No more excuses! 11 Tax-Saving Options that Save Tax and Grow Your Wealth

1. Best Tax Saving Plan

2. No more excuses! 11 Tax-Saving Options that Save Tax and Grow Your Wealth

3. If you are reading this, you are likely to be someone whose income exceeds the threshold of Rs 2.5 lakhs for paying taxes. • There are some legitimate ways of saving taxes and the good thing is that most of them also help you grow your wealth. • These options usually have a lock in period and vary in the nature and amount of return they provide. • You must also remember that each of these alternatives also serve specific purposes and tax saving is not the purpose but an ancillary benefit of that.

4. What does Scrip box recommend? • ELSS Mutual Funds – For people who want superior returns and also have higher risk appetite • PPF – For people who want returns at par with inflation and have very low risk appetite • ELSS Tax Saving Mutual Funds • ELSS or Equity Linked Saving Schemes, are a kind of equity linked mutual funds.  • As they invest in equity or stocks, ELSS funds have the ability to deliver superior returns - 14-16% over the long term. • That’s a full 6-8% above inflation.This return is not guaranteed though but historical evidence suggest that these returns are achievable over the long term.

5. Public Provident Fund • PPF is a good option if you are looking for an option with certain returns. • Your PPF investments earns interest at a rate announced every year – currently 8.7%. PPF return is therefore mostly at par with inflation. However, it is tax-free and you can do a lump sum or small regular investments.

6. 5 Year Bank FDs • The amount you can invest is limited to Rs 1,50,000. The interest you earn on your 5 year bank FD is fully-taxable and you will have to pay taxes on a yearly basis for the interest you earn for that period. • TDS typically collected by banks is only 10% (20% in case you have not submitted your PAN) and if you happen to be in the 20 or 30% tax bracket, you need to pay the remaining interest while filing your IT returns. • Post-tax, 5 year bank FDs are not particularly attractive- especially for people in the 20 and 30% tax brackets since the post-tax returns (6-7%) are typically lower than other tax saving investment options.

7. National Savings Certificate (NSC) • NSC interest rates are fixed in April every year. The current rate is 8.5% for 5 year lock-in NSCs, and 8.8% for 10 year lock-in NSCs. • The interest accumulated is fully taxable. However, one key difference here is that the interest amount is not paid out to the investor. • Instead, it’s re-invested in NSC and therefore can be considered as your investment in NSC for the subsequent year. Needless to say, this is complex. • Investments up toRs 150,000 are eligible. You can invest in NSC via your local post office.

8. Life Insurance Premium • This was almost the default tax saving option for years However, over the last few years, most informed investors have learnt the perils of choosing this option • There are 2 kinds of Life Insurance Policies: • Pure risk also called term life which ensure a risk to the life of the insured • Risk+ investment: which pay you back money over time

9. The returns from and costs of investment oriented insurance policies are not transparent and usually not attractive. We won’t go into length on this topic but suffice to say that you should not consider Life Insurance as a best tax saving plan investment option. • Source: (http://bit.ly/1MSvk8F)

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