five best tax saving scheme for Salaried class people
The Central Government has extended the tax filing deadline for the financial year 2020-21 to 30 September 2021. But most of the salaried employees remain in a dilemma about which options to invest in to save tax.
New Delhi. The process of filing Income Tax Return (ITR) is in the final stages. However, the Central Government has extended its deadline from July 31 to September 30, 2021, giving relief to the taxpayers. With this decision of the Center, tax return filers have time to think about what can be the best option to save tax. Also, by saving tax, how can you prepare the foundation for living your old age in a better way.
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You can save tax through these schemes
1. Tax Saving FD
Tax Saving Fixed Deposit is a good option to save tax for the salaried people. This is such an FD in which you can save tax up to Rs 1.5 lakh. However, tax saving FDs have a lock-in period of 5 years. But it is one of the safest options to save tax for the salaried employees. Another thing is that the returns of tax saving FDs are taxable.
2. Employees’ Provident Fund
Employees’ Provident Fund (EPF) is also one of the easiest tax saving options for the salaried people. It was introduced under the Employees’ Provident Fund and Miscellaneous Act 1952. It is managed by the Central Board of Trustees. The tax saving of salaried employees under EPF is in the form of tax exemption. The interest earned in the PF account of the employee (up to Rs 2.5 lakh) remains tax free.
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3. Public Provident Fund
Public Provident Fund (PPF) is also a tax saving option. Investment in PPF comes under EEE or exempt-category. The amount invested in PPF account is tax-deductible under section 80C. It helps in income tax planning for salaried employees. The amount, interest and maturity amount deposited in PPF are sub-tax free.
4. National Pension Scheme
Investing in the National Pension Scheme (NPS) can give higher returns. On this, tax exemption can be given to the extent of 1.5 lakh under section 80CCE. This option also helps in making income tax planning for salaried employees. NPS is one of the long term tax saving options for salaried people in India. It is also a great investment plan. Comes under the purview of PFRDA and the Central Government. This is the best tax saving plan for people who retire early from their jobs.
5. Equity Linked Savings Scheme
Investment in Equity Linked Savings Scheme provides the benefit of tax deduction under section 80C. Due to the tax deduction, this scheme makes it different from all other mutual fund schemes. ELSS is better than other tax saving options for salaried individuals due to its dual benefits.
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