Option for Investment for tax saving under 80 C

Sanat 1
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Hello,

I am planning for my wife's tax saving investment. I am looking for good investment option which can give a good/ decent return in short term (3 or 5 Years) and i can include that in tax saving declaration. I have already short out the following: 1) LIC - 20000 per year 2) PPF - 30000 Per year

I need good investment option for rest 50K amount.

Please advice.

Thank you for your time.

Appreciated

investment-advice section-80c provident-fund ppf tax-saving insurance
1 Answers

If you are looking for safe return with tax saving for 3-5 years investment term, tax saving fixed deposit would be best choice. At this time, you can get 9-9.5% p.a. rate of interest for five year deposit. Please note that interest income on such deposit would be taxable and will be added to taxable income.

PPF as you already chosen is a good choice for long term as returns are also tax free.

Please don't buy LIC or any other insurance policies for investment purposes. If you are looking solely for insurance, get term insurance policy only.

You may also invest into tax saving mutual funds, but they are equity linked and riskier in nature. If you stay invested in them for more than 5-6 years, returns on these may be better than any other form of tax saving investment. Returns on these would also be tax free.

Pankaj Batra5212

Thanks for the input.

I agree on taking the term insurance instead on LIC for insurance.

  • How is National Savings Certificate (NSC) for investment? NSC offers 8.4% interest compounded half-yearly. Due the compounding, the effective rate per annum will increase. The interest is taxable but only the final year's interest, when the NSC matures.

http://www.investmentyogi.com/planning/national-savings-certificates-nsc.aspx

Sanat•

Also, I wanted to know about the buying procedure for PPF & NSC.

I and my wife shifted to Bangalore 3 years back. Will She be able to buy the PPF & NSC from Bangalore although my Permanent address is not in Bangalore.

Is there any problem w.r.t the address proof or Identification document required to invest into these funds ?

Let me know.

Thanks Sanat

Sanat•

Tax saving fixed deposit is better than NSC at this time because of higher rate of interest. Interest on tax saving FDs are also compounded half-yearly or quarterly. Returns on both NSC and FDs are taxable.

To invest in PPF, you would need to open a 15 years account in SBI or post office. investment is mandatory every year.

PPF account can be opened in Bangalore too, but you would need to provide some local address proof too. NSC can also be bought from post office.

Pankaj Batra•
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