5 Best Tax-Saving Investments in 2021
Here we provide the best tax-saving investment opportunities. As a taxpayer or investor, thou need to remember that most long-term tax-saving debt investments have long lock-ins and consequently, liquidity issues. Take your pick from these six fixed income instruments that meet all requirements for charge allowances under Section 80C of the IT Act.
Public Provident Fund (PPF):
It is one of the most popular tax-saving investment plans. There is no credit risk. Because PPF is backed by a sovereign guarantee. However, the interest rate is linked to government securities and is subject to quarterly review. Currently, the public provident fund offered 7.01%.
However, the Public Provident Fund considered a safe investment by the market experts. On account of the fund remains a government-backed scheme. At present, the investment, interest, and maturity proceeds all are fully tax-exempt.
Voluntary Provident Fund (VPF):
The Voluntary Provident Fund is an extension of the employees’ provident fund. A provident fund remains also known as a pension fund. Individual employees can contribute up to 100% of the basic salary and familiarity allowance. But, the employees can only claim a deduction for investments up to Rs. 15 lakhs in a financial year. It is a vast investment for tax saving. Because the returns are tax-free. At present, it offers a nearly 8.65% interest rate.
Senior Citizens’ Saving Scheme (SCSS):
Through this scheme, senior citizens have a chance to invest up to Rs. 15 lakhs at any given point in time. Moreover, they will claim a deduction for investments up to Rs. 1.50 lakh in a financial year. However, this is the best tax-saving scheme for those above 60 years of age.
As of the source, the minimum age limit for retired security employees is 50 years. Moreover, the scheme has a lock-in of 5years. Although, the tenure can be further extended for 3 years. The senior citizen’s saving scheme provides up to an 8.60% interest rate.
Fixed Deposits (FDs):
As of the source, the fixed deposits are considered more secured than equity investments. Under the capital preservation and survey of returns, this is the best option. Besides, investors should deposit up to Rs. 1.50 lakh in a financial year. Moreover, this deduction tax-saving FDs have 5 years lock-in period.
However, the interest rates of FDs are decided by banks and change periodically. Currently, Fixed deposits offer 7 to 8.25% interest rates.
National Saving Certificate (NSC):
It is a fixed-income investment scheme. The fund remains suitable for small and mid-income investors. Investors can purchase NSCs in their interest. Because there is no limit on the purchase of NSCs. Although, the investments up to Rs. 1.50 lakh can have a tax-saving under Section 80C of the income tax act. Currently, it offers 7.90% interest rates.