PPF, ELSS, NPS, Ulip or Bank FD: Go online to save tax for FY 2019-20

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Updated: April 23, 2020 9:01:07 PM

The last date for saving tax for the financial year 2019-20 is already extended by the government till June 30, 2020.

 PPF, bank fd tax savings, Online Ulips, elss, financial year 2019-20, COVID-19 lockdownTax Saving Options: For those who are looking to save tax sitting at home, here are a few tax savers in which one can invest online.

Tax Saving Schemes: The country is under a nationwide lockdown owing to the COVID-19 pandemic and nobody is sure whether or not it will get extended after May 3, 2020. Meanwhile, the last date for saving tax for the financial year 2019-20 has already been extended by the government till June 30, 2020. So, anyone who still wants to save tax for the assessment year 2020-21, may do so over the next two months or so. For those who are looking to save tax sitting at home, there are a few tax savers in which one can invest online. There is no need to go outside or even visit any office. Most distributors of financial products are also offering online services wherein filling up of the application form and transactions is happening online.

5 key online tax-saving investments with tax benefit under Section 80C of the Income Tax Act are:

1. Public Provident Fund (PPF)

To open PPF account online, you may log on to net banking facility of your bank. The funds can be transferred from your savings account and the physical copy of the PPF account statement can be had from the bank once the lockdown gets over. One can also view the statement online after log-in. Important to know that PPF is a 15-year scheme and one needs to invest a minimum of Rs 500 a year and a maximum of Rs 1.5 lakh in a year. As a parent, one can open a separate account in the name of minor but the combined limit cannot exceed Rs 1.5 lakh a financial year.

Currently, for the period April 1 to March 31, 2020, the interest rate is 7.1 per cent per annum compounded annually and is tax-free.

2. Tax saving bank FD

Banks offer fixed deposit scheme of varying tenure ranging from 7 days to 10 years. One of the bank FD schemes is the Tax saving FD, which has a lock-in period of 5 years and helps one save tax by investing a lump sum amount. One need not invest regularly in Tax saving bank FD unlike PPF. Currently, the interest rate is around 6 per cent per annum for most banks, however, the interest earned is taxable.

3. ELSS mutual funds

Of the different kinds of mutual funds schemes, only equity-linked savings scheme (ELSS) come with tax benefit under section 80C. One can invest in ELSS by visiting the website of the fund house and after having completed the KYC formalities. One may also contact his or her distributor and apply online if such service is provided by them. ELSS is an equity investment with a lock-in period of three years, however, if returns are low once lock-in ends, one may continue holding the units for a longer-term. Unlike bank FD and PPF, there is no guarantee of returns but equities have the potential for high inflation-adjusted return over the long term.

4. NPS online

One can open an individual Pension Account under NPS through eNPS- Tier I or Tier and Tier II if they are between 18 – 65 years. Your KYC verification will be done by the Bank/Non-Bank POP selected by you during the registration process. One needs to upload a scanned copy of PAN card, scanned Photograph and Signature and Cancelled Cheque.

The Pension Fund Regulatory and Development Authority today said in a circular that its recent advisory issued to CRAs for not opening NPS Accounts through OPGM without photo and signature will now be effective from July 1, 2020

You will be routed to a payment gateway for making the payment towards your NPS account from Internet Banking.

5. Ulips online

Online Ulips have lower charges and hence suit long term investing. Investing in online ulips is possible by visiting the websites of the life insurance companies. Ulips are long term investments and one will require to pay the premium for the entire term, even though the lock-in period is 5 years. Opt for Ulips only when your goals are at least ten years and keeping your protection and investment needs is not an easy task for you.

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