Tax planning is an integral piece of a proper financial plan. Understanding the impact taxes will have on your financial well-being is essential. We guide you to take legitimately in the full benefits of all deductions, exemptions and rebates your tax liability reduces to minimum. By employing effective tax planning strategies, you can have more money to save and invest or more money to spend. Or both. Your choice.
Section 80C of the Income Tax Act allows certain investments and expenditure to be deducted from total income up to the maximum of Rs. 150,000 from the Financial Year 2014-2015. This section has been introduced by the Finance Act 2005. Broadly speaking, this section provides deduction from total income in respect of various investments/ expenditures/payments in respect of which tax rebate u/s 88 was earlier available. The total deduction under this section (along with section 80CCC and 80CCD) is limited to Rs. 1.50 lacs only.
Several options are available to claim the 80C deduction. Luckily, since there are no sub limits for these options, you can do all of Rs. 1,50,000 in one of them or allocate to many. You may also end up investing more than Rs. 1,50,000 in these; however your deduction in total will be limited to Rs. 1,50,000.
Section 80C of the Income Tax Act allows certain investments and expenditure to be deducted from total income up to the maximum of Rs. 150,000 from the Financial Year 2014-2015
Our Tax Savings Solutions help to reduce your tax burden and at the same time, aim to grow your money through equity investments.
Tax saving is important, if you are in the highest tax bracket 30%, you save a tax of Rs. 46800/-. Section 80C of the Income Tax Act, 1961 provides options to save tax by reducing the taxable income by up to 1.5 lakh. But, wealth creation is also important. Isn't it? That's why these solutions are ideal for investors who would like to create wealth along with tax saving.
The best Tax Saving Investment is ELSS Funds, followed by EPF/ PPF. As per the past track record ELSS Funds have outperformed all other Tax Saving Investments by a huge amount.
There are some mutual fund schemes specially created for offering you tax savings, and these are called Equity Linked Savings Scheme, or ELSS. Whatever investments that you make in ELSS are eligible for deduction under Sec 80C. Equity Linked Saving Schemes of mutual funds are nothing but diversified equity funds that have a lock-in period of three years and provide tax benefit and at the same has the potential to create wealth over a period of time.
Since a major portion of the amount is invested in equities or equity stock markets, the earning potential is higher as compared to other tax saving investments. Investors can invest up to rupees 1,50,000 in an ELSS fund and deduct the investment from their taxable income u/s 80C of Income Tax Act, thereby effectively reducing their tax liability.
Provide double benefit of tax saving, Tax efficient returns and tax free dividends in the hands of the investor.
Income tax benefit - Investments made in ELSS schemes are eligible for deduction from taxable income under Section 80C of the Income Tax Act.
Lower lock-in period - In comparison to traditional investment avenues like PPF, NSC under section 80C of the Income tax Act, ELSS funds have the shortest lock in period of 3 years.
Tax-efficient returns - Dividends declared under the ELSS scheme during the investment period are tax-free in the hands of the investor after deduction of dividend distribution tax. The profits on the sale of ELSS units are treated as long-term capital gains, and are subject to Income tax of 10% only if the gain is more than 1 lakh.
Higher return potential - ELSS funds invest a large part of the fund in equity, which despite short-term volatility has the potential to build wealth over the long term.
One of the best ways to invest is to save and invest on a regular basis. SIP is an investment method in which an investor invests small amounts in mutual funds at regular intervals.
In addition, SIP helps an investor take benefit of the volatility in the stock markets by rupee cost averaging and helps garner the advantage of compounding. Investment in an ELSS through SIP provides an investor the best combination of tax savings and capital appreciation. The minimum investment in an ELSS through the SIP route can be as low as rupees 500.
The lower lock-in period of 3 years in comparison to other tax savings instruments and the potential to take full advantage of growth through equities make ELSS funds a preferred investment option.
A Pension Plan is a retirement tool. A Pension Plan from Mutual Funds allows you to invest either lump sum or regular SIP, helps you in creating a retirement corpus, while also giving you a tax deduction upto Rs. 1,50,000/-. It also ensures a financially secure retirement and guarantees your peace of mind. So that you can make your dreams a reality and have financial freedom in the post retirement life. Retirement funds normally have a lock in / Exit Load till 60 years of age, which brings discipline and long term approach towards investing.