Tax saving instruments to consider | Fusion - WeRIndia

As the financial year is ending, it is the ideal time to choose the best tax saving instruments. While opting for tax saving instruments, taxpayers should consider their age and risk that is associated with it. Furthermore, the taxable income, flexibility and cost of investment are other criteria for choosing these instruments. Financial analysts advise not to invest all your money at a single place. So read this article and choose the appropriate tax saving instrument for you.

Public Provident Fund (PPF) and National Savings Certificate (NSC) is very good for risk-averse individuals. The investment in these schemes earn moderate returns. Though it is unsure whether the returns beat inflation or not in future, the current rates are 8.7% for PPF and 8.5% for NSC.

Unit Linked Insurance Plans (ULIPs) are the best choice if you need insurance and also get tax benefit under section 80C of the Income Tax Act. Yet, the returns are moderate as the premium is allotted to several charges. The return varies with market situations.

New Pension Scheme (NPS) is suitable for the individuals who have not planned for their retirement. The money invested in this scheme can be invested by the companies in both equity and debt funds. And investors can opt for specified options in this scheme. If you are going to retire, you can choose investing in the Senior Citizen Savings. Or you can opt for various pension plans that are offered by different insurance companies. The return depends on the market conditions.

If you are a risk taker, Equity Linked Saving Scheme (ELSS) is the best scheme for you. It yields higher returns in the long run. The amount invested in this scheme and the returns have tax benefits. However, ELSS has a lock-in period of three years. As per the conditions of the market, the returns will be yielded.

Tax saving fixed deposits in bank are generally chosen by many people due to their low risk. The current interest rates for fixed deposits in various banks vary from 7.5% to 8.5%. However, the interest earned on these deposits will be subjected to tax and TDS is applicable. So, before opting for this investment you can check you income slab and the return in various investments.

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