Financial year 2016-17 is nearly coming
to an end. We are sure that you must be looking for some good options
which may be good investments and also help you in saving tax under
section 80 C. And since the deductions now have increased from Rs 1 lakh
to Rs. 1.5 lacs, it gives us even a bigger reason to save tax by
investing more. Given below are few options that you might consider for
saving tax:
- Life Insurance: Life
Insurance not only helps you save tax but also offers financial
security to your family in case and God forbid some mishappening
happens. You can be assured that atleast your family will is financially
secured.
There are different time of Life Insurances that can be purchased:
- Term Plan
- Endowment Plant
- Unit Linked Plans
- Money back Plans
- Health Insurance: A
health insurance plan is also commonly called a mediclaim. Buying a
Mediclaim helps in taking care of the expenses which are incurred in
case of an accident or hospitalization. Also the deduction allowed is
more than Rs. 25,000 or Rs. 30,000 in case you are a senior citizen
- ELSS or Tax Saver Mutual funds :
Equity Linked Savings Scheme (ELSS) or Mutual Funds with Tax saving
benefits are also a good investment option. ELSS invest in stock markets
and other asset classes. But since they are linked with Stock markets,
we should keep in mind that they carry their portion of risk with them
and are suited for investors who can actually take risk. Investments
towards tax-saving mutual funds are up to a maximum of Rs 1.5 lacs.
Proceeds on death / maturity are tax-free in such schemes. Minimum
lock-in period for ELSS is 3 years.
- PPF: Public
Provident Fund or PPF currently offers a handsome 8.7 percent interest,
though this keeps changing every year. It is a great investment
instrument that offers Tax benefit on investment upto 1.5 lacs under
Section 80 C of IT act. Not only this, they offer tax free returns at
maturity. PPF has a lock-in period of 15 years. Minimum investment
required is Rs. 500 per year and Maximum can go upto Rs. 1,50,000.
- Tax Saver Bank Fixed Deposit Schemes:
Bank fixed deposits or FDs also have few schemes which are Tax Saving.
These schemes give very good returns ranging from 8.5 % per annum to
9.75 % per annum. Though they help in saving the tax, but here we should
not forget that we have to pay the Tax on interest income from such
schemes. Also the lock-in period is 5 years.
- 5 year and 10 year NSCs:
NSCs are saving certificates issued by Post Office and are a good tax
saving instrument. The 5-year and 10-year lock-in periods offer
guaranteed returns at maturity and although the interests earned are
taxable as per an individual’s income tax slab, there is no tax deducted
at source. NSCs are available for a minimum investment of Rs. 500 and
can be bough in the multiples of 500/1000/5000/10,000. Interest rate for
5 year NSCs is 8.5% and for 10 year NSC, its 8.8%.
- New Pension Scheme:
New Pension Scheme or NPS is regulated by the Pension Funds Regulatory
and Development Authority – PFRDA. Any citizen of India over the 18 – 60
years age bracket can participate in it. It is very good and cost
effective mode of investment as fund management charges are vey low at
just 0.0009%. Your money is managed in three distinct asset classes like
equity, bonds and gilts and you can choose to manage your portfolio
actively or passively. Also the maturity amount is taxable under this
scheme.
I can take every single investment option
in a very detailed matter, if you wish. Should you need more details,
feel free to write to me or leave a comment, and I will take up all
these instruments in a detailed manner. At Moneypalm, our aim is to
educate you, so you can take a wise investment decision, without needing
any investment advisor. Always remember, we at Moneypalm have a firm
faith in our ideology which say “Together We grow”