Every parents want their child’s better future. It is very important to invest for this. You have to invest longer to meet the increasing expenses of higher education. The Income Tax Department allows taxpayers to claim deduction by investing in small savings scheme. There are some small savings schemes in which a large fund is prepared for the child by earning long term. Also, good tax-savings also occur.
PPF and Sukanya Samriddhi Yojana
Both these schemes are run by the government. In these, good funds are prepared in the long term, which is very helpful in children’s higher education or marriage. Under Section 80C of the Income Tax Act, 1961, both schemes are allowed to claim deduction on investment. In one of these, deduction claims can be made by investing Rs 1.5 lakh in a financial year. It has to be kept in mind that Sukanya Samriddhi Yojana is only for girls.
NSC and Post Office Savings Scheme
NSC is a good option for tax-savings investment. In this also, deduction on investment under section 80C is allowed. Maximum Rs 1.5 lakh can be invested in a financial year. A tax-free interest of Rs 10,000 can be achieved in a financial year by investing in post office savings account.
The tax savings scheme of mutual funds is also called Equity Linked Savings Scheme (ELSS). Even on investing in it, deduction claim is allowed under section 80C. In this, deduction can be claimed by investing Rs 1.5 lakh annually. It has a 3-year lock-in. This means that money is not allowed to withdraw money for three years of investing.
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ULIP is an investment product in which you get the benefit of insurance along with investment. In this, the investor gets market linked returns. It is also included in the investment options under section 80. In this, deduction can be claimed by investing Rs 1.5 lakh in a financial year. Experts say that only a long -term investing in ULIPs gives good returns.