Middle-Class Tax Saving Tips: Taxpayers always look for ways to save tax. There are many options available that can help you reduce your tax burden. If you are also searching for such options, then this article is for you. Throughout this article, we will share some smart investment options to help you save tax.
Best Tax-Saving Investment Options for Middle-Class People
1. Public Provident Fund (PPF)
PPF is a popular tax-saving investment with a lock-in period of 15 years. The interest earned on PPF is completely tax-free.
2. Fixed Deposit (FD)
Many banks and post offices offer tax-saving FDs with a 5-year lock-in period. Under Section 80C of the Income Tax Act, you can save up to Rs 1.5 lakh in taxes. However, the interest earned is taxable.
3. Life Insurance Policy
Buying a life insurance policy not only provides financial security but also helps in tax savings. You can claim a tax exemption of up to Rs 1.5 lakh under Section 80C if you invest in LIC or any other insurance policy.
4. National Pension System (NPS)
NPS is a great option for retirement savings and tax benefits. Under Section 80CCD (1B), you can claim an additional tax exemption of up to Rs 50,000 per year.
5. National Savings Certificate (NSC)
This is a government-backed scheme with no market risk. Investors earn an annual interest of 6.8%, and they can save up to Rs 1.5 lakh in taxes under Section 80C.
6. Equity-Linked Savings Scheme (ELSS)
By investing in ELSS, you can save up to Rs 1.5 lakh in taxes under Section 80C. However, capital gains tax is applicable on the returns earned.
7. Employees’ Provident Fund (EPF)
EPF is a mandatory retirement savings scheme for salaried employees. Under Section 80C, you can save up to Rs 1.5 lakh in taxes.
Other Tax-Saving Options
Apart from these, government schemes like Senior Citizen Savings Scheme (SCSS) and Sukanya Samriddhi Yojana (SSY) also help in tax savings and offer secure returns.