By now everyone must have googled tax planner or searched for options of saving tax!!!
The hustle has begin for the tax paying salaried individuals as this financial year is coming to an end. All the people falling into the category of “Ignorance is Bliss” are now awake as HR has dropped an email asking for submission of receipts for tax saving purposes. At last moment going to a tax planner for tax saving options will be difficult because time is running out.
We all know for tax saving, what we need to do is some kind of Investments. For that one needs at least a small amount of savings which majority of the working salaried individuals miss on because of the current lifestyle or procrastinating nature.
After giving enough thought on this topic, I could only think of advising a temporary alternate solution where you can easily save taxes without any fresh investments.
- Public Provident Fund(PPF) : The traditional method followed usually for tax saving under Income Tax section 80C is to invest some amount in PPF account since one has opened it. Now PPF has a condition i.e One can withdraw from their PPF account only in the 7th year and that too 50% of the closing balance in the end of the 4th year or previous year whichever is lower. The best way that can be followed here is reinvesting the withdrawn amount into your PPF account for this financial year 2017-18 and get the claim under Section 80C without investing any fresh amount.
- Fixed Deposits: Most of us have a Fixed Deposit account with some or the other bank. However, many of them are not aware of the 5 year term tax saving FD which can be your savior in this kind of situation. I mean, you can break your current FD and reinvest the same amount in this Tax saving FD. You need to be aware that there would be some charges for breaking the FD however you will still benefit for this financial year 2017-18 and get the claim under section 80C without investing any fresh amount.
- Equity linked savings scheme(ELSS) : While traditional investors prefer PPF and FD, modern investors prefer ELSS. It is the only tax saving investment where the lock-in period is just 3 years. Supposing you have invested in ELSS fund in the financial year 2014-15 then you can withdraw it now and re-invest in any ELSS fund or the same fund to claim the tax benefit under section 80C.
All these are good options as of now because time, being a constraint and also that we have entered February. You can say it as quick heals for those who have been unable to save this financial year. Although this is not a long term solution because reinvesting the same amount is not generating more savings hence the wealth creation or meeting financial goals purpose is being defied. A tax planner or your personal tax advisor will be the right guide for you to save taxes while you will also be able to do investments on regular basis to create wealth.
For everything else, Money anna is always around.