In today's digital age, social media influencers have become powerful voices that shape popular culture. However, as influencers navigate their financial journey, understanding tax-saving investment options becomes crucial. By making smart investment decisions, influencers can not only grow their wealth but also save on taxes. This blog will explore five tax-saving investment options suitable for social media influencers in India.

Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a popular long-term investment option that offers tax benefits to Indian citizens. It has a lock-in period of 15 years, during which influencers can contribute a portion of their earnings. The invested amount qualifies for deductions under Section 80C of the Income Tax Act, reducing the taxable income. Additionally, the returns from PPF are tax-free, making it an attractive option for influencers looking for long-term wealth creation.

National Pension Scheme (NPS)

For social media influencers planning their retirement savings, the National Pension Scheme (NPS) is an excellent choice. Under Section 80CCD(1B) of the Income Tax Act, influencers can claim an additional deduction over and above the limit provided by Section 80C. NPS allows individuals to contribute towards their pension account, ensuring financial security during retirement. With the flexibility to choose investment options ranging from equity to government securities, influencers can align their investments with their risk appetite.

Equity-Linked Savings Scheme (ELSS)

Social media influencers seeking higher returns with the potential for wealth creation can consider investing in Equity-Linked Savings Schemes (ELSS). ELSS funds are mutual funds that predominantly invest in the equity market. By investing in ELSS, influencers can save taxes under Section 80C and benefit from potential capital appreciation. ELSS funds come with a lock-in period of three years, providing the necessary investment discipline while offering the potential for long-term growth.

Under section 80C, the following provisions are made to ensure substantial tax reduction on funds related to the ELSS scheme.

• The total principal amount invested in ELSS is exempt from taxation, provided the amount is under Rs. 1.5 Lakh.
• Any capital gains less than Rs. 1 Lakh is not charged with long-term capital gains tax.

Unit Linked Insurance Plans (ULIPs)

Unit Linked Insurance Plans (ULIPs) are investment-cum-insurance products that offer influencers the dual benefits of life insurance coverage and wealth creation. Influencers can contribute towards ULIPs and enjoy deductions under Section 80C. The portion of money dedicated towards the investment part under this scheme is entitled to tax redemption of Rs. 1.5 Lakh, along with 10% of the total premium (provided the value is less than Rs. 1.5 Lakh). ULIPs provide the flexibility to invest in a wide range of funds, including equity, debt, or a combination of both, catering to the risk appetite and financial goals of influencers. It's important to evaluate the charges and the performance track record of ULIPs before making an investment decision.

Presumptive Taxation

The presumptive tax-saving scheme benefits influencers and social media creators by simplifying their tax calculations and reducing their tax liability. Professionals with gross revenue up to Rs 75 lakhs can opt for this scheme, where they offer 50% of their gross revenue as taxable income. They pay taxes based on their slab rates on this income. By considering only half of their revenue as taxable, their overall tax liability decreases. Additionally, opting for the presumptive scheme eliminates the need to maintain detailed books of accounts, reducing administrative burdens.

However, professionals cannot claim deductions for profession-related expenses under this scheme. Although this limits their ability to reduce taxable income further, the simplified process and lower tax liability offset this drawback. It's important to note that if the offered income is lower than the presumptive basis and exceeds the basic exemption limit, professionals may face a tax audit. They must file their return in ITR 4 by 31 July of the assessment year to avail the benefits of this tax-saving scheme.

Conclusion

Social media influencers in India can optimise their financial planning by considering tax-saving investment options. The Public Provident Fund (PPF), National Pension Scheme (NPS), Equity-Linked Savings Scheme (ELSS), tax-saving fixed deposits (FDs), and Unit Linked Insurance Plans (ULIPs) offer unique advantages in terms of tax savings, wealth creation, and risk management. However, it is essential to align these options with one's financial goals, risk tolerance, and investment horizon. To make informed decisions, influencers are encouraged to consult with financial advisors or tax professionals who can provide personalised guidance. By incorporating these tax-saving investment options into their financial strategies, social media influencers can pave the way for a secure and prosperous future while optimising their tax liabilities.

byAstik Dubey

Astik is a law student diving deep into indirect Tax and business law. With a flair for business writing and a special interest in crypto taxation, he turns complexity into captivating articles. Join his enlightening blog, where law and business intersect.

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