It is almost the end of 2016, and soon it will be time to submit tax proofs to your employer. And in roughly three months the financial year 2016-17 will be complete. So now is the time to take action to invest and save tax, if you haven’t already done so.

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Bank accounts are plush with cash deposits post demonetisation. This money deposited by you may have been received as gift or held by you as a reserve to meet exigencies. Now is the time to make this idle cash work for you. If invested wisely this money can save you tax as well as earn you better returns than interest on a bank savings account.

Resolve to exhaust your section 80C limit

Close to 20 odd expenses and investments are eligible under section 80C. This section allows you to take off Rs 1.5lakhs from your taxable income. Claiming this deduction in full can save you significant amount in taxes. Our research shows that a lot of taxpayers do not exhaust this limit while they still have a tax due. So this time, decide to put away the cash deposited by you in the options available under section 80C.

ELSS SIP for remaining 4 months of FY 2016-17

Now that there is money to spare, consider investing in an ELSS or equity linked savings scheme. ELSS is type of a mutual fund eligible for tax deduction under section 80C. You can also spread your ELSS investment over the next 4 months. That way you are protected from the risk of making a lump sum investment and can benefit from entering the market at different levels. ELSS have a lock-in of 3 years, lowest amongst all the eligible investments under section 80C. At the same time they don’t have a maturity date. So you can continue to stay invested even after 3 years. Returns on traditional investments are likely to get lower as government is plush with money. So in the current scenario ELSS appears to be your best bet so long as you are comfortable with risk that comes with investing in the equity market. If you decide to stay invested for a 5 year or 7 year time frame, you are likely to see better returns that most other options available.

Additional contributions to EPF

If you have additional funds and prefer risk averse, conservative investment, consider making a voluntary contribution to your EPF account. You can end up with a significant corpus at the time of retirement, provided you do not dig into this balance during your working years. EPF has been a boon for the most laid back taxpayer, who do not make efforts to invest their funds properly. Besides, contributions to EPF are eligible for deduction under section 80C.

5 year Fixed Deposit

If you are a senior citizen and want a risk averse, safe investment consider making a 5 year fixed deposit to make the most of 80C. This way you can park excess funds and claim tax benefits as well. But your money will be locked in for 5 years. Though interest earned is fully taxable, it will be slightly better than savings account interest.

Consider a preventive health check up

Income tax act allows you to claim a deduction of Rs 5,000 for preventive health check-up. This deduction is allowed under section 80D. It is included within the maximum limit of Rs 25,000 for medical insurance of you, your spouse and dependent children. So if you have not exhausted your 80D limit, go for a health check up from the idle cash you deposited. Helps you save tax and take charge of your health!

The government is likely to soften tax rates on individuals post its bumper income from demonetisation. This could mean higher disposal income in your bank accounts. And soon it will be time to plan for the next financial year. Make sure you make the most of your tax saving for financial year 2016-17.

(The article is written by Archit Gupta, Founder & CEO, ClearTax.com)