8 Simple Investments to Save Tax

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8 Simple Investments to Save Tax
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1. Equity Linked Saving Scheme (ELSS)

• An ELSS is a diversified equity mutual fund which
  has a majority of the corpus invested in
  equities.
• Best return among all the investment options
  under Section 80 C
• Shortest lock-in period of just 3 years
• ELSS need not be a lump sum investment. Monthly
  SIPs not only eases out the burden of one time
  investment but also takes care of market
  fluctuation.
• Both Capital gains and returns are tax free.
• In ELSS, the investor can opt for dividend pay
  out and get regular income even during the
  lock-in period
• The investor can put as little as Rs.500 in ELSS
  and experiment.
• There is an option of recycling the investment
  amount for every 3 years

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2. Rajiv Gandhi Equity Saving Scheme (RGESS)

• Maximum amount that could be invested in RGESS is
  Rs.50,000
• It can be invested in BSE100 stocks or in RGESS
  Mutual Funds directly
• 50 of the invested amount qualifies for tax
  benefit.
• And such tax benefit is just one time
• The investment is locked in for 3 years. Under
  flexible lock-in option, the investor can sell
  off the shares and reinvest in buying other
  shares.

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3. National Saving Certificate

• National Saving Certificate is issued by Post
  Offices. The Principal and the interest are
  backed by the Government of India thus ensuring
  guaranteed return.
• The minimum amount for investment is Rs.500 and
  there is no maximum limit.
• The interest rate for 5 yrs is 8.5 per annum and
  for 10 yrs it is 8.8 per annum
• Interest is compounded every half year. Interest
  earned through NSC is taxable.
• Individuals, Joint and even minors (supported by
  Guardian) can invest in NSC

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4. Public Provident Fund (PPF)

• The Public Provident Fund is savings-cum-tax-savin
  g instrument in India,  to mobilize small savings
  by offering an investment with reasonable returns
  combined with income tax benefits.
• The lock-in period of PPF is 15 years. It
  provides 8.7 interest per annum which is changed
  year on year by the Government of India.
• Investment upto 1.5 lakhs per annum qualifies
  for IT rebate.
• Loan facility in PPF account is available from
  3rd year onwards and rate of interest on
  loan will be 2/ annum above the interest paid.
• Minimum investment is Rs.500 and the maximum is
  Rs.1,50,000
• Investment can also be made month on month,
  intermittently or annually

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5. New Pension Scheme

• NPS is a low cost investment option for those who
  are looking for retirement funds.
• The investment can be made as Rs.500/ month or
  Rs.6000/ annum. There is no maximum limit for
  investing in NPS
• Investors have choice to choose from equity,
  bonds and gilts
• The returns on maturity is taxable.
• One has to do proper research before opting for
  New Pension Scheme.

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6. Senior Citizen Saving Schemes (SCSS)

• The Senior Citizen Savings Scheme (SCSS) provides
  guaranteed returns to senior citizens through a
  safe investment.
• SCSS provides a return of 9.2 per annum.
• Maximum investment limit is Rs.15 lakh
• Interest is paid at the end of every quarter
• Interest earned is taxable like every other
  Fixed deposit scheme
• The interest is paid on 31 March, 30 June, 30
  September and 31 December, irrespective of when
  you start investing.

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7. Voluntary Provident Fund

• This is beyond the employee contribution of 12
• The maximum amount an investor can contribute is
  100 of Basic and DA
• The lock-in period is until the employees
  retirement and hence it is a safe bet for
  investors saving for post-retirement expenses.
• Maturity returns are tax - free

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8. Unit Linked Investment Plan (ULIP)

• A Unit Linked Insurance Plan (ULIP) is a product
  offered by insurance companies that unlike a pure
  insurance policy gives investors the benefits of
  both insurance and investment under a single
  integrated plan
• ULIP will start giving good returns only after 10
  to 12 years
• Unlike ELSS, the investor has to keep paying
  premium for the entire duration to stay invested.
• In case of premium holiday, the policy will be
  discontinued.
• This plan is ideal only for long term investors
• ULIP also provides risk coverage

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