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Tax Saving Investments and their Features

10 Jan 2017 Nutan Gupta

This is the time of the year when you start getting calls from the HR of your company asking for investment declarations. If you have not made any investments yet, here is the list of instruments where you can invest.

Instrument Investment Section of IT Act Lock-in Period Returns Risk Taxation at Maturity
ELSS ELSS is a type of mutual fund scheme where most of the fund corpus is invested in equities or equity-related products. 80C 3 years Not fixed, depend upon the performance of equity market. However, in the past, ELSS has given average returns of 12-14%. Carries some risk Tax-free
PPF It is a type of investment which is provided by the Government of India 80C 15 years The rate of returns changes as per government policies.

Current returns - 8.1% compounded annually
Risk-free Tax-free
NSC NSC are bonds issued by the government for small savings and one can purchase these bonds from post offices. 80C 10 years The interest rate on NSC is decided by the government every year. It is linked to the yield of 10-year government bonds.

The current interest rate is 8%.
Low Risk Interest is Taxable
Pension Mutual Funds Pension Mutual Funds invest 40% of the money in equity and 60% in debt instruments. 80C Until you reach the age of 58 The returns in pension mutual funds are not fixed as it depends on the performance of the equity and debt market. Pension mutual funds have given an average return of 8-10% for a 5-year and 10-year period. Carries some risk Tax-free
Tax Saving FD It is a special fixed deposit made with any bank. 80C 5 years The interest rate varies from one bank to another. It usually ranges from 6.5-7.5%. Risk Free Interest earned is taxable
Rajiv Gandhi Equity Saving Scheme Exclusively for first time retail investors. Individuals with an annual income below Rs. 12 lakh can invest. 80CCG 3 years Depends on the performance of equity markets. Carries some risk 50% of the invested amount

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Beginner's Corner

Tax Saving Investments and their Features

10 Jan 2017 Nutan Gupta

This is the time of the year when you start getting calls from the HR of your company asking for investment declarations. If you have not made any investments yet, here is the list of instruments where you can invest.

Instrument Investment Section of IT Act Lock-in Period Returns Risk Taxation at Maturity
ELSS ELSS is a type of mutual fund scheme where most of the fund corpus is invested in equities or equity-related products. 80C 3 years Not fixed, depend upon the performance of equity market. However, in the past, ELSS has given average returns of 12-14%. Carries some risk Tax-free
PPF It is a type of investment which is provided by the Government of India 80C 15 years The rate of returns changes as per government policies.

Current returns - 8.1% compounded annually
Risk-free Tax-free
NSC NSC are bonds issued by the government for small savings and one can purchase these bonds from post offices. 80C 10 years The interest rate on NSC is decided by the government every year. It is linked to the yield of 10-year government bonds.

The current interest rate is 8%.
Low Risk Interest is Taxable
Pension Mutual Funds Pension Mutual Funds invest 40% of the money in equity and 60% in debt instruments. 80C Until you reach the age of 58 The returns in pension mutual funds are not fixed as it depends on the performance of the equity and debt market. Pension mutual funds have given an average return of 8-10% for a 5-year and 10-year period. Carries some risk Tax-free
Tax Saving FD It is a special fixed deposit made with any bank. 80C 5 years The interest rate varies from one bank to another. It usually ranges from 6.5-7.5%. Risk Free Interest earned is taxable
Rajiv Gandhi Equity Saving Scheme Exclusively for first time retail investors. Individuals with an annual income below Rs. 12 lakh can invest. 80CCG 3 years Depends on the performance of equity markets. Carries some risk 50% of the invested amount