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8 Simple Investments to Save Tax


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Title: 8 Simple Investments to Save Tax

8 Simple Investments to Save Tax
1. Equity Linked Saving Scheme (ELSS)
  • An ELSS is a diversified equity mutual fund which
    has a majority of the corpus invested in
  • 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
  • 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

2. Rajiv Gandhi Equity Saving Scheme (RGESS)
  • Maximum amount that could be invested in RGESS is
  • It can be invested in BSE100 stocks or in RGESS
    Mutual Funds directly
  • 50 of the invested amount qualifies for tax
  • 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

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

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
  • Investment can also be made month on month,
    intermittently or annually

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.

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.

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

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
  • This plan is ideal only for long term investors
  • ULIP also provides risk coverage

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