It always been said that plan your today well and don’t think about tomorrow because of its uncertainty. And the current situation of the pandemic in the world was even impossible to anticipate. No one had ever visualized the current situation which the masses are going through. The adversity which everyone is experiencing was never been in anyone’s wish list. This is the time where economies in the world are facing a crisis, business growth is slow down, people are losing jobs, social environment is disturbed, educational institutions are closed, families are relocated and people are deprived of basic amenities.

This pandemic has created various difficulties in the life of many people. A liquidity crisis is one of them. The emergence of a liquidity crisis was natural because of job loss and salary cuts. Now the people are going after their savings and pulling out money from their investments which they have made in the past. But the problem arises for people who did not have the nature of saving money and never invested money to secure their future. But as and when the situation resumes to normal, everyone should cultivate the habit of saving money. It is always good to save some portion of your income for future purposes. Some people invest their money in different forms to earn some additional income rather than keeping in a it safe at home. Because “Saving funds is a best practice but investing funds is a clever choice”

Here I will explain to you some of the investment avenues where you can invest money and earn some passive income.

Investment Title Minimum period of holding Interest Rate

& Period of interest payment

Taxability of Interest Characteristics
i)                    Saving Account No Holding Period Between 2.75% to 4% credited in account quarterly, half-yearly, or annually depending upon bank policy. Interest received up to Rs. 10,000 is not taxable.
  • It is the easiest way to earn extra income.
  • The savings bank account can be maintained with the bank & post office also.
  • The money lying in saving account is highly liquid. One can withdraw funds anytime without any restriction.
ii)                   Fixed Deposit



7 days to 10 years Between 2.5% to 5% credited in account quarterly, half-yearly, annually or on maturity depending upon bank policy.
  • Interest is Fully Taxable.
  • Deduction of Rs. 50,000 can be claimed by only senior citizens.
  • The investment made in FD for a minimum period of 5 years is eligible to claim deduction u/s 80C.
  • The FD can be started with any Schedule bank and post office.
  • FD made with the rural or cooperative bank does not qualify for deduction u/s 80C.
  • Maturity proceeds are Tax-free.
  • Bank will deduct TDS on the credit of Interest but one can avoid TDS by submitting Form 15G/15H to the bank.
iii)                 Public Provident Fund 15 years Interest rates range between 7% to 8.75% and interest will be credited annually in the account.
  • The invested amount can be claimed as deduction u/s 80C.
  • Interest is Tax-free.
  • Maturity Proceeds are tax-free.


  • Investment in PPF is one of the best investment schemes.
  • It provides a higher interest rate than others.
  •  The money invested cannot be withdrawn before maturity.
  • Prematurity is possible only after 5 years.
  • Only individuals can invest in PPF. And one individual can have only one account.
  •  At most Rs. 150000.00 can be invested annually.
iv)                 Sukanya Samriddhi Yojana 21 years (but investment has to be for 15 years only) Latest Interest rate Is 8.4%
  • The invested amount can be claimed as deduction u/s 80C.
  • Interest is Tax-free.
  •  Maturity Proceeds are tax-free.


  • The investment can be made for the benefit of the only girl child.
  • The account can be open before the girl child turns to the age of 10 years.
  • One account for one girl child and a maximum of two accounts can be opened in a family.
  • Partial withdrawal up to 50% is possible before maturity only for the marriage or education of a girl child.
v)                  Sovereign Gold Bonds



8 years 2.5 % Annually.

Interest shall be paid half-yearly

  • Interest is Fully Taxable.
  • On maturity Capital Gain Tax is applicable.
  • Capital Gain Tax on Maturity is exempted for Individuals
  • Investment is Sovereign gold bonds is a safe investment.
  • Pre-maturity is possible only after completion of five years.
  • The redemption price is based on the prevailing price of gold at the time of maturity.
  • The gold bonds can be used as collateral for a loan.
vi)                 Direct Equity Investment No holding period The dividend is paid annually, depending upon the company’s financial performance
  • Dividend received is taxable in the hands of the taxpayer.
  • Capital Gain Tax is applicable to the transfer of shares.
  • This investment is risky but comes with possibly higher returns.
  • Best suited for the long term.
  • The dividend amount is not fixed. Distribution of dividends is the management’s decision.
  • One can start investing by opening a Demat account.

Conclusion: There are many more investment schemes available like equity mutual fund, debt mutual fund, National Pension System, real estate investment, Senior Citizen’s Saving Scheme. But one cannot invest blindly his hard-earned money in every scheme due to the pros and cons of each scheme. So, it is advisable to choose investment wisely in consultation with a professional advisor. So that money and future both shall remain secured.


Disclaimer: The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

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Qualification: CA in Job / Business
Location: New Delhi, New Delhi, IN
Member Since: 28 Apr 2020 | Total Posts: 2

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April 2021