Save Up to Rs 1.5 Lakh Annually With These Smart Tax-Saving Strategies To Secure Your Child’s Future – News18

Save Up to Rs 1.5 Lakh Annually With These Smart Tax-Saving Strategies To Secure Your Child’s Future – News18


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Experts Tushar Bopche and Rohit R Chauhan suggest diversifying investments and using tax-efficient options like PPF, SSY, NSC, ELSS, and ULIPs, emphasizing Section 80C benefits.

With smart planning and choosing the right investment options, you can effectively save taxes while building a large corpus for your child’s future.

Investing wisely for your child’s future requires a strategic approach that not only grows their savings but also minimizes tax liabilities. Let’s explore some effective tax saving strategies recommended by experts, helping you maximize returns on your investments for your child’s future.

Tushar Bopche, Co-founder of Invest4Edu, emphasizes the importance of diversifying investments and utilizing tax-efficient options. Schemes categorized under EEE (Exempt-Exempt-Exempt) and equity-linked savings offer significant tax benefits.

Public Provident Fund (PPF) & Sukanya Samriddhi Yojna

Both the schemes are government-backed, highly secure and offer attractive interest rates. Under Section 80C of the Income Tax Act, amounts up to ₹1.5 Lakh are deductible from your taxable income. And, both the principal amount and the interest are tax exempt upon withdrawal, making it an EEE investment. Remember that Sukanya Samriddhi Yojna is only applicable for a girl child.

National Savings Certificate (NSC) and Post Office Saving Scheme

While the interest is taxable upon withdrawal, NSC still is an attractive option to save taxes on investment. You can claim deduction up to 1.5 Lakh under Section 80C. On the other hand, Post Office Savings Account offers tax exemption of up to 10,000 in interest in a financial year.

Equity-Linked Savings Scheme (ELSS)

If you want to grow your investment at a higher rate while saving taxes, ELSS funds are your friends. ELSS are mutual funds class that offers tax rebate under Section 80C for up to 1.5 Lakh a year. ELSS are among investment options that offer the highest rate of return but compared to a NSC of a FD, they come with a higher risk and have a lock-in period of three years.

Unit Linked Insurance Plans (ULIPs)

While tax savings is important preparing for unforeseen incidents is equally crucial. That is where ULIPs come into the picture. ULIPs combine investment and insurance, offering market-linked returns along with life cover. You can save 1.5 Lakh a year under section 80C while ensuring the maturity and death benefits under the plan.

However, Bopche cautioned that you do not rely on only one of the abovementioned plans but strategically choose a mix of different plans to maximise your tax savings while ensuring to create the sufficient corpus for your child.

Deductions Up To Rs 1.5 Lakh Annually 

Rohit R Chauhan, founder of INGOOD, echoes the significance of tax efficiency in child investment strategies. He highlights Section 80C of the Income Tax Act, allowing deductions up to ₹1.5 lakh annually on investments like PPF, SSY, and 5-year Fixed Deposits for minors. For long-term planning, the National Pension System (NPS) offers an additional deduction of ₹50,000 under Section 80CCD(1B).

Tax-free bonds provide fixed returns without tax liabilities, while child insurance plans combine financial protection with tax benefits under Sections 80C and 10(10D). ULIPs offer tax-free maturity proceeds within premium limits, and tax harvesting in mutual funds helps optimize capital gains tax.

Chauhan suggests structuring investments in a child’s name through gifts from relatives to leverage clubbing provisions. For higher education expenses, education loans offer tax deductions on interest payments under Section 80E without an upper limit. By incorporating these strategies, parents can effectively minimize tax outflows and optimize wealth creation for their child’s secure future.

Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.



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