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SOME VERY POPULAR SCHEMES FOR INVESTMENTS (INCLUDING FOR TAX SAVINGS)
NAME OF THE SCHEME MINIMUM AND MAXIMUM INVESTMENTS ALLOWED

WHO CAN INVEST

OTHER DETAILS

The PPF account matures after 15 years. Tax benefit: Rebate under section 80C for the amount invested. Interest accrued is Taxfree. Interest 8.0% p.a. (compounded annually) is credited to the PPF account at the end of each financial year. Nomination is allowed at the time of opening the account or even later on during the tenor of the account. Loan facility is also available, but the first loan can be taken in the third financial year from the date of opening of the account, and only up to 25% of the amount at credit at the end of the first financial year. Withdrawals are permitted every year from the seventh financial year of the date of opening of the account, of an amount not exceeding 50% of the balance at the end of the 4th proceeding year or the year immediately proceeding the year of the withdrawal, whichever is lower, less the amount of loan if any. This is one of the most popular schemes of tax savings as the

Public Provident Fund (PPF)

Min Amount : Rs. A PPF account can be opened at 500/- per annum, and anytime during the year in a Post thereafter in multiples Office, or in SBI & its associates of Rs 5/or in other selected nationalized banks. It is safe to invest in the instrument, as it is governmentMax Amount :Rs. backed. It can be held by single, 70,000/joint, minor with parent/guardian and HUF

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interest received is tax free. One can avail of a loan against the certificates by pledging it to the bank. The certificate can be encashed from the issuing post office on the due date by simply The NSCs have a discharging the certificates at the NSCs can be purchased through maturity period of 6 back. It is safe to invest in this out the year by individuals either years. Interest rate - instrument, as it is governmentin single, joint, minor with 8% backed. It is useful for people parent/guardian, HUFs. from who invest to save tax. Post offices. National Min Amount Rs. Savings 100/- and additional If encashed prematurely, within a Certificate Tax benefit: Rebate under investment in year of issue, then only the face (NSC) section 80C. Interest accrued for multiples of Rs. 100/- value is given. If encashed after a any year is taxable but can be year but before 3 years, then treated as fresh investment in simple interest on the face value, NSC for that year and tax Max Amount : No at the rate applicable from time benefits can be claimed to time, will be paid. The Limit discount rate (The difference between the accrued interest and the simple interest is the discount rate) will be specified by the government from time to time. This is a good investment Kisan Vikas Patra (KVP) instrument for retired persons doubles money in eight years and and for those who do not have seven months. This Scheme is Interest rate - 8% taxable income. The certifiates available all through the year. Min Amount : Rs. can be encahsed by discharging This scheme it open to single, 100/- and additional on certificates and providing Kisan Vikas joint, minor with investment in proper identity If the certificate Patra (KVP) parent/guardian. Nomination multiples of Rs. 100/-. is lost due to theft, fire or the facility is available at the time of Max Amount : No certificate is mutilated, a opening the account or anytime Limit duplicate certificate is issued during the tenure of the after proper verification. No Tax investment. No Tax benefits benefits are available for available investments in this scheme under the Income Tax Act Infrastructure bonds can be purchased only when the same Liquidity: Lock-in for three years Interest rate usually have been floated by the specified financial institutions. ranges between : Tax benefit: Rebate under section These Bonds provide tax-saving 5.50% to 6% 80C. benefits under Section 80C of the Infrastructure Income Tax Act, 1961, up to an The Maximum bonds investment of Rs.1,00,000. investment limit is Rs However, with low rate of interest and flexibility of 100000 investing in any type of Safety: Purely depends on the instruments since 2005-06, these credit rating of the bank or Bonds are no longer popular. financial institution issuing the bond

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Equity linked savings scheme (ELSS) are equity funds floated by mutual funds. This scheme is suited for young people as they have the ability to take on higher risk. The ELSS funds should invest more than 80 per cent of The Maximum Tax benefit: Rebate under their money in equity and related investment limit is Rs section 80C Equity-Linked instruments. It is ideal to invest 10000. Saving in them when the markets are Long-term capital gains tax are Schemes down. These funds are now open Liquidity: Lock-in for exempt from tax. (ELSS) all the year round. The other way three years of investing in these funds could be a systematic investment, which essentially means investing a small sum regularly (monthly or quarterly). It is a market-linked security and therefore there will be risks accordingly. Interest rate: Depends There are a range of life on returns of the funds insurance products to choose from, such as term life insurance, Tax benefit: Rebate under section whole life insurance, variable life The Maximum insurance, universal life investment limit is Rs 80C Insurance insurance, and variable universal 70000 Interest or returns are not taxable policies life insurance. Annuities are taxdeferred investments that Liquidity - Minimum guarantee you regular payments lock-in of 2 years for at some future time, usually participatory policies retirement. It is a market-linked and 5 years for unitsecurity. linked Pension plans apart from playing a significant role in retirement planning, also offer tax benefits Interest rate - Depends under a dedicated section i.e. Pension on returns of the Section 80C. Premiums paid for policies funds. the same are eligible for deduction. It is a market-linked security.

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