There are various investment options that can help people save money on taxes. Thus, it is essential that every person opts for investments that increase their wealth as well as reduce their tax liability. Furthermore, gaining more tax benefits has become more important during the pandemic as the situation has caused various financial problems for many taxpayers.
In this article, we will explain a few tax-saving options that every person should consider during the COVID-19 pandemic.
Financial planning is essential for a comfortable life. There are various factors that allow a person to make a good financial plan, such as savings, investments, etc. One of the most important factors is tax planning. Maximising tax benefits can enable a person to save more money and build a good financial plan. However, the COVID-19 pandemic has caused financial troubles for many people. But there are ways that can enable a person to maximise income tax benefits during this pandemic.
Here are some tax-saving options-
National Pension Scheme (NPS)
NPS is one of the best tax-saving investment options. It provides tax exemptions under three different sections-
- Under Section 80C, the contribution made to NPS can be claimed for tax deduction up to Rs. 1.5 Lakh.
- A person can get an additional deduction up to Rs. 50,000 under Section 80CCD(1B).
- In case 10% of the basic salary of an employee is contributed by the employer in the NPS, then the amount isn’t taxed.
Term Insurance
A term insurance policy provides financial protection to the policyholder’s dependants. In case the policyholder passes away during the tenure, then the insurer can provide a sum assured to the insured person’s beneficiaries. This sum assured can help the dependants meet their regular and future financial needs.
Apart from this benefit, term insurance also provides tax benefits. The premiums paid to purchase a term insurance plan can be claimed for tax deduction under Section 80C up to Rs. 1.5 Lakh.
Unit-Linked Insurance Plan (ULIP)
ULIPs are policies that provide the benefit of life cover as well as investment. A part of the premium is used to make investments in equity funds, debt funds, etc. The remaining amount is used for life cover. Therefore, ULIPs are a good option if a person wants to provide financial protection to his/her family and build a financial corpus. Furthermore, ULIPs provide tax benefits under Section 80C.
Senior Citizen Savings Scheme (SCSS)
SCSS is a government scheme that provides tax benefits. It is specifically created for senior citizens to provide them with financial security. By investing in this scheme, a person can claim a tax deduction of up to Rs. 1.5 Lakh under Section 80C.
Maximising Tax Benefits with Such Investments
A good financial plan allows a person to earn wealth as well as save taxes. These are some of the best investment options that can allow taxpayers to save money, grow their wealth, and reduce tax liability. Therefore, every person should consider which plans can help them achieve their financial requirements and save tax.
