We reached the end of 2021 financial year. It is time to finalize and invest for tax planning. You have to invest before Mar 30 to get tax benefit. Do not invest all your money in LIC. LIC and FD is saving. The rich people invest whereas the middle class saves. Saving money will not make you rich. Investing will. Most middle class don’t even understand the concept of “time value of money” and “Power of Compounding“.
List of investments that qualify for tax deduction under Section 80C:
-Investments in Provident Funds such as EPF, PPF, etc., payment made towards life insurance premiums, Equity Linked Saving Schemes (ELSS or tax saving mutual funds), payment made towards the principal sum of a home loan, Sukanya Samriddhi Yojana, NSC, Senior Citizen Savings Scheme
-Tax Saving FDs offered by both banks and post offices.
-Payment made towards pension plans, as well as mutual funds under Section 80CCC.
-Payment made towards certain Government-backed schemes such as National Pension System, Atal Pension Yojana, etc. under Section 80CCD(1)
-Investments of up to Rs.50,000 in NPS is considered for exemption under Section 80CCD(1B)
FD, pension plans, NPS and atl Pension Yojana are saving instrument.
ELSS mutual funds are investment and tax planning instrument with the benefit of power of compounding. Invest 30K to 50K in ELSS mutual funds for long term benefit.
Best ELSS Mutual Fund to invest in 2021:
- Mirae Asset Tax Saver Growth Direct Plan (0.29)
- Tata India Tax Saving Growth Direct Plan (0.69)
- Axis Long Term Equity Growth Direct Plan (0.72)
- DSP Tax Saver Growth Direct Plan (0.80)
- IDFC Tax Advantage Growth Direct Plan (0.88)
Invest in low expense ratio mutual funds like Mirae Asset Tax saver which is lowest expense ratio 0.29. Try to avoid high expense ratio mutual funds like LIC mutual funds.
Last date to avail Special Festival Advance Scheme:
Government employees can avail an interest-free special advance of Rs 10,000 on or before March 31, 2021. The special festive advance was announced by the government back in October 2020 along with the LTC Cash Voucher Scheme. The advance taken by a government employee will be recovered by the government in a maximum of 10 instalments.
Ahead of Holi festival, here comes a piece of good news for the government employees. The Centre is offering them Special Festival Advance Scheme before Holi festival. Part of this scheme, the government employees will receive an advance of Rs 10,000 without any interest. Notably, the last date to avail the cash under Special Festival Advance Scheme is March 31, 2021. This time it is more special as this provision of Festival Advance Scheme was not there when 7th Pay commission was implemented.
The decision to give the government employees an advance of Rs 10,000 is included in the Seventh Pay Commission. The government employees must keep in mind that this advance is for this financial year and the money received will have to be spent before 31 March 2021.
Things To-do before March 31:
- Tax saving investments (Section 80C Deductions of Rs. 1,50,000)
- Additional Deduction of Rs. 50,000 for Investment in NPS Account
- Submit the proof of expenses to your employer
- Linkage of Aadhaar with PAN
- Submit Form 12B