What Are Various Tax Saving Investment Options

Today there are various investment options that can be utilized to save taxes. By the end of the fiscal year, it is important to invest so as to save taxes. In addition to regular investment options, investors can benefit by investing in infrastructural bonds.

Tax deductions under Section 80C: There are several investment options under section 80C which can be broadly divided as insurance, market linked and fixed income. The market linked instruments include Unit Linked Insurance Plans or ULIPs and the Equity Mutual Funds or ELSS.

The investment options under fixed income category include tax saving bank fixed deposits, Public Provident Funds, National Savings Certificate, Senior Citizen Savings Scheme and the Employee Provident Fund.

Public Provident Fund: One of the most popular investment options includes the PPF or the Public Provident Fund. The investor can enjoy tax benefits on the amount invested in the scheme and the interest obtained during maturity period.

National Savings Scheme: An investment of one lakh is exempted from taxes under Section 80C of Income Tax Act. However, the interest received at the time of maturity is subjected to taxes which make it quite an unattractive investment option.

Fixed Deposit Scheme: An investment upto 1 lakh in a savings bank deposit is also subjected to tax benefits under section 80C. However, this investment includes a lock-in period of five years and the interest rates vary according to different types of banks.

Equity Linked Saving Scheme (ELSS): This mutual fund scheme is another excellent investment option to save taxes. But it is ingrained with risks and investors need to make prudent decisions while investing in equity shares. However, there is a possibility of huge returns which are deducted from taxes. It has a mandatory lock in period of three years. It is considered to be a long term equity asset and investors can benefit from a longer time frame.

Senior Citizen Savings Scheme: This investment option is made available to Indian citizens who have attained 60 years of age. People who have opted for voluntary retirement can also invest in this scheme. It offers an attractive rate of interest which is payable every quarterly.

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