP)

ULIPs are a combination of mutual fund investment and insurance in one financial product. Under these investments, a part of your premium goes towards investing in mutual funds and the remaining is used to buy a life cover insurance. The part allotted to mutual funds can invest in equity mutual funds, or debt funds, or a combination of both. These schemes have the potential to offer significant returns when invested for a long duration. These funds provide the flexibility of switching between funds around three to four times in a particular financial year.

Public Provident Fund (PPF)

PPF are long-term tax saving investments provided by the government of India that helps to generate a financial cushion for investors for their retirement era. The interest rate on these tax-saving investments revised every quarter. PPF accounts enjoy the perks of an EEE status, i.e. exempt, exempt and exempt. This means that the principal amount invested, the interest received, and the maturity amount received are all exempted from tax.

National Pension Scheme (NPS)

NPS is a retirement-focused investment scheme that matures as soon as an investor turns sixty years of age. NPS investments are mandated by the Securities and Exchange Board of India (SEBI) to invest a minimum of 25% of their corpus in debt funds and the remaining in equity mutual funds. Investments in NPS schemes enjoy tax assistances of up to Rs 1.5 lac u/s 80C of the Income Tax Act, 1961. As an investor, you can also gain further tax benefits of up to rupees fifty thousand under sub-Section 80CCD (1B) of the IT Act, 1961.

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