Tax saving with investment – every individual who pays tax have interest in this topic. If you are one of them, you will glad to know that there are multiple options available forthe same. Knowing about your options is quite essential for making right tax saving decisions and not get stuck with multiple advices from everyone at the end moment.So, discussed below are some such best tax saving investment schemes in India from which you can draw such benefits:
Public Provident Fund
It is one of the best investment schemes in India that can be used for saving tax. It may not promise very high returns but it offers liquidity by way of withdrawals and loans; flexibility of investment and comes with a tax-free status. Investing in Public Provident Funds becomes an even more attractive option as the interest rate has been linked to bond yields in the secondary market. Also, it is expected that the Public Provident Fund will encounter a hike marginally in the year 2014-15. PPF requires a minimum investment of
INR 500 a year and a maximum investment of INR 1 Lac a year. Investing in PPF is the best option for elf-employed professionals, risk-averse investor and individuals who are not provided the cover of retirement/ Employees Provident Fund benefits. PPF has achieved 5 on 5 rating as a tax saving scheme.
Equity Linked Saving Schemes
They are another great way to save tax. They, too, have a tax-free status. It offers high returns and offers great flexibility and liquidity. As compared to any other tax saving scheme available under Section 80C, it is the one with the shortest lock-in period, i.e. of 3 years. The minimum investment that can be made in an Equity Linked Saving Scheme is INR 500. It is a good option for those who have experience and expertise in the field of stock market because Equity Linked Saving Schemes mirror the performance of stock market. These schemes are also preferred by young tax payers with huge loans and no surplus for tax saving. Equity Linked Saving Schemes have also received 5 on 5 rating as a tax saving scheme.
Voluntary Provident Fund
Though it is not so widely used, but it is a brilliant investment option that one can avail to save tax. Though it comes with limited liquidity (one-time withdrawal in special circumstance or after you retire), it has many benefits to offer that makes Voluntary Provident Fund a really good option. It is advisable to channelize at least 10% of your increment to VPF each year to make higher savings. The Voluntary Provident Fund as a tax saving scheme is available to salaried tax payers only and is covered by the Employees’ Provident Fund. Voluntary Provident Fund has obtained a 4 on 5 rating as a tax saving scheme.
Senior Citizen’s Saving Scheme
Senior Citizen’s Saving Scheme is one of the most widely used investment under Section 80C for retirees to save tax. It is a good option as any change in interest rate has no influence on the existing investments. Moreover, unlike Fixed Deposits or NSC, Senior Citizen’s Saving Scheme offers payment of the interest on quarterly basis. This ensures good liquidity. If you wish to claim more tax benefits, it is advisable to stagger your investments for a period of over 2 to 3 years. Senior Citizen’s Saving Scheme is one of the ultra-safe investment schemes for tax saving. The investment limit for Senior Citizen’s Saving Scheme is INR 15 Lacs. Senior Citizen’s Saving Scheme has received a 4 on 5 rating as a tax saving scheme.