Income tax return filing tips: NPS vs ULIPs vs ELSS vs PPF vs NSC – 5 best tax saving options for you
Income Tax return Filing Tips: Investments are never easy! Each financial product comes with its own pros and cons, often leaving you confused about the ideal product to actually buy. Your job becomes trickier when tabs have to be kept on income tax benefits and not just on profit or money gains to be made. The best income tax savings options for you are Public Provident Fund (PPF), National Savings Certificates (NSC), National Pension Scheme (NPS), Equity-Linked Savings Scheme (ELSS) and Unit Linked Insurance Plans (ULIPs). These should be some of the most preferred options for you. Get up close and personal with these savings tools to ensure you make maximum money and thereby ensure there is no loss to you:
Public Provident Fund (PPF): The biggest go-to option for you is public provident fund, which provides an interest rate as high as 8 per cent – January-March 2019. Notably, PPF falls in EEE tax category, which means that investors can avail tax benefits at the time of investing under the Section 80C of the Income Tax Act. The interest earned on PPF is tax exempt and the amount released at the time of maturity is also tax-free.
National Savings Certificates (NSC): The second tax saving option is of National Savings Certificates or NSC, which offers a fixed interest rate of 8 per cent for the period of January-march 2019. The product offers investors a chance to claim tax benefit on the interest earned and tax deduction under Section 80C.
National Pension Scheme (NPS): This is a smart investment option for those who are looking to save beyond Rs 1.5 lakh limit of Section 80C. Under National Pension Scheme, the investors can claim an additional discount of up to Rs 50,000 under Section 80CCD(1b). The scheme also offered an attractive rate of return of 10.84 per cent for last five years. However, remember that NPS has a long lock-in period.
Equity-Linked Savings Scheme (ELSS): The tax saving mutual funds come with a lock-in period, but that is of just three years and it offers you an attractive rate of return. In last year’s budget, FM Jaitley had introduced 10 per cent LTCG tax on equity and equity-linked mutual funds on capital gains of over Rs 1 lakh, so that was a dampener of sorts, but it does not stop ELSS from being a best option for investors to put their money in.
Unit Linked Insurance Plans (ULIPs): If you want insurance, but hate to put in money in an instrument that does not generate returns in terms of money, then ULIPs is for you. This scheme offers an interest rate between a range of 8 to 14 per cent and is eligible for tax exemption under Section 80C.