Tax Saving Tips Through Investments in India:
Under various sections of INDIAN INCOME TAX ACT there are lots of financial scheme which provides your guaranteed returns, high interest rates, tax saving and much more benefits available in India. If you are looking for short term saving then you can invest the money in post offices, government bonds, mutual funds, and if you looking for long term savings then public provident funds, life insurance, long term bank deposits(FD’s, RD’s) can help you.
First you find out your requirements. because the financial plan not only provide you money growth but also provide you with financial security at various steps in your life and its depends on your needs that which product suits you best.
1. Bank Tax Savings
I. Bank Fixed Deposits
The fixed deposit schema is safe,liquid, and fetches high returns. Its ideal if you want to invest your hard earned money for a longer period of time and get a regular income. In fixed deposit saving scheme a certain of money is deposited in the bank for a specified time period with a fixed rate of interest.
II. Recurring Deposit:
In this type of saving system the investor invest a specific amount in a bank on a monthly basis for a fixed rate of return. At the end, you get your principal sum as well as the interest during that period.Recurring Deposit provides you the element of compulsion to save at high rates of interest applicable to Term Deposits along- with liquidity to access that saving any time.
2. Government Tax Savings Bonds
I. RBI Bonds or RBI Relief Bonds
The RBI bonds are instruments that are issued by the RBI. These are tax saving bonds that have a special provision that allows the investor to save on tax.The maturity period of RBI bonds are five years, the interest is compounded half-yearly. The interest received is tax free in the hands of the investor.Other Savings:
II. Infrastructure Bonds
The infrastructure bonds provide tax – saving benefits under Section 88 of the Income Tax Act, 1961, for the investor. These are available through the issues of ICICI and IDBI, brought out in the name of ICICI Safety Bonds and IDBI Flexibonds You can reduce your tax liability by upto Rs. 16,000 per annum.
3 . Company Fixed Deposits
Fixed deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits. Financial institutions and non-Banking Finance Companies (NBFCs) accept these deposits.
4. Life Insurance:
These savings owned Life Insurance Corporation of India and other private life insurance companies like Bajaj Allianz, Birla Life Insurance, HDFC Life Insurance, ICICI Prudential etc.