Have you started your Tax planning for the Financial Year 2017-18. Not yet? Dont Panic.
We offer our clients different types of tax saving instruments which are assessed on eight key parameters - returns, safety, flexibility, liquidity, costs, transparency, ease of investment and taxability of income.
Our below ranking of tax saving instruments cuts through the clutter and tells you which is the most suitable option for you.
- PPF and VPF
- Sukanya Samridhhi Yojna
- Senior Citizen Scheme
- National Saving Certificates (NSC)
- Bank FDs
- Pension Plans
- Insurance Schemes
[Returns : 18.7% (Past 3 Years)]
ELSS or Equity Linked Saving Schemes, are a kind of equity-linked mutual funds. As they invest in equity or stocks, ELSS funds have the ability to deliver superior returns - 14-16% over the long term. That’s a full 6-8% above inflation.This return is not guaranteed though but historical evidence suggests that these returns are achievable over the long term.
ELSS funds have a lock-in period of only 3 years – the lowest amongst the options available. The return from ELSS funds is also tax-free.
You can invest up to Rs 150,000 in ELSS funds either as a lump sum or on a monthly basis (SIP) thereby spreading your investments over the course of the year. The latter also helps in reducing the volatility that’s typical of equity-linked products.
We help you to invest in these ELSS mutual fund. Click here to invest in mutual fund with TaxCart.
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[Returns : 12.5% (Past 5 Years)]
The NPS is a great way to save tax if you don’t mind locking in your money till you retire.
NPS is especially useful for investors who may have exhausted the Rs 1.5 lakh investment limit under Section 80C but want to save more.
Another way the NPS can cut tax is by rejigging the salary. If a company deposits up to 10% of the basic salary of an employee in the NPS under Section 80CCD(2d), the amount will be tax free.
[Returns : 10.9% (Past 5 Years)]
Among the most common products in which investors put their money are Unit Linked Insurance Plans as they not only provide insurance cover, but also a sound form of investment. The money invested in ULIPs is put into shares and customers are at liberty to choose how much of their funds must be invested in shares. These policies are highly tax efficient and offer benefits under Section 80C of the Income Tax Act.
The maturity amount is also tax free and the product is designed in a manner such that it urges investors to save money on a regular basis.
The income from these plans is tax free under Section 10(10D).
[Returns : 8.65% (For FY 2016-17)]
The Provident Fund (PF) is the bulwark of the retirement savings of the average salaried employee. But it can also be a great way to save tax. Although an individual’s contribution to the PF is linked to the salary, one can increase the amount by opting for the Voluntary Provident Fund (VPF). Contributions to the VPF are eligible for the same tax benefits as the PF.
The best thing is that the money automatically flows into the PF account every month. The interest rate on the PF has been cut by 15 basis points to 8.65% this year. Even so, it remains well above the average consumer inflation rate (5.3%).
So the real rate of return for the investor is fairly attractive at over 3%. For investors not covered by the PF, the Public Provident Fund (PPF) can be a suitable alternative. The interest rate is lower at 8%, but remains ahead of inflation. PSU bank employee Harshinder Kaur is covered by the NPS.