Tax saving investment is an important aspect of financial planning. But, often, people tend to delay their investment due to other commitments. Read, on to know the various tax-savings options available if you are starting late.
We all look for ways to save money. Be it by saving every month or with tax-saving investments. Most of us look to reduce the tax amount as much as we can. However, to know how much tax you are going to pay, you need to know your tax slab rate. When you know the amount of tax you must pay, you can invest in different tax saving instruments to reduce it. Hence, you can save, invest, and grow your money. Many put their money in life insurance, ELSS, fixed deposits, etc. to save tax.
Here are some investment instruments that can help you save money-
· Tax Saving Fixed Deposit
One of the most popular investment instruments is a fixed deposit. Many open fixed deposits to save tax and increase their wealth at the same time. The account holder can pick monthly, quarterly, or cumulative interest to take returns. If the account holder opens a long-term fixed deposit account (for more than five years), then they can save on taxes up to a specific limit.
Unit-linked plan or ULIP is a policy that is a wealth-saving as well as a wealth-creation instrument. It offers insurance and investment scheme at the same time. While a part of the policyholder’s money goes towards insurance, the other gets invested in equity, debt, etc. Hence, a person can save money on taxes and help their money grow.
· Medical Insurance
Another investment instrument that can help in saving taxes is medical insurance. Health insurance helps the insurer with financial assistance during a medical emergency. It will protect the policyholder and their family from the expenses of an unforeseen event. It also reduces the tax amount as the health insurance premium can be claimed in deductions.
· Life Insurance
Another way to save tax is by purchasing life insurance. The insurer offers different policies such as term life, endowment, critical illness, child plans, retirement plans, etc. Many purchase term life policies which provide a death benefit. If the policyholder dies during the term, then the insurer will pay the sum assured to their family. Also, life insurance helps in saving tax at the same time.
A policyholder can get up to Rs. 1.5 Lakh of tax exemption under sections 80C, 80CC, and 80CCE. Under Section 10(10D), the sum assured that can be claimed for deduction are survival benefit, death benefit, surrender value, sum accrued because of the bonus, survival benefit, maturity benefit, interest earned on ULIPs.
Life insurance is an investment instrument that can help a policyholder save as well as grow money. It helps to live a financially-independent life after retirement, offers financial assistance for children’s future, gives death benefit to the family in case the policyholder dies during the term and gives tax benefits to the policyholder.
Life insurance will help you save tax and protect you and your family from future problems as well.