Employees’ Provident Fund (EPF): EPF is a very popular way to save tax among salaried individuals. Under this scheme, both the employees and the employees contribute 12% of the salary of the employer to the Employee Provident Fund. On this, the employee gets a special rate of interest. Which is decided by the central government. Under section 80C, the amount of tax deducted in EPF (maximum limit of 1.5 lakh rupees) is paid, on which the benefit of tax deduction is given. Apart from this, no tax will have to be paid on interest up to 2.5 lakh rupees and no tax has to be paid on the fund corpus as well.
Public Provident Fund (PPF): PPF is a great option for salaried people. Through this, corps and guaranteed returns can be ensured for retirement. The tax deduction is paid on the contribution made to the PPF and there is no tax on the outstanding amount along with the interest, ie the PPF gives a triple benefit to the investors.
Equity Linked Savings Scheme (ELSS): ELSS is one of the best tax-saving options for salaried individuals. Investments made under this scheme get deduction under Section 80C of the Income Tax Act (maximum Rs 1.5 lakh). It offers comparatively higher returns as it is an equity-linked savings scheme. This is a mutual fund on which tax benefits are available.
National Pension Scheme (NPS):
Talking about long-term saving options, NPS is very popular among salaried people. Those who are planning for early retirement and have a low-risk appetite, mostly give priority to NPS. NPS offers higher returns than PPF and fixed deposits but does not provide much tax benefit. 10 of basic salary under Salaried Individuals Section 80 CCD (1)Tax deduction can be claimed at a percentage equal to the contribution. Although the limit of deduction under this is fixed at Rs 1.5 lakh under section 80 CCE, that is, you can claim a tax deduction at a contribution equal to 10% of the basic salary per annum, but this amount cannot exceed Rs 1.5 lakh per annum.
Tax Saving FD: Tax saving FD is also popular among salaried people. This is such an option of FD under which tax can also be saved. Tax deductions can be claimed under Section 80C on investments made up to Rs 1.5 lakh. It has a lock-in period of 5 years due to which it is a safe option for salaried employees. Invest in returns are safe but taxable. It has to be shown in ITR as income from other sources and tax has to be paid at the applicable rates.
Tax savings can also be done by giving financial security to your family in an uncertain environment. By buying life insurance, not only the financial needs of the family can be secured but tax benefits can also be achieved. Under section 80C, you can save tax annually on premiums up to Rs 1.5 lakh. Apart from this, death benefits or survival benefits are also tax exempted under section 10 (10D).