5 Ways :- How to save tax

(1) Invest in PPF

Investing in PPF is not only safe, but also gives the full benefit of tax exemption. At present, PPF is earning 7.1 per cent interest. Which is compounded annually. . Up to Rs 1.5 lakh deduction can be taken on the amount invested in this scheme. PPF is tax deductible on both interest earned and maturity amount.

(2) Invest in ELSS

Investments are made in the equity market through ELSS. It has a lock in period of three years. ELSS is a tax saving investment instrument. Investors get huge benefits in the form of tax savings with higher returns of ELSS. In the long run, tax relief can be availed by investing in it.

(3) Insurance plans

The premium paid for the insurance plan under 80C is tax deductible. You can choose traditional or unit linked plan i.e. ULIP. The premium paid for this is tax deductible.

(4) Tax saving FD

FD gets tax benefit on maturity. Under Section 80C of the Income Tax Act, tax exemption can be availed on fixed deposit investments up to Rs. 1.5 lakhs. The five year FD of any bank is called tax saving FD. All banks offer tax saving FDs. Even on tax saving FDs, senior citizens get higher interest than others.

(5) Sukanya Samridhi Yojana

Sukanya Samridhi Scheme can be invested for a maximum of 15 years. A tax deduction of up to Rs 1.5 lakh can be claimed under section 80C on the amount to be paid. Apart from this, the interest on the deposit and the money received on completion of the maturity period is also tax free.

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