Tips for using mutual fundsfor saving indian income tax

Tips for using mutual fundsfor saving indian income tax

If you are thinking of saving tax in India, Equity Linked Savings Scheme or ELSS mutual fundsor other funds with -taxsaver- clause can be specifically helpful. As ELSS funds are deductible as per section 80C, anyone who purchases these funds would be able to save tax. This clearly means that you would be able to get deduction of Rs. 100,000 from your income. So, your taxes would be calculated only after deducting this amount when you invest or spend this amount in some particular areas such as contributions to Public Provident Fund or Employee Provident Fund, New Pension Scheme, NABARD Bonds, Post Office Deposits, Bank Fixed Deposits, National Savings Certificates, ELSS mutual funds , Insurance, School fee for two children or principalrepayment for your housing loan. Before moving ahead to learn about how to save tax in india, you must find out if you are sufficiently insured. There are almost an unlimited number of insurance providers in the country and you can get the right plan with any one of them. An insurance policy is a sure shot way to save indian income tax. If you are considering ELSS funds as major investment in india, you would want to know the latest Direct Tax Code law. ELSS was Exempt on Entry so long, which meant that you would be saving tax on entering and pay no tax when you exit. However, now if you exit from your ELSS mutual funds.the fund would be considered as capital gains and it come fall into your tax bracket. So, if you purchase an ELSS fund and want to exit, you would better check with your financial planning services. A Public Provident Fund or Employee Provident Fund is another good investment in india, especially if you want to get most of your money in 3 years. However, ELSS fund is a long term investment and you can maintain it for many years, just taking out what you may require. Even if you have to bear tax, the profits from equity can be considerable. They can be sufficiently high to better the rates offered by Provident Funds. When considering mutual funds as investment options, even the higher fund commissionsmay not be a concern. It would still be a good thing to choose a tax-saving fund keeping your money invested until you retire. If you are looking for a long-term investment in india, these are the ideal savings systems that offer sufficient liquidity that can be taken out anytime you want after the lock-in period. However, if you have on your mind that you would not need that money soon, then the New Pension Scheme would be the ideal choice. It has extremely low charges for management, which can increase the returns dramatically. These are the leading indian income tax saving instruments that can help you save tax and get high returns in the long-term. Make sure to choose the best option that suits your income and long-term investment planning and requirements.

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