We analysed the top 11 Tax Saving investment Scheme available and here’s the list of the top 11 one could consider the flexibility of investing to the amount of tax exemption it allows.
- Investment in Sukanya Samriddhi Yojana (SSY)
- Investment in Post Office Savings Account
- Investment in Post Office Fixed Deposit (FD) Account
- Investment in Post Office Time Deposit Account (POTD)
- Investment in Senior Citizen Savings Scheme (SCSS)
- Investment in Public Provident Fund (PPF)
- Investment in Kisan Vikas Patra Yojana (KVPY)
- Investment in National Pension Scheme (NPS)
- Investment in TERM LIFE INSURANCE
- Investment in National Saving Certificate (NSC)
- Investment in Post Office Monthly Income Scheme (POMIS)
1. Investment in Sukanya Samriddhi Yojana (SSY)
About SSY :Sukanya Samriddhi Account is a Government of India backed saving scheme targeted at the parents of girl children.
Eligibility for SSY Account :
- Only a Girl Child with maximum age of 10 years can avail the benefits of SSY Saving Scheme.
- Only biological parents or legal guardians of a girl child can open the account on the child’s behalf.
- An account under this Scheme may be opened for a maximum of two girl children in one family
- Minimum – ` 250
- Maximum – ` 5 Lakh
Tenure of SSY AccountThe payment period for SSY accounts is 15 years, while the maturity period of the account is a minimum of 21 years.
Tax Benefits of SSY SchemeSSY is a completely Exempt (EEE) Investment. The interest earned as well as the maturity amount are all Tax-Exempt. IT is eligible for Tax Deductions U/s 80C, subject to a maximum cap of ` 1.5 lakh.
Transfer of SSYThis SSY Account can be transfer form a Post Office to a Bank or from a Bank to a Post Office.
2. Investment in Post Office Savings Account
- A Post Office Savings Account is one of the most popular and accessible savings accounts in India with the minimum opening amount as well as maximum balance that can be retained is `
- It can also be opened by a minor above the age of 10 in their own name.
- There is no limit on the maximum amount that can be deposited in a post office savings account.
- It is also eligible for tax exemption for interest of up to `10,000 earned in a financial year (for all savings accounts combined) under the Income Tax Act. 80TTA.
3. Investment in Post Office Fixed Deposit (FD) Account
- Minimum amount is Rs. 1,000.
- There is no maximum limit to the deposit.
- Any number of accounts can be opened in any post office anywhere in the country.
- The tenure can he extended by making an application.
- Interest is payable annually.
- Interest is credited into the holder’s savings account.
- A minor who is above 10 years of age can open a Post Office FD A/c.
- You can avail a Tax Deduction under Section 80C of the Income-tax Act, 1961. for deposits with a tenure of 5 years.
4. Investment in Post Office Time Deposit Account (POTD)
- A minor aged 10 years or more can open and also operate this account.
- This POTD schemes can have tenure of 1, 2, 3 or 5 years, and only one deposit can be made in one account.
- Minimum deposit required to invest in POTD Scheme is Rs. 200 and the amount to be deposited should be in multiples of Rs. 200 only.
- Income tax benefits are available only for a 5-year post office time deposit account.
- Depositors will be able to claim income tax exemptions of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act, 1961.
5. Investment in Senior Citizen Savings Scheme (SCSS)SCSS is a savings product available for senior citizens aged 60 or above. With the SCSS account, senior citizens can receive quarterly interest on deposits up to Rs. 15 lakhs. The deposit / Investment made in an SCSS account qualify for deduction under Section 80C of the Income Tax. The interest is taxable if the total interest in all SCSS accounts is more than 50,000 in a financial year. In such cases, TDS is deducted from the total interest paid. However, no TDS is deducted if the account holder submits form 15G / 15H. The account can be prematurely closed at any time, after the date of opening. The account may be extended for a Further period for 3 years from the date of maturity.
6. Investment in Public Provident Fund (PPF)You can invest in the PPF if you meet these criteria:
- You are a citizen of Indian
- You can open only one PPF account unless your second PPF account is in the name of a minor.
- You cannot invest in PPF is you are an NRI or HUF.
Tax Benefits :
- Public Provident Fund is an investment which comes under the Exempt-Exempt-Exempt (EEE) category.
- This means that the deposits that you make in the Public Provident Fund will be deductible (Section 80C of the income Tax Act).
- The amount that you accumulate and the interest will be exempt from tax when you withdraw the money.
- You should note that you cannot close a Public Provident Fund account before maturity.
- You cannot close a Public Provident Fund account prematurely.
7. Investment in Kisan Vikas Patra Yojana (KVPY)The following are the Kisan Vikas Patra eligibility:
- The applicant must be an adult and a resident Indian.
- The applicant can apply for Kisan Vikas Patra in their own name or on behalf of a minor.
- Trusts are eligible to invest in Kisan Vikas Patra. HUFs (Hindu Undivided Family) and NRIs are not eligible to invest in KVP.