We can create a surplus investable amount of up to 62,400 every year by investing 2 lakhs in a combination of NPS and ELSS mutual funds. Let us look at these investment options and how they can help you create a surplus amount to create long term wealth.
E.L.S.S.
E.L.S.S. (Equity Linked Saving Scheme) are tax saving Mutual funds. E.L.S.S investments are eligible for deduction in taxable income of up to ₹1,50,000 under section 80C. E.L.S.S. have the shortest lock-in period (3 years) and offers the possibility to earn higher returns compared to other tax-saving instruments.
N.P.S.
N.P.S. (National Pension System / Scheme) is a retirement saving scheme by the Govt. of India that offers a deduction of taxable income of ₹1,50,000 under section 80CCD(1A) and an additional taxable income deduction of ₹50,000 under section 80CCD(1B). NPS can be used to accumulate a sizable corpus till retirement.
Consider investing in a combination of E.L.S.S. and N.P. S.
So, an investment of ₹2 Lakhs with the combination of ₹1,50,000 in E.L.S.S. (80C) and ₹50,000 in NPS (80CCD(1B)) reduces the taxable income by ₹2 Lakhs and helps to save income tax up to ₹62,400.
This ₹62,400 saved will be a surplus investable amount created out of investment in a tax-saving combination of ELSS and NPS and will be available for additional investment for achieving money goals.
If this tax-saving combination investment is continued every year, then there is a possibility of an additional yearly investment of ₹62400 (assuming current IT tax rates) which can create a substantial corpus in the long term or create a guaranteed source of income for lifetime if invested judiciously.
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute professional advice. While full efforts have been made to ensure the accuracy of data and numbers, no responsibility is taken for any errors or omissions. Tax implications on insurance, investments and returns from related products may change due to updates in tax laws. Always consult with your financial advisor or insurance expert before making any investment or insurance decisions. The author is not responsible for any financial losses or damages incurred as a result of relying on the information in this blog.
Disclaimer: Disclaimer: Mutual fund investments are subject to market risks. read all scheme related documents before investing.
