106538What problems are there with recycled mobile numbers?

The new financial year has begun and the effort to save taxes has started. Employees in are being asked to submit their choice of tax regime. The new tax regime does not provide any deductions and exemptions, whereas the old regime has about 70 of them. Here we look at a few instruments that can help taxpayers save tax in the current financial year and is also an investment option to meet future needs.

Public Provident Fund
The return on investment in PPF is tax-free and the risk is negligible. PPF currently has an annual interest of 7.1 percent. In the old tax system, a deduction of up to Rs 1.5 lakh is available under Section 80C of the Income Tax Act. It has a lock-in period of 15 years, but money can be withdrawn from the seventh year onwards.

Equity Linked Savings Scheme
In the Equity Linked Savings Scheme the money is invested in equity based products so good returns are expected in the long run. This is a good option to get higher returns along with tax saving. Keep in mind that ELSS doesn’t give fixed and instead gives market-based returns. It has a lock-in of 3 years, which is the least compared to other tax saving options.

Nation Pension System
National Pension System is a good option both in terms of saving tax and putting together capital for old age. Investing in it gives an additional tax exemption of Rs 50,000, which is over and above the deduction of Rs 1.5 lakh under section 80C. If you opt for the new tax regime, the additional deduction of Rs 50,000 will not be available. However, it can add up to a good corpus for retirement.

Health, term insurance
Whether you choose the old tax regime or the new one, for financial security, do opt for term and health insurance. In the old tax system, deduction is available on this under section 80C and 80D. Both of these will come to your rescue in difficult times.

Section 80C also has many expenses that save tax. These include children’s education fees, home loan principal repayment, stamp duty and registration charges on buying a new property. Apart from this, the contribution to employees provident fund (EPF) is also eligible for tax breaks. If the limit of 80C is achieved through the above instruments, then you don’t need to invest further in them.