3 simple tax-saving measures that are equally effective in creating wealth
Also Read: ITR filing 2024: Here's how to maximise income tax savings from Employees' Provident Fund (EPF) account Several critical factors to contemplate when selecting a tax-saving investment comprise: Lock-in duration: This denotes the minimum period you’re required to retain the investment before being able to withdraw funds. Certain tax-saving choices, such as the Public Provident Fund (PPF), entail lengthy lock-in periods, whereas others like tax-saving fixed deposits might have shorter durations. Evaluate your financial objectives and the urgency of accessing funds.
Early withdrawal terms: While some investments permit withdrawals before the lock-in period concludes, they often entail penalties or constraints. It’s crucial to comprehend the conditions linked with premature withdrawals for each option under consideration. Taxation on interest income: Tax-saving investments vary in their treatment of interest earnings.
While some may incur taxes on interest earned, others may offer complete tax exemption (Exempt-Exempt-Exempt) on investment, interest earned, and maturity proceeds. Select an option that aligns with your tax-saving objectives. Maturity proceeds: This refers to the total sum received upon the conclusion of the investment term.
Evaluate your financial requirements and determine the amount needed at the maturity date. Consider these supplementary factors as well. Risk appetite: Tax-saving alternatives encompass diverse risk levels.
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