Every year, as soon as the season of tax filing arrives, taxpayers start looking for ideas to save taxes by different ways of investing. Tax saving methods are many, but it is really important to choose a method that not only saves your money but also makes you more of it in the future.
Although the deadline for tax is nowhere near right now, this is the best time to plan on tax saving investments as one can choose from a number of choices. It is definitely a great time to act and decide which tax-deductible expenses can be cut down in order to help you lower the amount of taxes that you have to pay to the government.
Not only is the idea of saving taxes quite attractive but is also part of systematic planning that can help earn more money. Most people plan on investing in tax saving investment schemes only when the deadline is nearby and do not plan all around the year. It is one of the biggest mistakes that they can make.
This is why they end up making investments in schemes and products that are not only unsuitable for them but are also unsupportive of their future financial goals. Having a vision of just saving tax can only help save tax and not help in growing one’s wealth in the future, thus hampering their future financial goals in the longer run.
Well, there are a lot of options out there. Usually, we ignore the investment planning part all around the year and only act when the deadline arrives.
Taxpayers should look into Section 80C, which is one of the most commonly used sections for saving on taxes and covers schemes such as ELSS, Public Provident Fund (PPF), five-year tax-saving bank deposits, Senior Citizens’ Savings Scheme (SCSS),five-year post office time deposits, National Savings Certificate (NSC), SukanyaSamriddhi Account, and Employees’ Provident Fund (EPF), etc.
If you have always wished of investing in stocks but didn’t have the courage or knowledge to do so then ELSS funds are the right choice for you. They diversify equity allocation amongst all of the tax-saving investments. They are a great way to earn high returns that surpass inflation. Conventional methods such as PPF and Fixed Deposits lose out to inflation in the longer run.
It gets you high returns.
Making investments in ELSS helps you get a diversified choice and thus can fetch you the returns that are not only higher than most of the other investment options that have tax saving benefits but can also get you in a great financial state in the longer run.
ELSS funds have a twofold purpose, one is to help save taxes, and the other is to help generate higher returns.
For those who are ready and willing to make investments for a longer period, ELSS is the best option for them as it helps one get the most returns, unlike other options.
If one goes by all the evidence that depicts the results of investments in ELSS, it is evident that more than 12 percent of returns have been generated by ELSS.
Yes, you read that right. ELSS mutual funds are not only helpful in generating higher returns but are also helpful in saving taxes.
Even the Long term capital gains that are realized from ELSS mutual funds a total of 10% taxes are imposed if the total capital gain is more than Rs. 1 lakhs in the said year of withdrawal. What’s even better is that no capital gain tax is imposed if the total profit is lesser than Rs 1 lakh in a financial year.
All the traditional tax-saving investments have really long lock-in periods and ELSS funds, on the other hand, have a lock-in of three years, only. Not only this, schemes such as PPF that has a lock-in period of fifteen years and NPS having a lock-in period till one retires, are not even close to the returns that ELSS funds offer.
The money invested in ELSS mutual funds has higher returns in a shorter time span and the money does not have to be blocked for a long period.
ELSS mutual funds can have an investment of even a small amount. There is no minimum or maximum limit.
If you can wait out market fluctuations and can wait for a period of time then you can definitely make a high earning on your investments and can also save your taxes.
Disclaimer: The views expressed in this post are that of the author and not those of Groww