Many People asks their friends who studies finance about Tips for investments for Tax Savings and get to know about many tax saving options, but no clear details about where to invest is actually available. Also if any details are available for the Investments of Tax Savings, then there are hassles as where to go, whom to talk, how much time it will take. To remove all these problems, we are going to discuss some Investment options which can Save Tax for you and also these investments can be done online with the help of you smartphone itself.
Before Discussing the Online Tax Saving Investment Options, lets discuss that how much tax will these investments can save for you as these options will not let you save unlimited tax but will let you save enough if you Invest in the right investments with right amount and on right time.
So if we take a look at section 80C of income tax, it will provide income deduction of upto Rs. 1.5 Lakhs and if you are in 30% tax bracket, then it will let you save almost 45000 of Tax.
Here are Investments that can be done Online for Tax Saving:
- PPF (Public Provident Fund): To Invest in PPF first thing to do is to open a PPF Account for Tax Saving, for this you have to choose your designated bank and ask them to open PPF account for you as soon as possible. This process will take a few days. This can be done by you by logging in to your net banking and fill form up online. After Filling up form, take printout of that form and attach it with documents mentioned in it and submit it in your designated bank account for branch verification.
However, if you already have a PPF account, then all you have to do is to transfer amount from the linked saving bank account or this can also be done through other bank account (Can be done via Net banking). To avoid Transferring money, the bank can also be informed for the standing transactions to your PPF Account for tax savings.
- Term Life Insurance Policy: A term Life Insurance Policy can be bought by an individual Online. But to buy Term life insurance policy online one has to buy it earlier i.e. not on the last date of the end of year because to buy Term Life Insurance Plan you might require to submit medical tests or the Policy issuer might need more information from you before issuing a policy. The Issuance date is very important in this case as if the issuance date is after March 31, 2021 then you will not get the benefit in this year’s Income tax. Benefits can only be taken in the next financial Years Income tax return.
As the expert says that, Term Life Insurance Policy issuance generally takes a time of 5 to 7 Days as the telemedical tests and physical medical test takes some time.
- Home Loan Principal and Interest Repayment: If You have taken a home loan and still repaying it then there are tax benefits that lies in the payment of Home Loan Principal as well as Interest. Amount paid as principal will be allowed as deduction under section 80C upto Rs.1.5 Lakhs, and amount paid as Interest will be allowed as deduction under section 24 of income tax upto amount of Rs. 2 Lakhs. Now a special benefit under section 80C for the payment of you home loan is available that, you can prepay your home loan to get the deduction under section 80C as in some cases, limit of 1.5 lakhs does not get utilized fully. This prepayment will help in also saving Interest on loan.
- Health Insurance Policy: During this pandemic period, everyone does buy a health insurance policy but 80 percent of them don’t know that this payment towards buying health insurance policy will lead in saving taxes for them. Health Insurance Policy can be bought easily online by just visiting website on any general insurance company or any aggregator. But there are also some requirements such as medical test and in some cases insurer may not allow people of the age of more than 45 years to buy policy online. The deduction for payment made for health insurance will be available under section 80D of the Income Tax Act. Following is the amount available as deduction:
- Equity Linked Saving Scheme (ELSS): ELSS are mutual funds which offers shortest lock in period of 3 years among the other options such as PPF, EPF, Tax Saving Time Deposits etc. These investments have no issue such as taking medical tests etc and can be made easily just by visiting fund’s website/portal. However in these, KYC Compliant is necessary. In ELSS Investment no limit for investment however, it is advisable to invest upto Rs. 1.5 lakhs as Section 80C of Income tax restricts Maximum deduction of Rs. 1.5 Lakhs only.
As investing online there are regular and direct options available. The direct option is comes with less expenses as it does not charge the distribution Commission.
Note: All the above investments should be completed before 31st march of the respective financial year so the deduction can be claimed in the respective assessment year and Tax savings can be achieved.
Hope this article provide the necessary information required. Thanks