Three simple tricks to save income taxes without investing fresh funds

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Three simple tricks to save income taxes without investing fresh funds

Income tax savings are an act, especially when planning less tax in advance, while avoiding any funds, helps avoid problems in eleven hours. Here are three simple tricks that can help you save income tax if you have saved in the past and you no longer have the money to invest. Here's how to walk it here

Withdraw from PPF and invest again

In public provident fund, every year Rs. You can get deduction under Section 80C of the Income Tax Act as you get investment up to Rs 1.5 lakh. If you have invested in a PPF account, you have a chance to cash shortages. You are eligible to withdraw money from your PPF account for the seventh year. "You can withdraw the 50% available at the end of the fourth year immediately before the withdrawal; Or the remaining 50% amount was at the end of the year," says Mumbai-based tax expert Balwant Jain.

If you have been investing regularly in PPF for all these years, then you have a fair chance to withdraw money from a PPF. You can invest money in PPF or other instruments of your choice, which deductions under Section 80C of the Income Tax Act.

Withdraw from mutual funds and invest again

Nowadays most invest in equity mutual funds and tax saving mutual funds (Equity Liquid Savings Schemes - known as ELSS). Tax-saving mutual funds pay Rs. Tax breaks are offered under section 80C of the Income Tax Act for a sum of up to 1.5 lakhs. These funds come with local in three years. If you have invested in tax-saving mutual funds for more than three years, you can sell it. Restore that money in the tax saving scheme and you are done. Investments are considered as a new investment and you get the much needed tax break. New investments in tax-saving funds come with a lock in three years.

For equity mutual funds, if you hold on for more than one year's investment, there is no tax on the benefits, the current rules say. If you have such an investment, you can sell it and invest in a tax-saving mutual fund.

This method does not change your asset allocation.

Are Fixed Deposits? Make a tax saving bank fixed deposit

Most of us have a fixed deposit of a bank, this can be broken. Periodically withdrawals will lead to a lower interest than commitment while creating a fixed deposit. But still you get some money. Now invest in income tax in bank tax-saving deposits. The deposit comes with a five-year lock-in period and under Section 80C of the Income Tax Act, Receives tax deduction up to Rs 1.5 lakh.

In this way, you do not have unnecessary risks, neither your asset allocation, but you get tax benefits.

These tricks look good. But they must be seen as a final minute resort. This 'roll-over' tax-saving investments effectively leads to minimal incremental investments. Tax savings can not be the only reason for the investment. You should ideally save more and invest more in your career progression and you can earn more. If you have to face the situation of cash crunch, then it's time to get your act together.