SOME VERY POPULAR SCHEMES FOR INVESTMENTS (INCLUDING FOR TAX SAVINGS)

SOME VERY POPULAR SCHEMES FOR INVESTMENTS (INCLUDING FOR TAX SAVINGS)

NAME OF THE SCHEME WHO CAN INVEST MINIMUM AND MAXIMUM INVESTMENTS ALLOWED OTHER DETAILS
Public Provident Fund (PPF) A PPF account can be opened at anytime during the year in a Post Office, or in SBI & its associates or in other selected nationalized banks. It is safe to invest in the instrument, as it is government-backed. It can be held by single, joint, minor with parent/guardian and HUF Min Amount : Rs. 500/- per annum, and thereafter in multiples of Rs 5/-

Max Amount :Rs. 70,000/-



The PPF account matures after 15 years. Tax benefit: Rebate under section 80C for the amount invested. Interest accrued is Tax-free. Interest 8.0% p.a. (compounded annually) is credited to the PPF account at the end of each financial year.
Nomination is allowed at the time of opening the account or even later on during the tenor of the account.

Loan facility is also available, but the first loan canbe taken in the third financial year from the date of opening of the account, and only up to 25% of the amount at credit at the end of the first financial year.

Withdrawals are permitted every year from the seventh financial year of the date of opening of the account, of an amount not exceeding 50% of the balance at the end of the 4th proceeding year or the year immediately proceeding the year of the withdrawal, whichever is lower, less the amount of loan if any.

This is one of the most popular schemes of tax savings as the interest received is tax free.

National Savings Certificate (NSC) NSCs can be purchased through out the year by individuals either in single, joint, minor with parent/guardian, HUFs. from Post offices.
Tax benefit: Rebate under section 80C. Interest accrued for any year is taxable but can be treated as fresh investment in NSC for that year and tax benefits can be claimed

The NSCs have a maturity period of 6 years. Interest rate - 8%
Min Amount Rs. 100/- and additional investment in multiples of Rs. 100/-


Max Amount : No Limit

One can avail of a loan against the certificates by pledging it to the bank. The certificate can be encashed from the issuing post office on the due date by simply discharging the certificates at the back. It is safe to invest in this instrument, as it is government-backed. It is useful for people who invest to save tax.
If encashed prematurely, within a year of issue, then only the face value is given. If encashed after a year but before 3 years, then simple interest on the face value, at the rate applicable from time to time, will be paid. The discount rate (The difference between the accrued interest and the simple interest is the discount rate) will be specified by the government from time to time.

Kisan Vikas Patra (KVP) Kisan Vikas Patra (KVP) doubles money in eight years and seven months. This Scheme is available all through the year. This scheme it open to single, joint, minor with parent/guardian. Nomination facility is available at the time of opening the account or anytime during the tenure of the investment. No Tax benefits available Interest rate - 8% Min Amount : Rs. 100/- and additional investment in multiples of Rs. 100/-.
Max Amount : No Limit

This is a good investment instrument for retired persons and for those who do not have taxable income. The certifiates can be encahsed by discharging on certificates and providing proper identity If the certificate is lost due to theft, fire or the certificate is mutilated, a duplicate certificate is issued after proper verification. No Tax benefits are available for investments in this scheme under theIncome Tax Act

Infrastructure bonds Infrastructure bonds can be purchased only when the same have been floated by the specified financial institutions. These Bonds provide tax-saving benefits under Section 80C of the Income Tax Act, 1961, up to an investment of Rs.1,00,000.
Safety: Purely depends on the credit rating of the bank or financial institution issuing the bond

Interest rate usually ranges between : 5.50% to 6%
The Maximum investment limit is Rs 100000



Liquidity: Lock-in for three years
Tax benefit: Rebate under section 80C.

However, with low rate of interest and flexibility of investing in any type of instruments since 2005-06, these Bonds are no longer popular.

Equity-Linked Saving Schemes (ELSS) Equity linked savings scheme (ELSS) are equity funds floated by mutual funds. This scheme is suited for young people as they have the ability to take on higher risk. The ELSS funds should invest more than 80 per cent of their money in equity and related instruments. It is ideal to invest in them when the markets are down. These funds are now open all the year round. The other way of investing in these funds could be a systematic investment, which essentially means investing a small sum regularly (monthly or quarterly). It is a market-linked security and therefore there will be risks accordingly. The Maximum investment limit is Rs 10000.
Liquidity: Lock-in for three years



Tax benefit: Rebate under section 80C
Long-term capital gains tax are exempt from tax.



Insurance policies There are a range of life insurance products to choose from, such as term life insurance, whole life insurance, variable life insurance, universal life insurance, and variable universal life insurance. Annuities are tax-deferred investments that guarantee you regular payments at some future time, usually retirement. It is a market-linked security. Interest rate: Depends on returns of the funds
The Maximum investment limit is Rs 70000

Liquidity - Minimum lock-in of 2 years for participatory policies and 5 years for unit-linked

Tax benefit: Rebate under section 80C
Interest or returns are not taxable



Pension policies Pension plans apart from playing a significant role in retirement planning, also offer tax benefits under a dedicated section i.e. Section 80C. Premiums paid for the same are eligible for deduction. It is a market-linked security. Interest rate - Depends on returns of the funds.