Best Option to Save Tax under section 80C

by RR Finance Marketing

When you want to invest for tax saving under section 80C, you should consider all the investment options based on not just returns but also on safety, liquidity, costs, ease of investment and taxability of income. All of them are important for investors.

Different factors are more important for different investors. For some, ease of investing is paramount because they don’t have much time. For such investors, fixed deposits rank high on this issue. Investment can be done online in just few clicks.

If an investor falls under the 30% tax bracket, the post-tax returns from fixed deposits are very low at less than 5%. The life insurance plans are also same, offering low returns as well as forcing the buyer to continue till maturity.

One of the best option for tax saving is ELSS. Investing in ELSS funds is now very easy as one can do it online. ELSS as a category generated 18.7% annualised returns in the last three years and 17.4% in the past five years. ELSS funds are better than others in most areas like costs, taxability and liquidity. There is no entry load and the investor is charged just 2-2.5% a year

But all tax saving options are not equally good for all. For example, ELSS funds can offer high returns, but senior citizens should stay away from these schemes. They should invest in the Senior Citizens’ Saving Scheme, the Public Provident Fund or tax-saving fixed deposits, as they are safe though they may be offering lower returns.

Some of the investment options mentioned here may not be available to all investors.

For example, the Sukanya Samriddhi Yojana is for only girls below the age of 10, the Senior Citizens’ Saving Scheme is only for those above 60 (58 years in some cases) and only those below 60 can invest in the National Pension System (NPS). Investors should select the tax-saving instrument that meets their needs and helps in achieving their financial goals.

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Created on Oct 6th 2017 02:02. Viewed 541 times.


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