Best Tax Saving Investment Options in India for 2017
It’s January 2016 and everyone is busy looking at best tax saving investment options to save income tax under section 80C. From Financial year 2014-15 onwards, 80C deduction limit has been increased from Rs 1 Lakh to Rs 1.5 Lakhs. With these Best Investment Plans, you can save tax as high as Rs 46,350 by investing the maximum eligible amount of Rs 1.5 Lakhs u/s 80C. What are the various best tax saving investment options available in 2017 in India to save tax u/s 80C? What are the tax saving options for salaried employees? Which top tax saving investment options in 2016 helps you save tax and provide good returns to you? Which are the tax saving options under 80c?
10 Best Tax Saving Investment Options in India for 2017
1) Public Provident Fund
- If offers 8% interest per annum. Govt. of India would keep updating this every year.
- Tax free returns at maturity.
- PPF has lock-in period of 15 years.
- Investment up to Rs 1.5 Lakhs per annum qualifies for IT Rebate under section 80 C of Income Tax Act.
- Loan facility in PPF account is available from 3rd financial year up to a 5th financial year. The rate of interest charged on loan shall be 2% per annum above the interest paid.
- Withdrawal permitted from 6th financial year.
- Non-Resident Indians (NRIs) are not eligible.
- An individual cannot invest on behalf of a HUF (Hindu Undivided Family) or Association of persons.
- Minimum investment is Rs 500 and maximum is Rs 150,000
- You can invest every month, by the 5th of the month and enjoy the interest for the remaining period of the month.
- PPF offer several good features and this is one of the best investment options to save tax u/s 80C. This is suitable for those who want tax savings and who want to accumulate funds for retirement purpose thereby earning safe and highest returns. This is one of the best investment plans to save tax.
2) ELSS Tax Saving Mutual Funds
- Offers highest returns (not fixed and not guaranteed) compared to other tax saving options.
- Lowest lock-in period of 3 years.
- Investors can opt for dividend option and get regular income even during the lock-in period.
- Investing in ELSS funds through SIP every month would help you reduce burden of investing a lump sum, take care of market fluctuations and provide higher returns.
- Since this is an equity mutual fund and investment period is 3+ years, returns / capital gains are tax free.
- Some of the top ELSS tax saving mutual funds are Reliance Tax Saver fund, ICICI Pru Tax Plan, Franklin India Tax Shield fund etc.
- You can refer top ELSS Tax Saving Mutual funds for 2015 article for more info.
- This is one of the best investment plans with higher returns that can also help you to save tax.
3) Tax Saving Bank FD Schemes
- This is one of the old and best investment option to save income tax under section 80C of IT act.
- Interest rates vary between 5.5% to 7.5% per annum
- Interest is taxable
- 5 Year Lock-in period
- Some of the best tax saving FD schemes offered by banks are : Ratnakar Bank – 7.7%, IDFC Bank – 7.5%, DCB Bank – 7.5% and Union Bank of India – 6.5%.
4) Senior Citizen Saving Schemes (SCSS)
- It provides assured returns for Senior Citizens. Principal amount is safe as they are backed by Government.
- Interest rates are at 8.5% per annum.
- Interest is paid at the end of every quarter. This is one of the best investment option to save tax for Senior Citizens as they would get quarterly interest.
- The maximum investment limit is Rs 15 Lakhs.
- Interest earned is taxable like any other fixed deposit scheme.
5) Rajiv Gandhi Equity Saving Scheme (RGESS)
- RGESS offers tax benefits for first time investors who are earning up to Rs 12 Lakhs per annum.
- Maximum investment is Rs 50,000. Such amount can be invested in BSE100 stocks or RGESS Mutual funds.
- 50% of such invested amount qualifies for tax benefit u/s 80C. Means if you invest Rs 50,000 in BSE 100 stocks or RGESS Mutual funds for the first time, you would get tax exemption of Rs 25,000 for the first time and only one time. Means you can get the maximum tax benefit of Rs 7,725 (30% tax bracket).
- Returns are not guaranteed as investments are made in stocks and RGESS mutual funds.
6) Voluntary Provident Fund (VPF)
- Voluntary provident fund is the contribution from employee to his provident fund account. This is beyond the employee EPF contribution of 12%. However, there is no bound from employer to contribute to this VPF.
- The maximum amount an employee can contribute is 100% of the Basic and DA.
- This would carry the same rate of interest of the employee Provident Fund (EPF). The current EPF interest rate is 8.8% per annum.
- Investment in VPF can be withdrawn only during retirement, hence it is one of the best tax saving options to save income tax.
- Maturity returns are tax free.
- You can also check comparision between VPF Vs EPF Vs PPF and know the differences.
7) New Pension Scheme (NPS)
This is another top investment option to save tax u/s 80C who are looking to save for retirement.
- NPS returns vary between 4% to 10%. In 2013, some of the funds opted in this scheme has provided 14% returns.
- Low cost investment option. The fund management charges are very low at 0.0009% of investment value.
- You can invest Rs 500 per month or Rs 6,000 per annum. There is no maximum limit for investment in NPS.
- Investors have the choice to opt for allocation of equity, bonds and gilts.
- Maturity amount is taxable.
- One has to do some homework before subscribing to NPS Scheme.
- You can review complete details of New Pension Scheme (NPS) here.
8) National Saving Certificate (NSC)
- National Saving Certificate is issued by Post offices and principal along with interest is backed up by the Govt. of India. Hence, these are safe investment options.
- NSC’s are available for 5 and 10 year period
- NSC’s are available for a minimum investment of Rs 500 and in multiples of Rs 1,000 / Rs 5,000 / Rs 10,000
- There is no maximum limit for investment.
- Interest rates are 8% for the 5 year NSC (VIII) and 8.8% p.a. for 10 years NSC (IX)
- Rs 100 invested in 5 year NSC would fetch Rs 151.62 and in 10 years would fetch Rs 234.35
- Interest is compounded every half year.
- Interest received is taxable. You need to show this as other income while filing ITR and pay income tax. However, such interest can be claimed again as exemption u/s 80C (within the limit of Rs 1.5 Lakhs). Means you would show as other income and exemption u/s 80C and need not pay any tax on such interest.
- Individuals, Joint and minor, supported by Guardian can invest NSC.
- Complete guide on National Saving Certificate (NSC) would help you to take decision to invest in this option or not.
9) Unit Linked Investment Plan (ULIP)
- After 2010 IRDA guidelines, Insurance companies have reduced ULIP charges.
- ULIP’s provide risk coverage.
- New ULIP policies have low policy / administration charges.
- No guaranteed returns. It provides returns of 5% to 11% returns depending on the scheme.
- Should hold for 10-12 years to see good returns.
10) Insurance Plans
- An important aspect of an individual is to consider adequate insurance plans for earning member.
- Prefer term insurance plan as it comes with low costs and high risk coverage.
- Term insurance plans come with zero maturity value. These are designed for risk coverage and not for saving purpose.
- Consider adequate insurance coverage based on 10 / 15 years expenses / income.
Conclusion: These top 10 tax saving schemes would help you to invest under section 80C up to Rs 1.5 Lakhs. You need not consider all options. You can consider some of these investment options which are best suitable to you based on your investment tenure and features indicated here.
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Suresh
Best Tax Saving Investment Options in India for 2017
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Pls advice me on time to time…
You can buy NSC and KVP certificate safe and sound only NSC you can claim deduction on tax from Post office.
Don't Invest in ULiP plan and mutual fund it is risky.
Only invest in Government security and bonds which are tax free and get deduction under 80 C and certificates and postal scheme.
You can buy LIC policy which provide you cover and can claim tax benefit.
Can open PPF account in Nationalised bank or post office 100% safe but it is lock in for 15 years maturity and can invest Rs.150000/- pa maximum and minimum Ra.500/- pa and claim tax benefit.
You can buy Government Bonds which are safe and claim tax bebefit.
Invest in Sumridhi kannya account in post office if you have girl child and claim tax benefit safe and sound but locking for 15 years as per rules will get amount on maturity.
Buy Medi claim policy for you or for your family and claim tax benefit.
plz tell me the best plan for saving taxes
DEAR SIR/MADAM
I AM A PROPROITER AND INTRESTED IN SAVING TAX ON MY INCOME. SO CAN YOU SUGGEST US WHAT TYPE, WHICH AND WHAT KIND OF INVESTMENTS TO MAKE SO WE CAN SAVE MAXIMUM OF TAXES?
REGARDS
Hi , I am retired personal and drawing pension from Central Government.Can you suggest any plans where I can save tax on the monthly pension drawn.
Thankyou
Go to Bank and make fixed deposit for higher rate of interest with Sr.Citizen benefit. And at the time of filling the Fixed deposit Form, write monthly interest required in your saving account. Bank will transfer monthly interest regularly at particular date.
hi
You have shared very useful information regarding tax saving investment options, bt i am still not able to make the decision.
I am 24 year old and My package is 6 lakh PA, can you please suggest some investment options with which I can start my investments.
Sir I have just opened ITR. now I want to know that in which govt. scheme is good for investment as well as tax benefit? And when can I avail for loans to purchase a land? Thank Abhijit
Hello ,
I m a 28 Yr old, and my ctc is 10 lacs pa. Please suggest some investment plans
Hi Team,
Good day!
I am 35 year old and working in IT sector, having 7.5 LPA without any investment.
Please help me out getting suitable investment plan. Please make sure I will not get return in form of INTEREST.
Thanks & Regards,
Hi Yusuf,
1 – You can invest in stock market using RGESS.
2 – You can consider mutual funds investment using SIP .Some best equity linked mutual funds are available in the market. Mutual funds and Share will not return you interest as they return you the money with growth at the time of sell. ( Mutual funds and Shares are subject to risk so choose wisely)
3-You can purchase LIC policy as LIC policy will not return you interest it return your money with bonus at the maturity.
4-Please take a health Insurance for you and your family also.
Hello Sir,
I need your suggestion!
I am 28 year old and working in IT sector.
My package in 5LPA. As per my info I have to pay tax after 2.5 Lakhs rupees.
Please help me in some investment plan coz I dont want to give tax.
Hi Deep, It depends on your risk appetite and tenure. If you want high returns and willing to take some risk, invest in ELSS tax saving mutual funds. These have 3 years lock in period. If not, try NSC which has 5 years lock in period. These are safe and you would get fixed interest.
Is there any investment plan beyond 80c ie.beyond 1.5 lakh. I Am having 16 lakh salary per annum. Please advise.
You can invest in NPS Scheme where you can save income tax for another Rs 50K income beyond 80c
The rate of interest of PPF account has been reduced to 8.1% /a and still u r showing it the past rate of interest of 8.7%. Is this system is not linked or updated with the current policies running in the country. It some times misguides the individual. why this all system not changed with the changing of the system of outside.
Very valuable true info
Good articles, helpped me to understand
I need some advise for one time highest return investment as well as tax savings plan.
Good helpful article. Can anyone here clarify on the last date for tax saver investments for AY 2016-2017? Also, if you happen to miss this deadline, what are the options for investing late?
thanks
Kedar
Hi Kedar, You can invest in such options by 31-Mar-2016. You cannot invest in them after this.
Can Co-op Housing Society invest in PPF.?
Start SIP in HDFC taxsaver Fund (Mutual Funds)
Hi , I am working as private teacher. Above what scheme better for income tax benefit .please reply me .
Hi… I am planning to start with one of the above plans.. could you please suggest what would be the best plan for monthly saving??
u should go for ELSS only
you can invest in ELSS, where you can save tax and earn 19+ % PA tax free income
Hello Sir,
Incase if i want to invest Rs. 1,20,000 How do i categorize them in terms of ELSS, NSC, PPF, Insurance Etc
I do not have any PPF Account or any Mutual Fund account nor i have any idea about it.
Please guide me accordingly it would be great favour
Looking forward to hear from You.. . ..
TIA
i am a senior citizen, 67 years old . Can i get income tax deduction of Rs. 1,50000/- from my gross income by investing Rs. 1,50,000/- in Post Office Senior Citizen savings Scheme quarterly interest @ 9.3% . please clarify .
Hello I don’t have knowledge of mutual fund and telll me which is best for my child future investment.
Shailendra, Open a MF account with any MF broker and start investing in it. Invest in large cap mutual funds like ICICI focussed blue chip fund or Birla SL Frontline to start with. Then try to understand which options would better suit your risk appetite.
Can I open more than one PPF account in Different Banks?
Legally, you are supposed to have only one PPF account
i want to invest in elss please suggest me
i have invested in sbi mutual fund earlier elss plan of sbi was good or not
suggest me
Kapil, You can invest in Franklin India Tax shield fund or Axis long term equity fund
You have mentioned almost everything in this post , please explain me a bit about ELSS it will be helpful for me
thanks in advance
sathish
Thanks Sathish. Check this article which has detils about ELSS and about top ELSS Mutual Funds. https://myinvestmentideas.com/2014/12/top-5-best-elss-tax-saving-mutual-funds-to-invest-in-2015/
Hi Suresh,
I had opened a PPF account sometime in year 2011. I deposit Through direct debit of my savings account to my PPF account. The amount of Rs. 2000 gets deducted every 20th of the month. I have noticed that in December, January, Feb and march the amount does not get deducted and in April the previous amounts get deducted at one go. What is the reason behind this? Please help me understand. Also I would like to add that your articles have lent great insight to investment ideas.
Many Thanks in advance.
Regards,
Papori
Hi Papori ..small advice for you. Any investment in PPF after 5th of a month does not fetch any interest for that particular month. I would advice that you change the direct debit mandate to 4th/5th of the month and enjoy 14 days extra savings account interest
Thanks kp sir…
This article covers all the investment options available for tax saving…
Ideal for ppl doing things in the last minute..:)
Sir, my wife is retiring in March 2015. Where to deposit her retirement amount. Kindly give your advice.
Thanks and best regards
venugopal
Hi Suresh,
I am not clear on investment in FD and NSC….If interest on 5 year FD is taxable then what is the meaning of investing money in FD or NSC? Please provide your suggestions.
Regards,
Rajesh
Hi Rajesh, Though you invest in FD / NSC, amount is exempted u/s 80C for tax savings, returns are taxable.
Hi Suresh
Do you really consider RGESS on of the best tax saving option of 2015. It is one of the most complicated scheme. I did not find any person who has taken benefit of this scheme. 🙂
Regards
Chandrakant
Hi Chandrakant, It depends. Among the various investment options available this is one of the unique option available for new investors. One should understand about stock market and know more about stocks before investing in RGESS scheme. However, one can invest in RGESS Mutual funds and leave the selection of stocks to fund managers.
Hello Suresh happy new year.
Im new to this website and im loving all your articles.
I have opened a PPF account and deposited 1.5Lks in November 2014. When can i deposit again?
Thank you very much
Hi Sawan, Happy new year to you too. You can do next deposit in Apr-15 for another Rs 1.5 for next financial year.
I want to invest 1000 rs. Every month in sip mutual fund. Plz suggest me which mutual fund is good for me? I can invest for 10 years. And after 10 years how much money return back?
You can review these best mutual funds for 2015 to invest in funds suitable to you.