The time to save tax and reduce your tax liability is nearing its end. The last date to save tax for the financial year 2019-20 is March 31, 2020. Most people do their tax planning early in the FY but at times many leave it to be attended at the far end of the year.
The Income Tax act provides for certain deductions that an individual may claim and thus reduce the gross total income thereby reducing your tax liability. These benefits are largely confined to Section 80C of the Income Tax Act. According to Section 80 C, an amount equal to the investment that you make in certain specified instruments or an expense that you incur up to a maximum of Rs 1.5 lakh in a financial year reduces your GTI by the same amount. This in effect, reduces your tax liability and, therefore, the tax payable.
If you are the one who still have to take up your tax planning, here’s how you can save tax and create wealth by diversifying your investments in tax saving Mutual funds, NPS and Ulips.
Equity-linked savings schemes
The tax saving mutual funds or equity-linked savings scheme (ELSS) is a type of mutual fund, which similar to any diversified equity mutual fund routes investments into the equity market. Your investments in ELSS should never be for the sole purpose of saving tax rather link it to a long-term goal to help you save funds to meet the goal.
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