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Investment options to save tax this financial year

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:

  1. 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:

  1. Term Plan
  2. Endowment Plant
  3. Unit Linked Plans
  4. Money back Plans
  1. 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
  1. 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.
  1. 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.
  1. 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.
  1. 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%.
  1. 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”

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Pratyush DixitConsultant - Digital Marketing and Content

Pratyush is a Post Graduate in Marketing Management and has a leadership experience of nearly a decade in diversified industry including Stock Broking. Having headed companies for over half a decade, Pratyush brings with him, rich Marketing and....

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