Choose from a Variety of Tax-Saving Investments this 2014

Making investments is one of the most important activities that almost every individual is concerned with. However, making investments also means paying a large amount of money in the form of tax, one of the inevitable payments that every individual has to encounter. Thus, when choosing one’s investments it is very important to select those options that are not only tax-saving instruments, but can also help your portfolio grow at the same time.

There are plenty of investment options for people to choose from to meet both short-term as well as long-term goals. Besides this, there is an interesting array of tax-saving investment options for people to choose from as well. Most of the tax-saving investments are listed under Section 80C of the Income Tax Act, 1961.

These options can be differentiated on the basis of five basic parameters, including returns, safety, flexibility, liquidity and taxability. A tax-saver fund is an investment option where the investor can save a considerable amount of money (in the form of tax) and also receive attractive returns.

Some of the best tax saving investments for the year of 2014 includes:

  • PPF- Public Provident Fund scheme: A popular long-term investment option that is backed by the Government of India, a PPF is an attractive option that is known to offer safety as well as attractive interest rates and returns which are completely exempted from tax. Investors can start with as low an amount of INR 500 to a maximum of 1, 00,000 in one financial year.
  • ELSS: Equity Linked Savings Schemes are simply referred to as those mutual fund schemes which invest 65% in equity related instruments which are notified to avail tax benefits. This is under Section 80C of the Income Tax Act, 1961. They have lock-in periods of up to three years. The returns for these investments are completely tax-free.
  • RGESS: The Rajiv Gandhi Equity Savings Scheme is one of the tax saving schemes that aims at encouraging the flow of savings of small time investors in the domestic capital market. This option presents investors with tax benefits as provisioned under Section 80CCG of the income tax Act, 1961.
  • NSCs AND BANK Fixed Deposits (FD): National Saving Certificates (NSC’s) and Bank Fixed Deposits are popular tax saving instruments. The NSC scheme has been designed by for Government employees, businessmen and other salaried people who are income tax assesses. They are long term tax saving options that are available for investors. This amount that is invested qualifies for tax benefits under Section 80C of the Income Tax Act, 1961.
  • Life Insurance Policies: There are dual benefits of savings and security. By paying a premium every month to the insurance company, the beneficiary of the person who is insured receives financial coverage of a certain amount. These policies are known to provide attractive tax-benefits, both at the time of entry and exit under most of the plans.