The individuals who haven’t filed income tax returns for the financial year 2018-19 should prioritise the investments quickly in order to assess the effective taxable income.
New Delhi: With the upcoming income tax returns (ITR) filing deadline of July 31, most of the individuals might be still planning to invest the money according to their respective income in order to downsize the taxable income. The individuals who haven’t filed income tax returns for the financial year 2018-19 should prioritise the investments quickly in order to assess the effective taxable income. The Income Tax Department has issued a couple of fresh changes in the income tax filing form as well.
The investment options for tax saving purposes should be selected on the respective earnings, investment capacities, upcoming requirements and existing liabilities. A person willing to reduce the taxable income by incorporating a mix of investment options should evaluate all the options to come up with the most profitable option.
There have been plenty of tax saving investment options with which a person can avail tax benefits on investment. Voluntary Provident Fund (VPF), Employee Provident Fund (EPF), Public Provident Fund (PPF), National Savings Certificates (NSC), Atal Pension Yojana (APY), National Pension Scheme (NPS) are some of the most commonly-known tax saving investment options. The selection of investment options should be taken after assessing the pros and cons of each investment with respect to the personal profile.
PPF: With the help PPF, a person can aim for making a sizeable corpus as the maturity period is 15 years and per year investment upper limit is Rs 1.5 lakh which is equivalent to the amount available for deduction under Section 80C of the Income Tax Act. the current rate of interest on the PPF account is fixed at 8 per cent.
VPF: Voluntary Provident Fund investment is slightly better as compared to the PPF investment as VPF offers an interest of 8.65 per cent. Both VPF and PPF falls in the EEE investment category which implies that a person is allowed for a tax break on investment, and further, the interest earned and the amount withdrawn at the completion of maturity is tax exempt.
ELSS: Equity Linked Savings Scheme is one of the most profitable tax saving investment options as equity as an asset class is more return generating in the long run as compared to all other government-backed savings options, and other conventional deposit schemes.