As we approach the final week of March, the current financial year is also about to end. With that, many salaried employees will be looking to reduce their income tax obligations by investing at the last minute. It's crucial to first calculate the amount you must put into the investment. The next step is to select the investment type. It is critical to understand the multiple tax-saving options available and pick the ones that best match your financial objectives and risk tolerance.
The tax regime a person chooses will determine how much income tax they can save. A person may continue to claim tax exemptions and deductions under various sections like 80C, 80D, 80CCD(1b), 80TTA, HRA, and LTA if they choose the old tax regime in the current fiscal year 2022–23 (which ends on March 31, 2023). A person cannot use these tax exemptions and deductions to reduce their income tax if they choose the new tax regime. Here are some last-minute income tax saving investment plans that you can invest in.
NPS
A popular programme that aids in tax exemption is the National Pension System (NPS). Section 80CCD of the Income Tax Act addresses the deductions that NPS contributors are eligible for. One may receive an extra deduction of up to Rs. 50,000 under Section 80CCD (1b).
PPF
PPF is well-liked for long-term tax reduction. Each quarter, the interest rate on the PPF balance is revised. The Public Provident Fund also has a EEE classification, which stands for exempt, exempt, and exempt. This means that the money contributed to the PPF account, the interest generated, and the money received at maturity are all tax exempt.
NSC
The National Savings Certificate is a government-sponsored, fixed-income investment programme that encourages participants to put money into it to receive returns. NSC is regarded as a low-risk investment.
SSY
Sukanya Samruddhi Yojna is a tax-saving, fixed-income investment programme. Similar to the Provident Fund in terms of security, it is regarded as a low-risk investment. Additionally, investments made in the SSY plan are also deductable under Section 80C. Plus, Section 10 of the Income Tax Act exempts this account from paying taxes on the interest that accrues against it and is compounded annually.
ELSS
The possibility to invest in the markets while receiving tax benefits makes ELSS, or Equity Linked Saving Scheme, one of the best investment options among all financial instruments.
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