Professional Documents
Culture Documents
Investments in Tax Saving Products - An
Investments in Tax Saving Products - An
Saving products - an
overview
•Tax Saving Investments are an integral part of one’s life
as they offer tax deduction under section 80C or
Investments •However, they are not keen enough to invest due to low
returns and different risks associated with various
investments.
• Reduce your income tax by up to ₹46,350 every year
with Section 80 (C) investments
• Investments up to a total of ₹1.50 lakh in 80 (C) are
exempt from taxable income
Importance of
• ₹1.50 lakh investment can double to ₹3.02 lakh in just 5
80(C) Tax years!
Savings • Section 80 (C) popular for tax savings => first investment
for many
• PPF, ELSS Mutual Funds, Tax-saving FDs, NSC, ULIP
popular schemes for 80 (C) savings
•Issued by Public Sector Entities
•Long Term Savings Option
•Interest earned on these bonds is non-taxable.
•Bonds having credit rating AA and AAA are likely to meet
TAX FREE their financial commitments.
• Returns on these bonds are beneficially only after lock-in
BONDS
period because the returns are guaranteed at maturity.
•If sold before lock-in-period ends, then you may get an
amount higher or lower than the initial amount
investment.
•It is an equity-oriented mutual fund in which the returns
are tax free as per Section 80C of Income Tax Act, 1961.
•3 Years lock-in-period.
National •Return on investment: 8.5% p.a. for 5 year investment & 8.8%
Savings p.a. for 10 years investment.
Certificate
Point to remember: The entire interest on NSC is received
on maturity, but the yearly interest has to be declared
every year in your income tax returns and tax has to be
paid on it. Carefully evaluate the lock-in period and the
taxability before opting for investment in NSC
•Introduced to encourage first time investors into adopting the equity culture.
•Maximum Investment amount is Rs.50000/- and 50% of the investment can be used for
tax benefits under Section 80CCG.
RAJIV GANDHI •Returns are market based with a moderate to high amount of risk.
EQUITY
•Dividends are tax-free.
SAVINGS
SCHEME •1 Year lock-in-period.
(RGESS)
•A smaller investment amount and a lesser lock-in-period definitely makes the RGESS a
more appealing option if you are investing in equity savings scheme for the first time.
Point to remember: RGESS is not so easy to understand as the fixed deposit. For first
time investors, it is advisable to invest in simple schemes rather than investing in the
equity market.
•NSCs are savings certificate issued by post office.
•Good Tax Saving Instrument.
5 YEARS AND • 5 Year and 10 Year lock-in-periods offer guaranteed
10 YEARS returns at maturity.
NSCS •Interests earned are taxable as per individual’s Income
Tax Slab.
•No TDS.
•Traditional yet highly preferred retirement planning instrument.
LIFE •Tax benefit under Section 80C for the premium paid
INSURANCE for the policy.