Best Investment Schemes to Save Income Tax: In the beginning of February month, Piyush Goyal acting as interim Finance Minister presented the interim budget of India for FY20, where joy was erupted among taxpayers when he announced a host of tax reliefs. Among the major one was tax rebate for Rs 5 lakh income class. Goyal proposed that those who have a Rs 5 lakh income, will not have to pay tax. Now that, salaried employees having gross income of up to Rs 5 lakh, have tax exemption benefit, that amount can be used to make investment. Rs 5 lakh tax rebate is given under section 87A, where taxable amount will be only Rs 12,500. Apart from this, standard deduction was increased to Rs 50,000 from previous Rs 40,000. 

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With this, the burden for working class earning up to Rs 5 lakh has definitely been shortened. Hence, those amounts can be used to become rich. 

Here's how much an individual should look to invest?

Ankur Choudhary  Co-founder and CIO at Goalwise.com
 
"The most important things investors should look at before investing in Mutual Funds are their risk profile and goals. Any investment made without taking these two things into account is likely to disappoint. Also, multicap funds in general for equity and liquid funds for debt are good fund categories to invest in 2019. 

There have also been a couple of tax rebates for income earners that will be applicable from FY 2019-20 - standard deduction for employees to be Rs 50,000 (up from Rs 40,0000) and full income tax rebate for those with taxable annual income of Rs 5 lakhs or less. 

This means that individuals with gross income up to 7.5 lakh rupees will not need to pay any tax if they make investments in provident funds, NPS and prescribed equities. Example: 7.5 lakhs - 50k standard deduction - 1.5 lakhs in 80C - additional 50k in NPS = 5 lakhs taxable income => zero tax.

The new income tax rules are likely to increase the savings of young earners in the age group of 24-28 which can be further channeled into investments like Equity and Debt Mutual Funds.

Another important aspect to consider for first time investors, especially young earners, is to first build an emergency fund equivalent to 4-6 months of their expenses by investing in good Liquid Debt Mutual Funds before investing for long term growth in Equity Mutual Funds. This will help them tide over any unforeseen expenses or shifting between jobs and save them from the possibility of getting into a debt trap."

Pravin Jadhav, Whole-time Director at Paytm Money (Image source: linkedin.com)

Individuals earning up to Rs.500,000 can now save up to Rs.12,500 as per the new Budget 2019-20. We suggest that this sum must be utilised towards investing in mutual funds, as compared to simply keeping it idle in bank account because mutual funds help in beating inflation and generating higher returns over long period of time.

For tax saving, most investors usually invest via the lump sum mode towards the end of the year; but a smarter thing to do would be to invest monthly via SIP in ELSS funds. We recently introduced Tax Saving Investment Pack which is our advisory recommended solution for individuals to save tax via ELSS funds and enjoy the benefits of 80C deductions.

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For short term i.e. upto 1 year horizon, we recommend parking their money in liquid mutual funds, which are low risk yet offer higher returns than savings account. We offer 4 liquid funds with instant redemption, where you can withdraw a maximum of Rs.50,000 within minutes to your Bank Account.

For long term investing, we suggest exploring SIPs via Investment Packs which is our advisory portfolio solution based on user's risk profile.

Income tax rates for salaried employee below 60 years of age - stands NIL on below Rs 2.5 lakh income, 5% between Rs 2.5 lakh to Rs 5 lakh income, 20% between Rs 5 lakh and Rs 10 lakh income and 30% above Rs 10 lakh income.