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Unlimited Lifetime Taxfree Planning

Now that tax season has begun, taxpayers with salaries and those without will evaluate investment possibilities to minimize their tax liability. Finding investments that allow you to both reduce your tax liability and increase your after-tax earnings is a top priority for any investor.
Your chosen income tax regime is something to think about this year. In FY 2020-21, individuals can keep using the same tax deductions and exemptions they’ve always had. One last alternative is to choose the new, more lenient tax regime without using any of the tax breaks and exemptions available to him or her. Suppose you decide to file under the new tax regime. In that any case, you will no longer be eligible for certain deductions, such as those available under Section 80C (which allows you to deduct up to Rs 1.5 lakh by investing in specific financial products), Section 80D (which will enable you to deduct health insurance premiums paid), Section 80TTA (which allows you to deduct interest earned on savings accounts from banks and post offices), etc.

Choosing the right tax saver

Make sure you know how you’ll be taxed on any returns before deciding on the best tax saver. There is less room for long-term financial success if earned income is subject to taxation.
The interest you earn from tax-deferred financial instruments like the National Savings Certificate (NSC), the Senior Citizens’ Savings Scheme (SCSS), and 5-year time deposits at banks and post offices will be fully taxable once it is added to your income.
Although they may assist you in reducing your tax bill this year, interest income will continue to generate tax bills until the conclusion of the term. “It’s important to remember that (taxable tax savers) instruments can defer capital gains and income taxes up to the applicable limits. Given the tax advantages they offer, their returns are typically lower than those of the market, “Right Horizons CEO and co-founder Anil Rego put it this way.
With taxes taken into account, the after-tax return on a taxable instrument is lower. If an individual is subject to a 30% tax rate, their after-tax return on a 7% fixed deposit for 5 years would be 4.91% per year (before the surcharge).
Interest earnings can still qualify as tax-free if the person’s total yearly income is below the exemption limit the Internal Revenue Service set. Remember that under both tax systems, you won’t owe any money unless your taxable income is more than Rs 5 lakh.
However, tax breaks with E-E-E status are a welcome addition for most people, including those with wage or company income. Earnings from these investments are not taxed in any of the three ways (EEE) generally applicable to investments. Section 80-C of the Income Tax Act of 1961 allows for a deduction of the investment principal, while Section 10 exempts any investment income.
Here is a strategy to help you reduce your tax liability and increase your after-tax income under the prior law. However, not whole of them are created equal in terms of capabilities and asset class, which is why it is crucial to make the correct option.


Beginning on April 1, 2018, investors will be subject to a 10% long-term capital gains tax on any boosts realized from the sale of equity mutual funds or other investment vehicles with a minimum equity exposure of 65%, such as ELSS. Only payments over Rs 1 lakh per fiscal year will be taxable; gains in excess of Rs 1 lakh in a single FY will not be taxed. However, any Long-Term Capital Gains made before January 31, 2018, are grandfathered and will not be subject to taxation.
Equity-linked savings schemes (ELSS) are similar to diversified equity mutual funds, except that investors can deduct up to Rs 1.5 lakh annually from their taxable income by investing in them following Section 80-C of the Income Tax Act, 1961 and must remain invested in the scheme for at least three years. Every MF firm provides these, and the word “tax-saving” is typically included to set it apart from the firm’s other MF schemes. The profits on an ELSS investment are not guaranteed and are instead tied to the stock market’s success.
Dividend and growth options are available for them. The former is appropriate for those searching for a reliable but unguaranteed source of income, while the latter is more suited to those with long-term financial needs.
From April 1, 2020, investors will be subject to taxation on dividends received from equity mutual fund schemes. To maximize after-tax profits from an ELSS investment, it is recommended that investors select the growth option rather than the dividend option.
One can spread their bets and reduce their exposure to risk by investing in many ELSS schemes (depending on market capitalization and sector exposure). As with any open-ended mutual fund plan, ELSS investments can be maintained after the lock-in period ends. However, before doing that, you should compare its results to the benchmarks. Investing in an ELSS is a great way to go ahead financially and avoid paying taxes on the money you earn while you save for the future.


The Public Provident Fund (PPF) Scheme remains a popular choice for many who wish to save money. After all, the initial investment and any interest accrued are protected by a sovereign guarantee, and the profits are exempt from taxation.
The current annual rate offered by PPF is 7.1% (subject to change every three months) (for the quarter ending March 31, 2022). The Public Provident Fund account can be opened in the account holder’s name or the juvenile for whom the account holder is the legal guardian. A minimum yearly deposit of Rs 500 is required to maintain an active account, with a maximum of Rs 1.5 lakh permissible. Both the adult and the minor account limits are totalled here.
The PPF is a plan that lasts for 15 years but can be extended forever by adding 5-year sections. It can be cashed at any participating bank or post office. Only some banks allow you to open one entirely online. Postal Savings Accounts (PPFs) can be moved between financial institutions (post offices and banks). It doesn’t matter how aged you are to start a PPF account. A PPF account can be created by anyone, regardless of whether they already have an EPF account or not.
The PPF is a plan that lasts for 15 years but can be extended indefinitely by contributing an additional 5 years at any time. You can activate it at any post office or bank that accepts it. It’s also possible to open one at some online banks. Your PPF account can be moved from the post office to the bank or vice versa. An individual’s participation in the PPF is not restricted by age. One’s eligibility to open a PPF account is not affected by whether or not one already has an EPF account.
Who should consider it? People who do not want the high risk inherent in the equity asset class should consider purchasing PPF. However, PPF should not be relied on exclusively for long-term goals and should be supplemented with preferably through equity mutual funds and equity exposure, including ELSS tax saving funds, especially when the inflation-adjusted target amount is significant.


A salaried person might save on taxes through involuntary savings and accrue tax-free corpus through the Employees’ Provident Fund (EPF). Every month, an employee must set aside 12 per cent of his or her base pay to deposit into his or her EPF account. The employer also pays an equivalent amount, but only 3.67 per cent of payroll is deposited into EPF.
The employee’s contributions are tax deductible up to Rs 1.5 lakh per year (under Section 80C), but the employer’s contribution is not. The government annually declares some types of interest exempt from taxation, and employee and employer shares of these interest payments are included. For the fiscal year (FY) 21, the interest rate on EPF is 8.5%; for FY 20, it is 8.5%; for FY 2018-19, it is 8.65%. And for FY 2017-18, it was 8.55%.
Starting in the upcoming fiscal year (2021-22), employees whose combined VPF and EPF contributions exceed Rs 2.5 lakh would no longer enjoy tax-free returns on gifts over that amount. To learn more, please visit this link: Changing our investment strategy because of the tax on PF interest: When and how your PF is affected by the Budget.
However, an employee’s VPF account transforms into a voluntary provident fund if he or she contributes at least 100 per cent of primary and DA (VPF). Since the VPF is integrated into the EPF, the latter’s regulations also apply to it.


The Unit Linked Insurance Plan (Ulip) combines insurance with investment. It’s a way to save for the future and secure one’s financial future by investing in various market-linked assets, including life insurance.
In most Ulips, investors can choose between 5 and 9 funds with differing equity and debt allocations. A Ulip’s duration can be up to 20 years. However, the lock-in term is just 5 years. The fund value is not subject to taxation at policy maturity or upon cancellation (after 5 years). Taxes need not be paid when investors in a tax-free mutual fund change their allocation between the many investment choices available.
After April 1, 2021, any returns from new ULIP investments with yearly premiums above Rs 2.5 lakh will be subject to taxation. Following Section 10(10D), only the proceeds from the maturity of ULIPs with annual premiums of up to Rs. 2.5 lakh will be free from taxation. For ULIPs with yearly premiums above Rs. 2.5 lakh, income and return on maturity will be taxed as capital gain under section 112A; however, the limit of Rs. 2.5 lakh on the yearly premium of ULIP will only apply to plans purchased on or after February 1, 2021.
Suppose you already have a ULIP in force. In that case, you can continue investing the premium until the policy matures without fear of being taxed differently because the new regulation will only apply to new ULIPs.
Although some investors may benefit from Ulips, that is not necessarily the case. Investors confident in their ability to recognize and manage ELSS schemes and who already have a pure term insurance plan in place can skip out on purchasing Ulips. Those considering Ulips should also wait at least ten years before spending their savings. After 5–7 years, it may not be financially beneficial to leave Ulip.


Endowment, money-back, and whole-life policies are examples of the more conventional types of insurance. They feature a savings component and a set term and sum insured, making them distinct from pure term insurance plans. Life insurance premiums are calculated considering the policyholder’s age at entry, the amount of coverage desired, and the needed coverage duration. Until the policy matures, annual premiums must be paid. The premiums for such policies typically must be paid annually, but the policy itself may last for decades. When purchasing a policy with a longer duration, such as 25 years, you may only be required to pay premiums for the first 5 or 10 years.
Section 80C allows for a tax deduction on the premium, but the maturity value and the death benefit are entirely free of taxation.
The new income tax slab does not offer the financial incentive to pay life insurance premiums to reduce the tax obligation under section 80C. However, under the new tax law’s section 10(10D), maturity proceeds from a life insurance firm continue to be tax-free.