At the beginning of every year, you get tensed about how to cut on tax and save more and more without tilting your financial balance. Loads of suggestions, options and contradictory advice coming from your surrounding make the task lot difficult for you to decide on something particular. Here we are discussing some basic investment plans which are tax saving plans with good dose of return and security. This article will surely help you to cut the crap and find the most suitable tax saving investments.
Public Provident Fund (PPF):
When it comes to invest money, we Indians jump for PPF because of its good return and for its tax-free status. This investment plan offers liquidity and flexibility of investment as you can use the invested money in forms of loans or simple withdrawals at the time of need. If you look at the trends, then PPF has never earned bad return for its investors. This small saving scheme is one of the best tax saving investment options available in the market. With PPF, you can invest up to Rs. 1.5 Lakhs per year attracting Income Tax Rebate under section 80C of Income Tax Act. PPF comes with a lock-in period of 15 years which may seem very long but you can accumulate huge funds for your retired life through this plan. Because of its safe and sound returns, PPF will always attract investors to have faith on it.
Equity Linked Saving Scheme Mutual Fund (ELSS):
ELSS Fund is highly recommended for equity investors who want to earn high returns with vast choice of funds and flexibility. For many years, ELSS has been successful in earning good returns compared to other tax saving investments. Lock-in period for ELSS is just 3 years. You can go for the dividend option and avail regular income even during lock-in period. As you can invest bit by bit in ELSS every month, it does not incur extra financial burden on you and lets you check the market conditions and divert investment accordingly with minimum loss. Returns and capital gains of ELSS are tax-free which helps you to build a strong financial profile for yourself. There are many ELSS tax saving mutual funds available in the market, now you have to just pick the right one.
Tax Saving Bank Fixed Deposit Schemes (FD):
In spite of variety of investment plans, we swear by Tax Saving Bank Fixed Deposit Schemes. From the moment you opt for bank fixed deposits, you know the exact amount it can draw after maturity. The best part of the FD is the modest and secure return without any scope of risk. Interest rates of FDs may vary bank to bank and usually it runs around 8-9% per annum. For senior citizens, there is extra 0.5% interest rate. FD investment is tax-free under section 80C of Income Tax Act though the interest it attracts is taxable. Minimum lock-in period for FD Scheme is 5 years. In recent time, FD rates have been slashed but still it is the most practiced way of investing money in Indian market. Usually salaried person like to invest more and more in bank FDs as it is totally void of risk generated from dwindling market condition. If you prefer FD over market-linked investment, then our suggestion is you put extra money that you got suddenly as your bonus or DA.
Here we have discussed over the most popular ways of investment plans. Apart from these tax saving investments, there are many more investment schemes matching your financial status and requirement. Our advice is you should start investing wisely from an early age if you plan to enjoy your retired life as happily as your thirties.