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. (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 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 if invested judiciously.
