8 Simple Investments to Save Tax

An ELSS is a diversified equity mutual fund which has a

majority of the corpus invested in equities.

Best return among all the investment options under Section 80 C

Shortest lock-in period of just 3 years

ELSS need not be a lump sum investment. Monthly SIPs not only

eases out the burden of one time investment but also takes

care of market fluctuation.

Both Capital gains and returns are tax free.

In ELSS, the investor can opt for dividend pay out and get

regular income even during the lock-in period

The investor can put as little as Rs.500 in ELSS and experiment.

There is an option of recycling the investment amount for every

3 years

1. Equity Linked Saving Scheme (ELSS)

2. Rajiv Gandhi Equity Saving Scheme (RGESS)

Maximum amount that could be invested in RGESS is

Rs.50,000

It can be invested in BSE100 stocks or in RGESS Mutual

Funds directly

50% of the invested amount qualifies for tax benefit.

And such tax benefit is just one time

The investment is locked in for 3 years. Under flexible

lock-in option, the investor can sell off the shares and

reinvest in buying other shares.

Claim Tax

benefit

Buy eligible stocks/

ETFs

Designate it as RGESS

Account

Open a demat

Account

3. National Saving Certificate

National Saving Certificate is issued by Post Offices.

The Principal and the interest are backed by the

Government of India thus ensuring guaranteed return.

The minimum amount for investment is Rs.500 and there

is no maximum limit.

The interest rate for 5 yrs is 8.5 per annum and for 10

yrs it is 8.8 per annum

Interest is compounded every half year. Interest earned

through NSC is taxable.

Individuals, Joint and even minors (supported by

Guardian) can invest in NSC

4. Public Provident Fund (PPF)

The Public Provident Fund is savings-cum-tax-saving instrument in

India, to mobilize small savings by offering an investment with

reasonable returns combined with income tax benefits.

The lock-in period of PPF is 15 years. It provides 8.7% interest per

annum which is changed year on year by the Government of India.

Investment upto 1.5 lakhs per annum qualifies for IT rebate.

Loan facility in PPF account is available from 3rd year onwards and

rate of interest on loan will be 2%/ annum above the interest paid.

Minimum investment is Rs.500 and the maximum is Rs.1,50,000

Investment can also be made month on month, intermittently or

annually

Reasonable return

Compounding Return

Tax- Free Return

5. New Pension Scheme

NPS is a low cost investment option for those who are

looking for retirement funds.

The investment can be made as Rs.500/ month or

Rs.6000/ annum. There is no maximum limit for investing

in NPS

Investors have choice to choose from equity, bonds and

gilts

The returns on maturity is taxable.

One has to do proper research before opting for New

Pension Scheme.

6. Senior Citizen Saving Schemes (SCSS)

The Senior Citizen Savings Scheme (SCSS) provides

guaranteed returns to senior citizens through a safe

investment.

SCSS provides a return of 9.2 % per annum.

Maximum investment limit is Rs.15 lakh

Interest is paid at the end of every quarter

Interest earned is taxable like every other Fixed

deposit scheme

The interest is paid on 31 March, 30 June, 30

September and 31 December, irrespective of when you

start investing.

7. Voluntary Provident Fund

This is beyond the employee contribution of 12%

The maximum amount an investor can contribute is 100%

of Basic and DA

The lock-in period is until the employee’s retirement and

hence it is a safe bet for investors saving for post-

retirement expenses.

Maturity returns are tax - free

8. Unit Linked Investment Plan (ULIP)

A Unit Linked Insurance Plan (ULIP) is a product offered

by insurance companies that unlike a pure insurance

policy gives investors the benefits of both insurance and

investment under a single integrated plan

ULIP will start giving good returns only after 10 to 12

years

Unlike ELSS, the investor has to keep paying premium for

the entire duration to stay invested.

In case of premium holiday, the policy will be

discontinued.

This plan is ideal only for long term investors

ULIP also provides risk coverage

Life Cover

Investment Benefits

Tax Benefits

ULIP

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