The Taxation laws are stringent but governments do offer plans for letting your meager monthly savings grow into a substantial fund by the end of your career. The money a layman saves throughout his life helps him combat difficult challenges and overcome obstacles to fulfill cherished dreams.
There are numerous investment schemes but not all of them provide tax benefits. Among the investment plans which are tax free only a handful offer security, flexibility, safety and liquidity. In the following some of the best tax free investment options have been described for your benefit.
Public Provident Fund
While investing the top most concern for every working professional is security. There is no tax free investment plan as safe as Public Provident Fund or PPF. In 2015, the annual interest rate for PPF is 8.7%. As the government updates it every year chances are high that the interest rate will grow in the coming years. According to the section 80C of Income Tax Law, if you invest more than 1.5 lakh a year then you will qualify for IT Rebate. The minimum investment amount is just INR 500, which makes it a good option for members of the poorer strata of society.
New Pension Scheme
This is another investment option which has been made tax free under the section 80C. It is a safe way to invest your money and let it grow for making life after retirement more secured for citizens. The returns can vary from 4% to 10% and above. Though there is no restriction on the maximum amount you invest in this scheme annually, you will have to deposit at least 6,000 a year or 500 a month in this scheme.
Senior Citizen Saving Scheme
By investing money on the Senior Citizen Saving Scheme the elderly individuals can get considerable tax benefits. The two cons of this scheme are that only people aged over 60 can opt for it and the upper limit of investment in this scheme has been set as 15 lakh only. The quarterly payment of interest makes it a flexible option.
National Saving Certificate
You can avail National Saving Certificates in 5 year or 10 year tenures. The Post office of India is responsible for issuing this type of savings certificate and the returns are guaranteed by the government. You will not have to worry about maximum amount restrictions and can make minimum investment of INR 500 according to your personal convenience.
Life Insurance
Invest in endowment and money back plans if you are new in the field of investment. Buying life insurance coverage is a common practice among the working professionals of different denominations. The rate of return is only 6% and it does not completely cover all risky circumstances but still considered a safe choice.
Summary
While investing money one has to consider many factors including tax benefits, returns and liquidation. One should weigh the pros and cons of each investment plan carefully before going ahead.
