The avoidance of taxes is the only intellectual pursuit that carries any reward.
— John Maynard Keynes
Quite often, we rush to make the least thought-through tax saving investment (the easiest like insurance plan & PPF being the most popular) with a short-term view to save on taxes.
Have you ever wondered if the same investment could also help you build wealth and take you closer to your financial goals? Probably not.
Here’s a cheat-sheet to help you choose the best tax-saving option to utilize your section 80C’s INR 1.5 Lakh tax-deductible limit.
Hint: Look for the lowest lock-in & highest potential return.
Options available under the section 80C basket:
|Amount invested for years||Percentage appreciation||Percentage depreciation|
Over this period, he saved almost INR 4.5 lakhs in yearly taxes while his investment has grown to INR 32 Lakhs! A total gain of INR 21.5 Lakhs in ten years!
What happened there? It’s the power of equity, compounding and a wise tax-saving investment that made all the difference.
We recommend you to watch a brief video by Nirav Karkera (who heads the Research team at Finity) listing the best tax-saving funds for year 2018-19:
Equity as an asset class is by far the most dominant when it comes to building wealth. A classic display of the power of equity was the performance of TCS shares in the past week.
Shares of TCS gained the most this week. Since it got a clean-chit in the controversial racial-discrimination lawsuit filed in the U.S. Digital funds have been the biggest winners along with TCS.
|NPA classification will now not include the 90- day moratorium on loans||Securing banks' books & entity classification as RBI rolls out aggressive measures|
|TLTRO 2.0 worth Rs 50,000 crore||Liquidity boost to NBFCs, HFCs & MFIs|
|Special refinance facilities of Rs 50,000 cr to NHB, SIDBI and NABARD||Systemic liquidity support to small enterprises|
|LCR requirement for SCB to be brought down from 100 percent to 80 percent with immediate effect||Commercial banks deposit less with RBI, keep more with themselves for liquidity|
|Fixed reverse repo rate under LAF cut by 25 bps to 3.75 percent from 4 percent with immediate effect||Unattractive for commercial banks to deposit with RBI, might as well lend|
|For large accounts under default, additional provisioning of 20 percent is required for not implementing resolution in 180 days. This has now been relaxed.||Breathing space for banks, leaving more towards the banks' liquidity|
- Axis Mutual Fund has decided to change the load under Axis Small Cap Fund with effect from November 29, 2018. Now, for units in excess of 10% of the investment, 1% will be charged for redemption within 12 months.
- Principal Mutual Fund has decided to resume fresh investment in Principal Cash Management Fund, Principal Ultra Short Term Fund, Principal Low Duration Fund & Principal Arbitrage Fund with effect from Dec 03, 2018.