Making tax-saving investments as early as possible for the financial year 2022-23 will enable you to save more for your tax-free returns. Investment under Section 80C of the Income Tax Act is the most popular option for individuals and Hindu Undivided Families (HUFs) to save tax in a financial year as an individual can claim a maximum deduction of up to Rs. 150,000 per year. ELSS is the investment product with the shortest lock-in period under section 80C, but market based returns can be achieved only if you stay invested for a long period of time. As a result, investors seeking stable returns or income from their tax-saving investments can consider bank FDs, PPF and other financial products. For the financial year 2022-23, tax savers can claim maximum deduction under the old tax regime 1.5 lakh in a financial year, and in the maximum tax slab of 30% a person can save tax 46,800 including 4% cess. Here are four fixed income assets for risk-free investors that can be used to save money on taxes under section 90C for the current financial year.
Sukanya Samriddhi Account
This small savings scheme in the post office can be set up by the guardian in the name of a girl child below the age of ten years, and the account can be opened for a maximum of two girls in a family. The current rate of interest is 7.6% per annum for those who start the account with a minimum INR deposit. 250 and maximum deposit amount of INR. 1,50,000/- in a financial year, with a maximum deposit of 15 years from the date of opening. Interest is determined for the calendar month on the minimum balance in the account between the end of the fifth day and the end of the month and is credited to the account at the close of each financial year. Deposits are eligible for deduction under section 80C, hence the interest generated is tax free. Account maturity can be claimed after 21 years from the date of account opening or after the marriage of the girl child at the age of 18 years. After a girl child reaches the age of 18 years or has passed class X, she can withdraw up to 50% of the amount available at the end of the preceding financial year, and the account can also be prematurely closed after 5 years in case of emergency. can go.
Public Provident Fund (PPF)
PPF is one of the most popular tax-saving schemes as it not only pays 7.1 per cent per annum (compounded annually), but also allows account holders to deduct under Section 80C of the Income Tax Act, thereby making the interest earned by tax- becomes free. With a minimum deposit amount of INR. 500/- and maximum deposit amount of INR. 1,50,000/- in a financial year, a single adult resident Indian or a guardian on behalf of a minor/disabled minded individual can open a PPF account. The account holder can make a withdrawal after five years, excluding the year of account opening, and the withdrawal amount can be up to 50% of the total balance at the end of the fourth preceding year or at the end of the previous year. , whichever is less. After 15 years, the account will mature, making the PPF account the account with the longest lock-in tenure under Section 80C. On maturity, one has the option to receive the maturity payout, keep the maturity amount in his account without further crediting, extend his account for another block of five years, etc. After 5 years from the end of the year in which the account was established, one can make early withdrawals. The account will be closed and the account balance will be handed over to the nominees in the event of death of the account holder.
Senior Citizen Savings Scheme (SCSS)
Apart from bank fixed deposits, one of the most popular tax-saving investments for elderly individuals is the Senior Citizens Savings Scheme (SCSS). The account can be started by anyone who is above 60 years of age, and can be opened in his own name or jointly with his/her spouse. An account can be started with a single deposit of INR.1000/- and a maximum limit of INR 15 Lakh, after which a customer can earn 7.4 per cent return per annum which is payable on quarterly basis. Interest is taxable if the aggregate interest in all SCSS accounts in a financial year exceeds Rs. 50,000/-, and TDS will be deducted from the total interest paid under SCSS. The account will mature after 5 years from the date of establishment; However, in the event of death of the account holder, the account will generate interest at the rate of PO Savings Account from the date of death. Within one year of maturity, the account holder can extend the account for a further three years, and SCSS can be prematurely closed subject to penalty.
5 Year Bank Fixed Deposit
Bank fixed deposits are one of the most popular risk-free investments, and in the current environment of rising interest rates, bank FDs are even brighter. Tax saving fixed deposits have a lock-in term of 5 years and can be opened with as little as 100 and maximum deposit limit 1.5 lakh, allowing individuals to claim Section 80C tax benefits, however, the interest earned is taxable as per the tax slab bracket of the investor. The account can be set up only individually or jointly, and tax benefits under 80C will be provided only in case of joint deposits to the first or primary holder. Many interest payment options include monthly, quarterly, or principal reinvestment in tax-saving FDs and the most important feature of tax-saving FDs is that neither early withdrawal nor auto-renewal is allowed. TDS of 10% will be deducted when the interest payable on FD exceeds Rs.40,000/- (Rs.50,000/- for senior individuals) in a financial year. Small finance banks are currently offering around 7% returns on tax saving fixed deposits, which is among the highest in the market.