Tax Saving Investment Options

While tax saving is very important, tax saving investment options are also important. You could save tax quickly and earn higher returns by investing in tax-saving investment options in India. The right time to invest for tax saving investment options in India is at the start of the new tax year. Many investors in India to invest their tax saving in the short term and long term options. The beginning of the new tax year is an ideal time to start your tax saving investment options in India. Tax saving is also possible with your international investments.

An important part of many tax saving investment options in India is the lock-in period. With lock-in periods, your investment option remains open even when the market is volatile. This is a perfect time to buy if the interest rates are low, lock in your profits for a longer time and save on tax in India. There are many companies in India that provide high quality tax saving investment options like lock-ins and dividends.

A lock-in period allows you to buy a property and let it remain unoccupied for a specified number of years. This helps you to save tax on your residential income even as you rent out your property. With this option, you can claim a tax deduction on your income tax return for the number of years you let your property remains unoccupied. Usually the period starts from five years and you could claim the deduction up to ten years from the end of the fifth year of residence. However, you could claim the same deduction only up to five years from the end of the sixth year of residence.

Another important section of investment options is the section 80c. This is another excellent tax saving option that helps the taxpayer to avail the benefits of the various credits and deductions available under the federal tax law. Under this tax relief option, a taxpayer may claim expenses related to improvement of the home or fixtures if the improvement is made for the purpose of improving his health or personal comfort. The tax deduction for the home or fixtures may be claimed by a taxpayer also if he reimburses expenses related to rental income and taxes applicable on personal use of the house. A taxpayer could also claim expenses for his child’s education if he takes the educational loans.

Real estate investment is considered an excellent way to make profit. In case of investments in the real estate, one must remember that the gains should not be claimed until the property has been put for sale. If you want to claim the gain on the property within a specified time, then one has to calculate the value of his property in accordance with the current market price. There is another option for investors who purchase plots for development purposes. Under this option, the investor has to enter into an agreement with the concerned authority for developing a particular plot. Even if the plot is developed later, it does not lose the overall value in case you sell your property within the prescribed period.

A very important tax saving options is the option of ‘locking-in’. Under this option, the investor has to agree to sell his property within a prescribed period after the completion of the development project. If the investor wants to keep his property, he can still claim the gain. There are other tax saving options too, such as reduction of the tax payable on capital gains and dividends. However, it is recommended to seek professional advice before taking a decision to invest.

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