PPF or NPS, ULIP or ELSS: If you want to save tax, then this option is the best

Feb 13 2020 09:00 AM
PPF or NPS, ULIP or ELSS: If you want to save tax, then this option is the best

If you are an Income Tax Payer, this is your last chance to save tax for the financial year 2019-20, for that you plan from the beginning of the financial year. Apart from this, the right strategy of tax saving is only related to reducing the tax burden. It does not happen. Its planning has to focus on keeping the risk within a range while achieving a maximum return. Anyone planning a tax-saving with their financial goals in mind. In addition, it depends on the age, needs and risk appetite of the taxpayer. Let us tell you which tax saving schemes you should give preference to in the opinion of experts.

Which to choose from NPS and PPF?
According to tax and investment affairs expert Balwant Jain, both National Pension System (NPS) and Public Provident Fund (PPF) are long-term investment products. However, these two schemes provide different benefits to the investors. NPS is purely a retirement scheme. The NPS fund matures with the retirement of the investor. With this, there is no tax on the 60 percent amount due to maturity of this fund. At the same time, the remaining 40 percent has to be invested in an Annuity Plan. Income from annuity is to be taxed later on slab rate basis. In this way, income from NPS is not completely tax free. NPS provides a higher tax benefit of up to Rs 50,000 under Section 80CCD. If you want tax exemption in addition to 80 (C), then you can choose this option. Apart from this, investment in PPF is exempt under Section 80 (C) of the Income Tax Act. At the same time, income from this is completely exempt from tax. Interest revisions occur every quarter on PPF investments. The fund has to invest for a minimum of 15 years.

Which is better in ULIP or ELSS
Under the current system of income tax, investment up to Rs 1.5 lakh per year is exempted under section 80 (c) of the Income Tax Act. Income tax exemption is available for investing in Unit Linked Insurance Policy (ULIP) and Equity Linked Savings Schemes (ELSS). At the moment, many taxpayers are confused about investing in these two schemes. It takes time to choose one in both schemes. In such a situation, taxpayers need to understand what is the basic distinction between these two schemes. According to Jain, while ULIP is an investment as well as investment-linked product, ELSS is a fully investment-linked product. According to Jain ULIP's Lockin Period where there are five years. Investing in ELSS requires a minimum of three years. Experts say that ULIPs are charged more than ELSS. According to them, you can invest in ELSS through lump sum or SIP. Annual investment in ULIP is required. Jain said that in ULIP, you can invest in both debt and equity assets. Investments in ELSS can only be done in equity category.

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