The new tax regime announced by the Finance Minister of Indian during the Budget 2020 has got many investors in India to rethink about their portfolio. But, if you wish to opt for the new regime, here are a few investment schemes you must continue to invest in.
If you are thinking about opting for the new income tax regime as announced by the Finance Minister during the Budget 2020, you must first know about its benefits. One of the critical points to take note of is that no exemptions or deductions are allowed for opting for the new tax slab.
If you are wondering why should you invest in the various tax-saving investment schemes if there are no tax benefits, you must re-consider your financial planning and make certain adjustments based on your long-term goals. Also, it may not be a good idea to commit to investing in any long-term investment that would require you to make an annual contribution to save taxes.
If you are confused about the new income tax slab and wish to withdraw your investments, here is a list of tax-saving schemes you must not stop investing in:
Equity Linked Savings Scheme is a diversified mutual fund. Investments in ELSS are subject to tax benefit under Section 80C up to a maximum limit of Rs. 1.5 lakhs. Since there is no benefit under the new tax regime, it does not mean that you must now overlook other features of ELSS. This scheme is known for having the lowest lock-in period of three years among all other tax-saving investments.
Also, you need not invest a fixed sum every year in ELSS, and the scheme is known to generate returns in the range of 12% to 15%, and the gains are taxed at 10% provided the gains exceed 1 lakh in a financial year.
Public Provided Fund is another excellent investment option that is backed by the government of India, and it is known to generate higher returns than other traditional investments like bank FD. Also, since it is a long-term investment scheme, it is ideal for retirement planning; the lock-in period of the scheme is 15 years, which can be extended in a block of five years.
Another significant benefit of investing in PPF is that you need not invest a lump sum amount; you can start investing with as little as Rs. 500 and a maximum of Rs. 1.5 lakh per annum initially and later invest Rs 500 per year to keep your account active. Additionally, the withdrawals from the scheme are exempted from tax.
SukanyaSamridhi Yojana is an excellent investment to have in your portfolio if you have a girl child. It is a social welfare scheme that is backed by the government, and it offers tax benefits. The scheme is known to provide an interest rate up to 8-9% per annum, which is compounded annually.
You can open an SSY account with a minim investment of Rs. 250 and get a tax benefit on the amount invested under Section 80C to a maximum limit of Rs. 1.5 lakhs. It is a long-term investment scheme that matures after 21 years from the date of opening the account. It allows you to build a corpus for your daughter’s higher education, marriage, and other expenses. The best thing about this investment scheme is that both the interest earned and the maturity amount are tax-free.
National Savings Scheme is another investment option that you can consider having in your portfolio. You can start investing in NSC with a minimum contribution of Rs. 100 and it has no limit on the maximum amount you can contribute. All contributions made in a particular financial year are eligible for tax benefit under Section 80C.
Make sure to evaluate the financial products mentioned above and choose to invest in the scheme that best suits your financial goals.