If you are salaried person, it is the time to submit your tax proofs to your employer. Now the FY 2016-2017 has been completed.
After the demonetization, bank A/C of the person are flooded with the cash deposits. To meet the exigencies, the money deposited by you is used because this is the money may have been received as gift or held by you as a reserve. If the person put this cash to idle use or we can say this is invested wisely, then it can save your tax as well as provide you better returns. These returns will be more from the interest on a bank deposits. So here are some ways which can help an individual to save tax if Idle cash is deposited:
- Resolve to Exhaust Your Section 80C limit
Under section 80C, near about 20 odd expenses and investments are eligible for tax deductions. You can take deductions up to of Rs.1.5 lakh from your taxable income under this section. Significantly amount of taxes can be saved by claiming this deduction partially or in full. We found that a lot of persons those who pay the tax exhaust this limit but there are some people also who don’t exhaust this limit and has to pay more tax than the persons claiming this deduction in full. So, this time under section 80C it is decided to put away the cash deposited by you in the available options. Click here to know more about 80C.
- Additional Contribution To EPF
Start making a voluntary contribution to your EPF account. If you have an additional funds and you can prefer risk averse, conservative investment etc. A person needs not to dig into his working years whereas he/she can end up with his significant corpus at the time of retirement. The term EPF results a GOD gifts for tax payers those who do not try or make efforts to invest their funds properly, in proper way. Because contribution done in EPF is eligible as it provides deduction under section 80C.
- 5 Years Fixed Deposits
The person those who want to save investment and do not want to take risk in their life (mainly senior citizen) they can make 5 years fixed investment deposit to enjoy the scheme 80C. This is the most preferable and suitable method to invest excess funds to claim the tax benefits as well. Whereas the drawback of this scheme is that, your money will get blocked for continuous 5 years you cannot withdraw in between and also the interest earned through this is fully taxable as far slightly better than the saving account interest.
- Consider A Preventive Health Check-Up
It is allowed by the Income Tax Act to claim the deduction of Rs.5,000 or less for preventive health check-up which is included with the deduction of Medical Insurance of your spouse or your dependent children, the maximum limit for this is Rs.25,000. The deduction of Rs.5,000 is allowed under section 80D for the preventive health check-up. So, to enjoy or to take charge of your health and also to save tax, you should go for health check-up from the Idle cash which is being deposited by you.
- ELSS SIP for Remaining period of current FY
Equity Linked saving scheme is the best scheme for investing the spare money. It is type of Mutual Funds which is deductable for taxpaying under section 80c. If ELSS is made then he/she gets protected from the risk of making a lump sum investments and it also benefits the person from entering the market at different levels. The minimum period for which ELSS are to be kept is 3 years which is lowest among the all investments eligible under 80C. These ELSS do not have any maturity date due to which a person can stay his/her investments even more then 3 years. But the demerit is that, return on these investments is less because government is also fully plushed with the money. Many more options are available and return also get better only if person stay invested more than 3 years i.e. 5 years to 7 years.