Tax Saving Investments
Tax saving schemes are investments which reduce the tax liability of an individual by providing exemptions on the invested amount. While these investments help lessen your tax burden, they also aid you in growing your savings, build a substantial retirement corpus and avail benefits such as market-linked returns. Here are some of the key tax saving investments and their brief descriptions.
Public Provident Fund
Public Provident Fund (PPF) is a low-risk and high-returns investment and the contributions made to the PPF can be claimed as deductions.
- Minimum deposit is Rs. 500 in a financial year.
- Maximum deposit is Rs. 1,50,000 in a financial year.
- Interest rate is 8% per annum.
- Exempted from wealth tax and the returns are tax-free.
Employee Provident Fund
This tax saving investment product is for salaried individuals and the investment has two components - an employee’s contribution and the employer’s contribution.
- Interest rate is 8.65%
- The employee contribution is tax-deductible.
National Pension Scheme
It is a government-backed tax saving scheme for Indian professionals in the private and public sector. If the NPS contribution is up to 10% of the salary, it is exempted from taxable income with an upper limit of Rs 1.5 lakhs. It also allows for deduction of Rs. 50,000 under Section 80CCD (IB).
Equity Linked Saving Scheme (ELSS)
It is a tax-saving investment product which has the lowest, in the category, lock-in period of 3 years. By investing in an ELSS, tax deductions of up to Rs. 1.5 lakh can be availed under section 80C of the Income Tax Act, 1961.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.