In another 2-3 months, most of us need to submit the investment proofs. So most of us will be scrambling to invest our money to save tax. I hope this article will be helpful for you guys to choose the correct investments to save the tax.
The best option is to put money in the Equity Linked Savings Schemes (ELSS).
ELSS schemes have given superior returns in the long term. Those who have not taken the step from the last year April for Tax planning will have only two options left.
- Allow huge chunks of their salary to get deducted as Tax
- Invest hurriedly in one of the tax-saving options to escape the tax net at the last minute (Specially Traditional Life Insurance. This will be the worst decision).
Anyhow in this post, I want to explain how one can avail full Tax Benefit without investing 1.5 Lakh. Sounds impossible. doesn’t it?
Here is the way to save tax without investing 1.5 Lakh. The idea simple and uses the Mutual Fund dividend option.
With Dividend Payout Option: We all know most of the Mutual funds declares dividend yearly. So we can make use of this dividend payout option to full benefit of tax savings without investing 1 Lakh.
For example: If you have invested 1 Lakh in ELSS Scheme XXX – Dividend Payout option today (For example NAV as on Today is 29.7399 under dividend option) you will get around 3362 Units.
Assume, If they declare a dividend of Rs. 3/- Per Unit in the month of Jan-2017. You will get back around 3362 * 3 = 10086. This 10086/- will be Tax-free income for you. So effectively you have invested 100000 – 10086 = 89914. So this amount will be Locked in for 3 Years. Lowest lock-in on Tax savings instruments.
Please Note: After declaring dividend the NAV will fall to the extent of dividend declared and the reinvestment happens on ex-dividend NAV.
Recent Comments