In the realm of tax-saving investments, most people gravitate toward familiar choices like PPF, EPF, or ELSS. Yet, hidden beneath the surface are lesser-known options that can diversify your portfolio and boost returns. This article introduces five such alternatives, starting with the National Saving Certificate (NSC), a government-backed savings tool. Tax-saving Fixed Maturity Plans (FMPs) offer unique tax benefits within a fixed tenure, while Sukanya Samriddhi Yojana empowers parents to secure their daughter's future. As you explore these options, remember to consult a financial advisor for a well-rounded tax-saving portfolio that aligns with your goals and risk tolerance.
When it comes to tax-saving investments, most individuals tend to think of popular options like Public Provident Fund (PPF), Employee Provident Fund (EPF), or Equity-Linked Saving Schemes (ELSS). While these are excellent choices, there exist lesser-known tax-saving investment options that can help you diversify your portfolio and potentially enhance your returns. In this article, we will explore five such options that may not be as widely recognized but can be equally beneficial.
Before delving into the specifics of these lesser-known tax-saving investments, let's understand why tax planning is essential. Taxes can significantly erode your income and wealth over time, making it crucial to explore legitimate avenues to minimize your tax liability. Tax-saving investments not only help in reducing your tax burden but also enable you to grow your wealth over the long term.
While traditional options like PPF and ELSS have their merits, they may not always align with your financial goals and risk tolerance. That's where these lesser-known alternatives come into play. They provide unique benefits and can be valuable additions to your investment portfolio.
Let's explore these options one by one.You can consult a Cube Wealth coach or download a Cube Wealth application.
National Saving Certificate (NSC) is a government-backed savings instrument that often goes unnoticed but can be a reliable tax-saving option. It is available in denominations of Rs. 100, Rs. 500, Rs. 1,000, Rs. 5,000, and Rs. 10,000. NSCs have a fixed tenure of five years, making them a suitable choice for individuals seeking stable returns over a relatively short period.
1. NSC investments qualify for a tax deduction under Section 80C of the Income Tax Act.
2. The interest accrued on NSCs is reinvested and eligible for tax benefits under Section 80C.
1. There is no maximum limit on investment in NSCs.
2. The minimum investment amount is Rs. 100.
Tax-Saving Fixed Maturity Plans (FMPs) are debt mutual funds with a unique tax-saving feature. FMPs typically come with a fixed tenure, usually ranging from one to five years. These plans invest in fixed-income securities like government bonds, corporate bonds, and money market instruments.
1. Investments in FMPs qualify for a tax deduction under Section 80C of the Income Tax Act.
2. FMPs offer indexation benefits for long-term investments, reducing the tax liability.
3. The maturity period for FMPs typically ranges from one to five years.
Sukanya Samriddhi Yojana is a government scheme designed to promote savings for the girl child's education and marriage expenses. It not only provides tax benefits but also empowers parents to secure their daughter's future financially.
1. Sukanya Samriddhi Yojana contributions qualify as a tax deductible under Section 80C.
2. Both the interest received and the maturity sum are free from taxes.
3. How It Benefits Parents:
4. The scheme offers an attractive interest rate.
5. Parents can open accounts for girls below the age of 10.
6. Partial withdrawals are allowed for the girl child's education and marriage expenses.
Tax-Saving Bonds and Infrastructure Bonds are relatively less-known investment options that can be considered for tax planning. These bonds are typically issued by government-backed institutions and come with specific tax-saving benefits.
1. Investments in tax-saving bonds can be claimed as a deduction under Section 80C.
2. Infrastructure bonds offer tax benefits under Section 80CCF.
Safety:
3. Tax-saving bonds are considered relatively safe due to government backing.
Infrastructure bonds are linked to long-term infrastructure projects, making them a potential avenue for wealth creation.You can consult a Cube Wealth coach or download a Cube Wealth application.
Now that we have explored these lesser-known tax-saving options, let's address some common questions that may arise:
Ans: There is no maximum limit on investment in NSCs, and the minimum investment amount is Rs. 100.
Ans: Sukanya Samriddhi Yojana benefits parents by providing a dedicated savings avenue for their daughter's education and marriage expenses. It offers a tax deduction under Section 80C, tax-exempt interest, and partial withdrawal options.
Ans: Tax-saving bonds are considered safe as they are backed by the government. However, it's essential to assess the specific bond's terms and conditions before investing.
Ans: NRIs may have different eligibility criteria and tax implications when investing in these options. It's advisable to consult with a financial advisor or tax expert to understand the rules applicable to NRIs.
Ans: The maturity period for Tax-Saving Fixed Maturity Plans typically ranges from one to five years, depending on the specific scheme.
In conclusion, while popular tax-saving investments like PPF and ELSS have their merits, exploring lesser-known options can provide diversification and potentially enhance your tax-saving strategies. It's essential to align your investment choices with your financial goals, risk tolerance, and tax planning needs. Consult with a financial advisor to make informed decisions and create a well-rounded tax-saving portfolio that suits your individual requirements.
However, we at Cube believe that in order to successfully maximize the tax benefits of NPS and EPF payments, it is critical to understand the exact laws and regulations regulating such contributions. You may download a Cube Wealth application or speak with a Cube Wealth counselor
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