Time to revise investment plan

There is a certain limit for investments in particular areas to avail tax rebate benefits by individual taxpayers as per the Income Tax Act 2023. Tax rebate is important for taxpayers to reduce tax liabilities significantly and save money for financial security in the future.

As per Income Tax Act 2023, the areas of investments are a few to get the tax credit facility, and if any taxpayers want to enjoy these benefits, they will have to invest in the areas mentioned in the law.

Sometimes, it is noticed that someone has invested but not in the sectors mentioned in the tax law or the investment is not in the appropriate manner. Due to these reasons, they fail to claim the full tax credit benefits.

Except for the deposit pension scheme (DPS) and life insurance, there was no cap to invest in government securities and mutual funds in the past. Now a limit has been fixed.

Let's discuss the investment opportunities where the full tax rebate benefit could be availed.

DPS

DPS is the most popular and easy way to save money. And you can increase your savings in the DPS to get a good refund at maturity.

Now you can maintain your DPS up to Tk 120,000 yearly instead of Tk 60,000.

Government securities

Savings certificates and treasury bonds are the most secured. They give comparatively higher returns to investors. You can invest up to Tk 500,000 in government securities.

If your investment goes past the ceiling, you will not be able to claim tax rebates for the exceeded amount. So, make an investment plan considering the highest return benefits.

Life insurance

You can take an insurance policy for you, your spouse and your children, and there are no changes per new tax law.

Only you have to keep in mind that your annual insurance premium does not exceed 10 per cent of the life insurance policy value. This was also maintained in the Ordinance, which was replaced by the tax law.

Mutual funds

In a mutual fund, you can invest up to Tk 500,000.

There was no bar for investments in mutual funds in the past. Now you will have to follow this limit if you want to get the tax rebate on your full investments.

Shares of listed companies

There is no limit to investments in the shares of the listed companies in the capital market.

Considering the five investment areas, your first two deciding factors will be a high return to grow your money fast and investment security to get the full amount at maturity. In that case, government securities are the number one investment area and initially, invest up to the limit. And then go for DPS with a reputable scheduled bank or financial institution.

When your investment cap of Tk 620,000 is reached, go for life insurance again with a reputable company. And finally, if you want to take the risk, go for mutual funds or shares of companies listed in the capital market.

Jasim Uddin Rasel is author of Smart Money Hacks