Schemes that offer maximum tax benefit - Fusion - WeRIndia

As the financial year is closing and the taxpayers are getting ready to file their returns, several people are seeking schemes that provide maximum tax exemption.

Here are some of the schemes that provide maximum income tax benefit to the taxpayers.

Public Provident Fund or PPF is one of the popular long-term investment options in India. The current interest rate is 7.6 percent per annum. Any individual can open this account either in any nationalized bank or in post office.Even authorized private banks help in opening these accounts. One can deposit ₹500 to ₹1,50,000 per year in PPF account.

The contribution towards PPF can be availed as exemption under Section 80C of the Income Tax Act. Maximum amount that can be exempted under this scheme is ₹1,50,000 per annum. Even the interest earned and maturity amount under PPF are exempt from the tax.

Employees’ Provident Fund or EPF is aimed to promote retirement savings for employees. It is a monthly contribution of both the employee and the employer. Every EPF account has a different UAN number which does not change even if the employee shifts to another job. An employee can withdraw the EPF amount only on the attainment of retirement age. However, partial withdrawals are allowed if the employee remains unemployed for over two months.

Both the interest and the maturity amount in EPF amount are also eligible for tax exemption under Section 80 C. However, the withdrawals of an employee from this account before completing the continuous service of five years in an organization are subject to TDS.

Equity Linked Savings Scheme or ELSS is another tax saving scheme. Almost every mutual fund company in the country is offering this scheme. ELSS has a lock-in period of three years. Minimum of ₹500 can be invested in this scheme.

And there is no maximum limit. Investment of up to ₹1,50,000 is eligible for tax deduction. There is no capital gain tax and the dividends earned are tax free.

Unit Linked Insurance Policies or ULIPs provide tax saving benefits as well. Investment of up to ₹1,50,000 per annum is eligible for income tax deduction. Even the maturity amount is exempt from tax.

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