Last-minute  tax saving options you  can  explore

It is always advisable to plan your tax-saving investments at the beginning of the financial year. Tax planning is part of an individual's overall financial strategy, though many people keep such investments for the last minute.

If you are planning to do your tax-saving investments now it is important that you first ascertain how much you need to invest. Do consider investments and expenses such as employees provident fund, life insurance premium, tution fees, home loan principal repayment etc as you can claim a deduction of up to ₹1.5 lakh against these under Section 80C. After you have decided the amount, the next step is to choose the instrument to invest.

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“The choice of instrument will depend on the risk appetite of the investor and investment horizon. Right now, mode of investments will also be important as people may not want to physically visit places like banks or post offices,” said Naveen Julian Rego, registered investment advisor and certified financial planner.

Here is a list of instruments which you can consider for making last minute tax saving investments.

Public Provident Fund: A small saving scheme with an investment tenure of 15 years, will suit a long-term investor well. It's a government-backed scheme and is currently offering an interest rate of 7.1%. The interest rates are revised quarterly. It enjoys an exempt-exempt-exempt tax benefit. Basically, amount invested, interest earned as well as withdrawals on maturity are all tax- free.

“Generally I suggest PPF as an investment to fill the gap under Sec 80C. PPF is flexible, minimum ₹500 to be invested each year and maximum ₹1.50 lakhs. For long term goals one needs debt allocation too hence, PPF fits this well,” said Chandan Singh Padiyar, a Sebi-registered investment adviser. However, not all banks provide the facility to invest online in PPF. Therefore, you need to check with your bank.

National Savings Certificate: Another small saving scheme which has a lock-in of 5 years. It is currently offering an interest of 6.8% “The yearly accrued interest can also be claimed to be re-invested in subsequent years for tax benefit under 80C.The interest received on maturity is taxable,” said Sriram Jayaram, a SEBI registered investment planner.

Tax saving fixed deposits: These are suitable for seniors and also risk-averse investors. An individual gets tax deduction under Section 80C for investment in tax-saving FDs which have a tenure of 5 years. However, advisors generally don’t prefer these as post tax returns are very low especially for those in the highest tax bracket. But one can invest in tax saving FDs online. Currently, banks are offering interest rates in the range of 5.30% to 7.5%.

ELSS: It is always advisable to invest in Equity linked savings schemes or ELSS through systematic investment plan (SIP). ELSS mutual funds invest 80% to 100% of their assets in equity shares of companies and hence are exposed to market risks. Although they have a lock-in of 3 years experts advise people to stay invested in these funds for longer term. “One should be reasonable with their return expectations from ELSS and shouldn’t invest just in the greed of higher expected returns but keep his or her risk appetite in mind,” said Jayaram.