It’s already December and most companies will require the 80C investment proofs by the end of January 2010. Do not leave this task for the last moment. Earlier you start the better it is. Investment decisions should never be made in a hurry.
InvestmentYogi tells you the investment avenues to maximize tax benefits available under Sec 80C & 80D.
- Invest in ELSS schemes: It is one of the best investments to make if you can afford to take the risk. It is also one of the options where the lock in is least. There are a lot of ELSS (Equity Linked Savings Scheme) which offer a good avenue to invest to save tax as well as avail growth. SIP (Systematic Investment Plan) is a good way to invest in this asset class as it averages your cost over the year. Here is a list of best ELSS for 2009-2010
Get your Insurance check up done: Do not take an insurance policy just to avail tax benefits. Get your insurance check done; calculate what your dependants need to stay financially fit even if you are not around. Life Insurance is for your loved ones’ goals and happiness. If you cannot afford a huge cover, take a term policy. It is one of those investments that will give you peace of mind and it is light on the pocket.
- Add to the PPF account: PPF is one of the best debt products. The investment is Exempt from taxes, the interest is Exempt and so is the maturity amount. You can only invest up to Rs.70,000 in a financial year.
- Home loan Principal: The principal component being paid in the EMI of your home loan is also eligible under this Section. Don’t forget to get a break up from your bank.
- Medical Insurance premium: You can now avail up to 15,000 of deduction if you pay your medical premium (your, spouse and dependants). In addition to this, if you are paying medical insurance premiums for your parents, that is eligible for another deduction (of up to 15000; up to 20000 if they are senior citizens).
But before you do this, do check what your contribution has been to the PF account, because that is also eligible under 80C. So, if your annual contribution to PF account is Rs.25,000 invest only the balance (Rs.75,000) for availing the 1 lakh deduction under Sec 80C.
In a nutshell:
- Check your PF contribution
- Check the principal component of the home loan payment
- Invest according to your financial goals
- Evaluate your insurance requirement
- Invest 1 lakh over the year not just the last 15 days
The author Lovaii Navlakhi is a Certified Financial Planner, Managing Director of International Money Matters Pvt. Ltd.