Save Tax

It’s the month of March and most people would’ve just started thinking about investing for tax savings. Investing, however, is not an annual one-time transaction. It is a process and tax planning is only a part of it. Planning may not make your tax liability zero, but it can certainly reduce your overall liability.



There many provisions to save taxes and Section 80C of the Income Tax Act is very popular amongst the tax savers where a deduction of up to Rs. 1 lakh from the taxable income can be availed of, if invested in certain approved products.

PPFs are popular option since investors find the 8% tax-free return attractive. However, this comes at a cost of 15-year tenure and relative liquidity – one can avail loan from PPF account subject certain conditions. PPFs can be ideal investment if you are looking to build a corpus for long term needs like retirement or your children’s education. Let us look at the power of compounding here. If a 30-year-old invests Rs.70,000/- p.a for 15 years and leaves the money for his retirement, he will observe that he has a corpus in excess of Rs.75 Lakhs at the time of retirement. It should be noted that the returns are assured but not fixed. This is because the rate of return is subject to revision i.e. it can be revised upwards or downwards thereby impacting the returns.