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Investing in ELSS to save tax: ELSS mutual funds, a tax-saving tool with a short lock-in period, provide a tax deduction of up to Rs 1.5 lakh under section 80C for those selecting the old tax regime. They carry higher risk and volatility compared to tax-saving fixed deposits. The investment amount can be as low as Rs 500, with a maximum tax break of Rs 1.5 lakh. KYC compliance is required before investing.
ELSS is a great way to save tax while gaining exposure to the equity market. It is recommended for those with a tax saving mindset and a tilted asset allocation towards debt. ELSS schemes are mutual fund schemes that offer exposure to different types of underlying markets. They can be largecap, midcap, or flexicap. Some recommended ELSS funds include Quant ELSS Tax Saver Scheme, Bank of India ELSS Scheme, DSP ELSS Tax Saver Scheme, Bandhan ELSS Scheme, and Kotak ELSS Tax Saver Scheme. EL
Apart from popular tax deductions like 80C, 80D, 80G, there are lesser-known tax breaks. Here is a look at 7 such tax-saving options to choose from.
Tax-saving investments: PPF offers tax exemptions at the time of investment, accrual, and withdrawal. It has a current interest rate of 7.1% per annum and a maximum deposit limit of Rs 1.5 lakh per financial year. PPF accounts can be extended indefinitely in blocks of 5 years. Additionally, it is advisable to diversify savings between PPF and equity investments for a balanced portfolio.
Here are some ways to save on taxes under section 80C of the Income Tax Act, 1961.