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Is it too late to make an investment now and save tax?


Absolutely not! If you are looking at last minute investments to save tax, read on. How many requests from your company’s finance department to submit investment documents have you avoided till now? If you’ve been contemplating the whole year and think that it’s too late now to make an investment, you are wrong. You can start your investment with an assessment of your income which will give you a clear visibility on how much you need to invest.

You should also look at Section 80 (c) and the exemptions listed like PPF, EPF, education loan etc. Your salary slip comes handy to check for such deductions.

Finding the exact amount you need to save is a good point to start with. There are many traditional and new-age investment options which can be useful to you depending upon your financial goals and gross income. Now, you can either focus on saving tax this year or look ahead to save tax in long term while achieving your financial goals. Here are various investment options which you can opt for:

  1. Health Insurance
    The amount you pay for Health Insurance goes into section 80 (d). The good news is that the limit for claiming medical insurance premium has been increased from 25,000 to 30,000 for senior citizens. This means if you are already paying premium for your parents you can add 50-55,000 based on their age. You can also consider buying health policies for yourself or your parents if you haven’t received already.

  2. NPS
    Generally employers contribute up to NPS, out of which 10% of your salary is eligible for deductions under 80 CCD(2). If your employer offers NPS option you can get it on your salary break up to avail these deductions. People might say that it is tough to shift from EPF to NPS but if you look at the benefits, it’s worth the hassle.

  3. RGESS
    Individuals who are investing in equity for the first time with a gross income of 12 lac+ can apply for Rajiv Gandhi Equity Savings Scheme (Section 80CCG). Through this you can get an exemption of up to 50% of the investment. However, there is an upper limit of Rs.50,000 of the total exemption (only applicable for 3 consecutive years).

  4. SIPs
    People often go for investing in Infrastructure Bonds while Systematic Investment Plans reap higher benefits in terms of profit. If you want to beat the inflation, SIPs are the way to go. As per various financial advisors, if you are looking at a long term investment, you should park your money in equity.

  5. NSC
    National Savings Certificates can save you tax of up to 1 lacs in a financial year. Listed under section 80(c), these investments earn you an annual interest of 8.5% for five years and 8.8% for 10 years.

  6. ELSS Funds
    ELSS boasts the best return when compared with other investment options. In the last 3 years, ELSS has returned 17.8% average returns. Although, to get rebate under 80 (c) you need a minimum lock-in period of 3 years.

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