Skip to main content

Which tax saving scheme you should invest this year

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

Suggest a good tax saving scheme…asked Manav a very old friend who usually visits me every year in January just for this question. His salary package is good and thus in the name of tax saving scheme he has only one choice i.e Employee provident fund. His EPF contribution normally overflows the basic requirement of tax saving investments u/s 80C. But still as he follows my various tax planning tips so deploying the funds into various suitable tax saving schemes becomes inevitable.

Selecting a tax saving scheme is no different than selecting any other investment option as one just have to look at the taxability of returns, investor's own tax bracket and return potential of the product. But in the case of tax saving schemes options are very limited. In the case of Manav almost all the investments and allocation has been already worked out and fixed but this year due to some changes in the products scenario he wanted to clear on some of his doubts and restructure his portfolio of tax saving schemes if required.

 

Changes in tax saving schemes in short:

Public Provident fund (PPF), National savings Certificate (NSC), Senior citizen saving scheme (SCSS) are no longer a Stable interest / return product now. All these products' interest rate will be changed every year and depends on the government securities rates. This change has affected more to the most popular tax saving scheme i.e PPF as it has a lock in of 15 years and whatever deposited today will not earn the same rate for the complete tenure as it used to get earlier . Every year the investment will grow with a new rate which may be more or less than the current rate. Whereas NSC and SCSS are one time investments and whatever interest you are offered today will be fixed for the remaining tenure, but the interest rates in this case will also be changed and announced every year and applicable to new investments. A current rate of PPF is 8.80% p.a, NSC is 8.60% p.a and SCSS is 9.30% p.a.

Other change is in the Insurance products. Only those insurance policies will be qualified for deduction u/s 80C, where the insurance cover would be at least 10 times of Premium.

Some new tax saving schemes launched which are meant for some specific categories and type of investors – Rajiv Gandhi equity saving scheme, New pension scheme  and Tax saving on Preventive health check-up.

Others are common products like Equity linked savings scheme, 5 year bank fixed deposit, Pension plans u/s 80CCC, new pension scheme. But do note here that IRDA has announced some changes in the pension products which have made these investments suitable only for retirement planning.

Which tax saving scheme should be opted by whom?

In the case of Manav, he's opened various tax files in his family by properly spreading out the income/savings among members. Now there are all types of tax files which are subjected to different tax rates. So keeping financial planning angle, tax slabs of different members, taxability and rate of returns of product the following composition was suggested.

The young savers and those in 30% tax bracket should not look beyond PPF and ELSS, in other words long term savings only. Both of these tax saving schemes are for long term savings and generate tax free returns. It is perfectly suitable investments to supplement your savings towards your long term goals. One may also put some amount in NPS from retirement planning perspective. When there are financial dependents than do buy adequate life insurance cover through term insurance plan. Never buy an insurance cover through investment linked policy as it will neither suit your investment profile nor provide you with enough insurance cover. In other words avoid ULIPs and traditional plans. Though term insurance is a pure insurance policy with decent difference in the premium and sum assured but still keep in mind the 10 times of insurance condition for tax saving. If direct tax code gets announced this budget '13 then the condition of 10 times of insurance coverage might get increased to 20 times.

Those who are in lowest tax bracket, specially senior citizens in the lowest tax bracket may consider the taxable tax saving schemes like 5 years bank FD as even after tax some of banks FD will give returns more than PPF 8.8% tax free rate. For e.g. the tax saving FD of IDBI bank is offering 9.75% rate to senior citizens. As this rate will remain fix for 5 years and with quarterly compounding this product will be much more rewarding than any other fixed return tax saving scheme instrument.

The Business persons who are concerned on the liquidity front can consider investing in NSCs, as loans are easily available on these instruments.

Tax saving investments is among the most important savings for many and when there's option where you can map your financial planning with tax planning than why not? Manav has understood it and arrange all his investments after having holistic view of his overall financial situation. So should be done by all of you i.e chose tax saving schemes wisely keeping in mind your overall financial planning.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Mutual Fund Review: Taurus Tax Shield

    Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.   Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...
Read more

AXIS Long Term Equity Fund - The Best Tax Saver Fund for 2016

  AXIS Long Term Equity Fund - Invest Online   History:   The open ended mutual fund was launched on December 21 in the year 2009. It is benchmarked against BSE 200 and managed by the fund manager JINESH GOPANI. Initially the scheme was called as Axis tax saver fund but later it was renamed as Axis long term equity fund with effect from September 2, 2011. Nature of investment: As far as asset allocation is concerned, 97.52% of the stocks are equity and 0.02% is debt based. The primary focus of the fund is to invest in diversified equity stocks that have higher growth potential. Total asset size of the fund is in the tune of 4,996 CRORE as of June 30, 2015. Performance: The performance of the fund for one year, 3 years and 5 years are 23.6%, 29.9% and 19.1 respectively which are far greater than 6.4%, 14% and 5.6% benchmark figures. It has also preformed fairly well against SBI magnum Tax Gain (G) and HDFC tax saver (G). The growth comparison is enumerated below;                        ...
Read more

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...
Read more

Use Mutual Fund SWPs for getting fixed payments

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   Investors time withdrawals optimally to save on tax The systematic withdrawal plan, or SWP, could be called the lesser known cousin of the much talked about and publicised systematic investment plan (SIP). There's yet another cousin — the Systematic Transfer Plan ( STP ). In SIP, you invest a fixed sum of money at regular intervals (monthly/ quarterly) to buy some units of a mutual fund scheme. In SWP, as the name suggests, you do the opposite: You redeem some mutual fund units from your portfolio to get a fixed sum of money at regular intervals (monthly/quarterly/half year/yearly). In SIP, you get a higher numbers of units when the markets are down, and lesser in a buoyant market. In SWP, going by the product logic, you redeem higher number of units when the markets are do...
Read more

IDFC Classic Equity Fund

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   IDFC Classic Equity Fund IDFC Classic Equity is a large-cap equity fund which currently has assets under management worth Rs. 158.52 crore. It was launched in August 2005. The fund is benchmarked against the BSE-200 Index. Performance YTD 1-Year 3-Year 5-Year Since Inception IDFC Classic Equity 0.93 26.61 6.30 1.01 11.65 BSE 200 1.52 17.31 6.00 1.99 12.98 All figures in % as on January 31, 2013; Returns above one-year in CAGR terms ...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now