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Tax saving is something that all of us typically think about only in the last quarter of a financial year. As we enter January, we get an email from our company’s HR department to submit our tax-saving details for the year. This email makes us realise that we haven’t made any tax-saving investment yet. We rush to invest to save taxes and end up making hurried investment decisions. Sure, even this way, we do end up saving tax. But that shouldn’t be the sole purpose of tax-saving <keyword id="6362476" type="ORGANIZATION" weightage="20" keywordseo="investments">investments</keyword>. When planned and executed properly, tax-saving investments can help you build wealth over the long-term as well. By their nature, tax-saving investments are long-term and can be used for goals like child’s education or marriage and your own retirement. Under Section 80C, a taxpayer can invest up to Rs 1.5 lakh in a year to save tax. This is a decent amount to build a corpus of wealth as well. But these investments should not be done in the last few months with little time and after little thought. These investments should be planned and started in the beginning of the financial year itself. Here is how you can plan your tax-saving investments for FY2017-18 to make maximum gains. Figure out the tax-saving expenses that you can claim Under Section 80C, there are a number of expenses that qualify as tax-saving deductions. This includes the life insurance premium you pay, school tuition fees for two children, repayment of your home loan, etc. These are expenses that you make anyway and they should be used to save taxes. Figure out how much will be the amount of these expenses. This will help you understand how much of the Rs 1.5 lakh 80C limit you need to invest. Build a portfolio of tax-saving investments Once you know how much you will need to invest to fulfil the 80C limit, you should think about where you want to invest that money. There are a number of investment options available, like ELSS funds, PPF, NPS, SukanyaSamriddhi, fixed deposits, NSC, etc. Choose the kind of investment that you are comfortable with, which matches your risk profile and start investing in them right away. It is easier to invest a small amount every month through the year than a big amount in one go at the end of the year. Make good use of ELSS funds ELSS funds are equity <keyword id="6357979" type="ORGANIZATION" weightage="20" keywordseo="mutual-funds">mutual funds</keyword> that come with a lock-in period of 3 years. They are considered to be the best tax-saving investment because of the flexibility they come with and the ability to earn inflation-beating returns. Everyone should invest some amount of their 80C limit in these funds. The equity-related risks get mitigated over the long-term and the returns earned by these funds also become tax-free after a year. Ideally, the younger you are, the more you should invest in ELSS funds. Link investments to goals It is always good to have investment goals. With a target in mind, it would become easier for you to choose a tax-saving investment. For example, for a goal like retirement, you can rely on your investments in EPF or PFF. But for a goal that is just 5-7 years away, you can put money in tax-saving fixed deposits or ELSS funds. This way, investments with different lock-in periods can be used to achieve different short-term and long-term goals. Don’t invest and forget This is a mistake that many investors do, especially with ELSS funds. It is of no use to check a fund’s performance every single day, but you should at least once in 6 months or a year. You can stop your SIPs in an underperforming ELSS fund any time you want and start SIPs in another ELSS fund to avail the same tax benefit. This flexible nature of ELSS funds should be used to earn optimum returns. Think beyond 80C Tax-saving doesn’t end with Section 80C investments and expenses. There are other ways to save taxes that should also be utilized by taxpayers. Medical insurance is tax-deductible under Section 80G. An additional ₹50,000 can be invested in NPS under Section 80CCD. Taxes can also be saved by making certain donations under Section 80G. You should find out about these tax-saving deductions and avail as much benefit as you can. These are some things that the common taxpayer can do to get the most out of saving taxes this year. But the most important thing is to not procrastinate. Plan your investments and start early. (The article is authored by Archit Gupta, Founder &amp; CEO, ClearTax.com)

Here’s how you can plan your investments to gain maximum savings

It’s that time of the year when people run around, searching for ways to save tax. In this matter, Section 80 C of the <keyword id="6354751" type="COMPANY" weightage="20" keywordseo="Income-Tax">Income Tax</keyword> Act gets the most amount of attention from investors, as it allows tax exemption through some popular investment instruments. Premiums paid for life insurance policies, investments in <keyword id="762633" type="UNKNOWN" weightage="20" keywordseo="equity-linked-saving-schemes">Equity Linked Saving Schemes</keyword> (<keyword id="103549" type="CITY" weightage="20" keywordseo="ELSS">ELSS</keyword>), five-year fixed deposits, National Savings Certificates (NSC), Public Provident Fund (<keyword id="76579" type="CITY" weightage="20" keywordseo="PPF">PPF</keyword>) and investment in Sukanya Samriddhi Yojana are some such instruments. 
 
Among these, ELSS has the potential to beat the long-term returns from all other investment options. It also allows you to save tax up to Rs. 1.5 lakh under Section 80 C. Let’s understand what ELSS is and what are the associated benefits through this article. 
 
What is ELSS? 
Equity Linked Saving Schemes (ELSS) are open-ended mutual funds with at least 65% exposure to equity. Although there’s a high degree of risk involved in this investment, it is beaten down in the long run. The returns earned through ELSS funds have outperformed other investment instruments in the long run. 
 
According to the CRISIL - AMFI ELSS Fund Performance Index in December 2016, ELSS funds as a mutual fund category have returned 3.35% in the last year, 16.64% in three years, 17.71% in the last five and 10.61% in 10 years. 
 
The minimum investment in ELSS has to be Rs. 500, while there’s no limit on the maximum amount you can put in. ELSS comes with a lock-in period of three years and withdrawal cannot be done before the completion of the stipulated period. On completion of the stipulated period, you can either redeem your scheme or continue with it. Returns from ELSS is tax-free on completion of a year. 
 
Why is ELSS your best long-term bet? 
ELSS has proven to be beneficial in terms of saving tax and yielding returns. Following are the benefits of ELSS: 
 
• ELSS allows you to claim tax deduction of up to Rs. 1.5 Lakh under Section 80C of the Income Tax Act. The proceeds on redemption of the scheme after three years of lock-in is also completely tax free. 
 
• Compared to PPFs, NSC and fixed deposits, the lock-in period associated with ELSS is relatively shorter, indicating more liquidity. 
 
• The highest ranked ELSS funds have provided a CAGR of around 20% in the last five years – far more than options such as PPF and NSC which can provide returns in the range of 8-9%. Not just that, your ELSS returns are tax-free. 
 
• This scheme is highly affordable, as the minimum amount you can invest is only Rs. 500. If you don’t have a lump sum amount, you can even invest through Systematic Investment Plans (SIPs), depositing a small amount every month. 
 
• There is no fixed maturity period. Investors can stay invested as long as they want. 
 
• Investors earn dividends even during the lock in period and it is tax free. 
 
• The scheme forces you to stay invested at least for a period of three years without any interruptions. Moreover, if you opt for SIPs, you indulge in a more disciplined saving habit which ensures high capital growth. 
• 
ELSS and other instruments that allow exemptions under Section 80C 
 
Here is a comparative analysis of ELSS and other popular investment instruments:

Looking to save tax? Give an ELSS fund a chance – For tax savings & wealth creation

As we draw a close to a whole year and usher in the New Year, all of us need to do certain things to take a relook at our <keyword id="2672828" type="UNKNOWN" weightage="20" keywordseo="financial-positions">financial positions</keyword>. This helps us in taking stock of our funds, investments, loans and <keyword id="25450" type="UNKNOWN" weightage="20" keywordseo="savings">savings</keyword>. When we take stock of things, it helps us right our wrongs, and hence, plan necessary changes to better our financial planning. Following are the important aspects of our funds that we need to relook at: 
 
· Relook at retirement plans: Abhishek Gupta used to live in Mumbai. He is from Secunderabad. He inherited his father’s house in his hometown. “I had given it on rent and earning around Rs 15,000 a month. This rent used to go towards retirement planning option I had opted for. I desperately wanted to increase the contribution towards the fund. So I worked towards it, got a transfer to my hometown, gave the 1 BHK house that I owned in Mumbai on rent. It fetches me Rs 25,000 a month. So the contribution towards my retirement plan went up.” 
 
· Review your spending habits: Take a relook at where your every pie is going. Make a list of every expense you incur and make up your mind cut down on those expenses, which can be avoided. In fact you do not have to wait for the New Year. We, at Creditvidya.com, always encourage our clients to cut expenses on a month-on-month basis. 
 
· Do contribute to charity: Your contribution towards charity, philanthropy or national relief fund get exempted from tax under Section 80G on <keyword id="6354751" type="COMPANY" weightage="20" keywordseo="Income-Tax">Income Tax</keyword> Act. Not that you get to enjoy this money, at least you have the satisfaction of doing something for a social cause. 
 
· Plan something for other sources of income: It could be a tax refund or the annual dividend you earned on the shares you held or your mutual fund investment. Make sure you plough them back for better returns. If it is itching so much to spend it, may be spend a part of it, but not the whole of it. Get habituated to saving money, don’t make it an occasion. 
 
· Resolve to pay up some bit towards loan principal. It may be a car loan, home loan or a loan against property. Just decide and keep aside some bit to pay towards the principal. That way you save a lot of money on interest and work towards closing your loan account sooner. 
 
About the author: Rajiv Raj is the director and co-founder of<a href="http://www.creditvidya.com/">www.creditvidya.com</a>.

Five Important Money Moves To Make For This New Year

We’re days away from the end of the financial year. There’s little time left to plan investments and save taxes. If you’ve clicked through to this article, it’s likely that you’ve fallen short on your tax-saving goals. 
 
You’re probably looking for a quick fix. You need to make an investment, save your taxes under Section 80 C, generate handsome returns—and you need to do all this without getting out of bed. 
 Worry not. Here’s an option for you: buy some <keyword id="103549" type="CITY" weightage="20" keywordseo="ELSS">ELSS</keyword> mutual funds. 
 
Introduction Equity Linked <keyword id="25450" type="UNKNOWN" weightage="20" keywordseo="savings">Savings</keyword> Schemes – ELSS – are diversified equity mutual funds. Your capital is invested in a variety of equity options in the stock market, allowing you to earn market-linked returns on your investments. 
 
Where To Buy 
Mutual funds can be bought from fund house branches, bank branches, agents, and distributors. Since you’re looking for a quick way out of your quagmire, you should go online. In this, you have two options: buy funds directly from the fund house website, or buy them from an online distributor. 
 
What To Buy 
There’s a plethora of ELSS mutual funds, and it’s not easy to decide which one to pick. Most fund houses offer at least one ELSS fund. There are plenty of mutual fund research and analysis websites that offer data on ELSS funds. You can access this data, look at parameters such as long-term returns, research rankings, management fees, investment objectives, etc. Ideally, you should consult experts before making this investment. 
 
How Much To Buy 
Like all mutual funds, ELSS funds can be bought as SIPs or lump sums. Since you’re looking to do a one-time investment to urgently save tax, you should be aware of your investment shortfall and invest up to that limit. You’re allowed to invest to save up to Rs. 1.5 lakh under Section 80 C through one or many of the investment options available, including ELSS funds. 
 
Risks 
ELSS funds are equity investments. Which means that your investment is subject to market risks and you should read all scheme documents carefully before investing. As markets rise and fall, so will your investment value. 
 
Returns 
That said, over the long term, ELSS funds have out-performed most small savings scheme such as PPF. As per the CRISIL - AMFI ELSS Fund Performance Index in December 2016, the ELSS fund category as a whole has generated annual returns of 3.35% in the last year, 16.64% in the preceding three years, 17.71% in five years, and 10.61% in 10 years. In case you find the markets tanking, stay calm, remain invested, and reap long-term, tax-free returns. 
 
Lock-In 
ELSS funds have a lock-in of three years. It means you cannot redeem units whose tenure has been less than three years. This has one significant benefit, which is… 
 
<keyword id="6383566" type="PERSON" weightage="20" keywordseo="Taxation">Taxation</keyword> 
Returns from ELSS funds are tax-free. ELSS funds are equity investments. Equity investments with a tenure longer than one year qualify as long-term investments, and therefore become exempt from capital gains tax. Since ELSS funds have a three-year lock-in, they are automatically tax-exempt. 
 
 
(The writer is CEO, BankBazaar.com)

Forgot to save taxes? Don’t panic. Here’s an investment option for you

As the New Year approaches, most salaried individuals will be on the lookout for <keyword id="35453" type="PERSON" weightage="20" keywordseo="tax-saving">tax saving</keyword> investments. Most people make the mistake of having a portfolio which is dominated by a single asset class. It’s important to understand that a single asset class can’t deliver the great result compared to that of a well-balanced investment mix. For increased results from your investments, it is necessary to create a responsible assortment of asset classes made up of Equity, Debt and Gold. From SIPs to TIPs, most investments offer tax benefits, but a new type of investment is catching the eye of the investor for providing increased tax- saving benefits. A Unit Linked <keyword id="35450" type="COMPANY" weightage="20" keywordseo="insurance">Insurance</keyword> Plan or a <keyword id="44600" type="CITY" weightage="20" keywordseo="ULIP">ULIP</keyword> is a financial product offered by insurance companies that gives aggressive investors both insurance and investment under one plan. ULIPs are one of the best tax saving investments because not only are the premiums paid eligible for tax deduction under section 80C, but they also help investors below the age of 45 to get great returns: It gives good returns ULIPs allow you to invest in a range of equity funds. Equity has given the best returns over the long term (greater than 5 years). They also have the unique ability to offer 80C tax saving on investments made in debt and balanced funds. No other investment allows 80C tax saving in these asset classes. You can also switch between these funds at no extra cost and still get the benefits of 80C tax saving. Can change between monthly and yearly investments If you want to get the maximum tax benefit in this financial year, it might be best to choose a yearly mode of premium payment.However, with ULIPs, you can change your mode of payment to monthly which is much more convenient way of investing. Tax benefits on maturity The maturity amount on ULIPs can be withdrawn tax free. No other instrument that invests in debt /balanced funds can claim tax free maturity. Life Cover ULIPs come with an in-built life cover element which is ideal for someone in the first 5-7 years of their professional career.<a name="_GoBack"></a> Good <keyword id="2567711" type="PERSON" weightage="20" keywordseo="Long-term-investing">long term investing</keyword> tool The best financial planners are those who invest for the long term. While one can always invest in liquid investments, at least 30% of one’s total investment must be in long term investment instruments and ULIPs by design come with a 5 year lock-in that inculcates the habit of long term investing. The best part about the Unit Linked Insurance Plans are that they are now easily available to buy at any of the trusted insurers websites. In fact, we've made it much easier for you to calculate your monthly premium right here: 
<iframe src="https://www.iciciprulife.com/ulip-plans/ulip-returns-calculator-times.html?UID=6027&amp;utm_source=TimesInternet&amp;utm_medium=BI&amp;utm_campaign=ULIPTaxArticle&amp;cid=Display:Article:TimesInternet:Calculator:DM-TI-Article:LTC:ULIPTax-BI:ULIPTaxArticle::Eng::6027:cpc:::" scrolling="no" width="100%" height="690" frameborder="0">
</iframe>
Disclaimer: The quotes are indicative and TIL bears no legal liability for the calculation. (Image Credits: Policybazaar.com)

ULIPs are one of the best tax saving investments for people under 45 years of age

10 best tax-saving investments

The <keyword id="19903456" type="General" weightage="20" keywordseo="Income-Tax-department" source="keywords">Income Tax department</keyword> on Wednesday said 'substantial <keyword id="20138064" type="General" weightage="100" keywordseo="tax-savings" source="keywords">tax savings</keyword>' are expected for a vast majority of taxpayers due to reduction in the <keyword id="22526761" type="General" weightage="20" keywordseo="long-term-capital-gains" source="keywords">long term capital gains</keyword> <keyword id="45031" type="General" weightage="20" keywordseo="tax" source="Orion">tax</keyword> (LTCG) rate in the <keyword id="19895040" type="General" weightage="20" keywordseo="real-estate" source="keywords">real estate</keyword> sector. The Budget has reduced tax rates on capital gains earned from sale of house properties held for long term, but has removed the <keyword id="22142879" type="General" weightage="20" keywordseo="indexation-benefit" source="keywords">indexation benefit</keyword> available to taxpayers. The LTCG has been reduced from 20 per cent with indexation benefit to 12.5 per cent without indexation for the real estate sector. The indexation benefit allowed taxpayers to compute gains arising out of sale of <keyword id="801267" type="General" weightage="20" keywordseo="capital-assets" source="Orion">capital assets</keyword> after adjusting inflation. In a post on X, the income tax department said the nominal real estate returns are generally in the region of 12-16 per cent per annum, much higher than inflation. "The indexation for inflation is in the region of 4-5 per cent, depending on the period of holding. Therefore, substantial tax savings are expected to a vast majority of such taxpayers," it said. Giving a comparison of benefits based on the holding period of the real estate property, the I-T department said the new <keyword id="22422932" type="General" weightage="20" keywordseo="tax-rate" source="keywords">tax rate</keyword> without indexation is beneficial in most cases. For property held for five years, the new regime is beneficial when property has appreciated 1.7 times or more, while for a property held for 10 years, it is beneficial when the value has increased 2.4 times or more. For a property purchased in 2009-10, if value has increased to 4.9 times or more, it is beneficial, it said. "From the above examples, it is clear that only where returns are low (less than about 9-11 per cent per annum) that the earlier tax rate is beneficial, but such low returns in real estate are unrealistic and rare," the I-T department said. As per the changes brought in the 2024-25 Budget, the government has retained the indexation benefit for taxpayers on properties bought or inherited before 2001. The changes in the tax rate have been made effective from July 23, 2024.

Majority of taxpayers to have substantial tax savings due to reduction of long term capital gains on real estate: IT Dept

The taxation laws in India contain a number of provisions to let the tax payers save on taxes. By taking some informed decisions on how you spend and account, you can save on taxes in a legitimate way. Here we discuss some important deductions under the Income Tax Act 1961. Tips to save on income tax Make the right use of Rs.1.5 lakhs limit allowed under Section 80C Investing up to a limit of Rs. 1.5 lakh in schemes like Tax-Saver FDs, PPF (Public Provident Fund), ELSS Funds, NSC (National Saving Certificate), Life Insurance Premiums, National Pension System (NPS), Home Loan Repayment, Payment of tuition fees of your children, EPF, Senior Citizens Savings Scheme, and Sukanya Samriddhi Yojana can enable you for appropriate tax deductions depending on the case. National Pension System This deduction facilitated by Section 80CCD (1B) allows up to Rs 50,000 for contributing to the National Pension Scheme. The NPS makes it possible to invest in equity and debt pension funds for building a corpus for the retirement life. This can be withdrawn at 60 years of age. Health Insurance Premiums Paying for health insurance premiums can let you qualify for a deduction up to Rs 25,000 under Section 80D. This is permitted on top of all the deductions listed above. In case of senior citizens, this limit is up to Rs. 50,000. The taxpayer contributing towards health insurance premiums for himself as well as for a senior citizen can claim a combined deduction of up to Rs. 75,000 per annum. Deduction on your rent If you are getting HRA, it is possible to claim tax deduction on your House Rent. Though there is no upper limit specified for this, there are some rules that place a cap on the maximum deduction. If you do not get HRA but pay towards rent, a maximum claim of up to Rs. 60,000 per annum is allowed under Section 80GG. Deduction on the home loan interest When you have a home loan running, the interest you pay towards the home loan is tax deductible under Section 24 of the Income tax Act. The maximum limit that you can claim in this regard is Rs. 2 lakh. If the house is rented out, there is no upper limit. Money in your savings account The easiest way to save money on income tax is to keep some money in your savings account. Up to a limit of Rs. 10,000 per year, the interest on savings accounts is tax free under the Section 80TTA. In case of senior citizens, this limit is up to Rs 50,000 applicable in cases of both FD and savings account interest. Give for charity Donations made towards charity enable you for tax deductions. Though there is no upper limit for this, there are different rules that restrict the amount deductible on the contributions towards charities. Across a majority types of donations to the NGOs, this limit is fixed at 50% of the donated amount and up to 10% of the total income that is adjusted. If you want to claim this deduction, the NGOs to which you contribute must have 80 G certificate.

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Here’s how you can plan your investments to gain maximum savings

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Majority of taxpayers to have substantial tax savings due to reduction of long term capital gains on real estate: IT Dept

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