Which investment is best for tax exemption?
Table of Contents
Which investment is best for tax exemption?
Investment options under Sec 80C
| Investment | Returns | Lock-in Period |
|---|---|---|
| Public Provident Fund (PPF) | 7\% to 8\% | 15 years |
| National Savings Certificate | 7\% to 8\% | 5 years |
| National Pension System (NPS) | 12\% to 14\% | Till Retirement |
| ELSS Funds | 15\% to 18\% | 3 years |
Which policy is best for tax benefit?
Best Tax-Saving Investments Under Section 80C
| Investment | Returns | Lock-in Period |
|---|---|---|
| ELSS Fund | 15\%-18\% | 3 years |
| National Pension Scheme (NPS) | 12\%-14\% | Till Retirement |
| Unit Linked Insurance Plan (ULIP) | Returns vary from plan to plan | 5 years |
| Public Provident Fund (PPF) | 7\%-8\% | 15 years |
Why ELSS is better than PPF?
ELSS investment relies on equity and has higher volatility compared to PPF which is a debt instrument with negligible volatility. With both ELSS and PPF, you can get a maximum deduction of INR 1.5 Lakh under Section 80C of the Income Tax Act, 1961.
Which ELSS fund is best?
The table below shows the top-performing ELSS mutual funds based on the past five year returns:
| Mutual fund | 5 Yr. Returns | 3 Yr. Returns |
|---|---|---|
| BOI AXA Tax Advantage Fund Regular Growth | 20.95\% | 29.79\% |
| Mirae Asset Tax Saver Fund – Direct Plan – Growth | 23.55\% | 27.37\% |
| Canara Robeco Equity Tax Saver Fund – Direct Plan – Growth | 21.61\% | 27.11\% |
Is ELSS safe?
ELSS funds have a lock-in period of 3 years, the shortest among all options eligible for tax saving under Section 80C. Public Provident Fund has the highest lock-in of 15 years whereas other options like Tax saving FDs, Life Insurance Policy and National Savings Certificate have lock-in periods ranging from 5-10 years.
How do I invest in ELSS?
You can invest in ELSS the same way that you invest in any Mutual Fund. The easiest way is through an Online Investment Services Account. You can invest either as a lump sum or via the SIP (systematic investment plan) route.
Is EPF better than ELSS?
Conclusion. In comparison, ELSS offers higher returns than EPF. EPF is suited for individuals who are absolutely risk-averse and can afford a 15-year lock-in period. Investors who are willing to take a moderate risk to earn higher returns can opt for ELSS.
In which bank PPF account is best?
State Bank of India (SBI), which is the largest bank in the country, offers the PPF scheme with a good interest rate. SBI has over 15,000 branches in India, therefore, getting access to the scheme is easy. Opening of the PPF account offered by SBI can also be done online.
Can you open 2 PPF accounts?
As per the Public Provident Fund (PPF) Scheme rules, an individual cannot have more than one account.
How much tax does ELSS save?
ELSS mutual funds are the only class of mutual funds eligible for tax deductions. You can save up to Rs 46,800 (tax deductions of up to Rs 1,50,000) a year in taxes by investing in ELSS, which is covered under Section 80C of the Income Tax Act, 1961.
What are the tax benefits of investing in ELSs and PPF?
Tax benefits for investment in PPF under Section 80C are limited to up to Rs 1.5 lakh. ELSS (or Equity Linked Savings Scheme) is a diversified mutual fund that invests in stocks and also offers benefits under Section 80C. There is no limit on maximum investment but tax benefit is available only on Rs 1.5 lakh.
Is Public Provident Fund (PPF) still the best tax saving investment?
Public Provident Fund (PPF) is still one of the best tax saving investments for risk-averse investors. PPF offers the triple benefits of tax saving, risk free returns and tax free returns.
What is the difference between EPF and ELSS?
The EPF interest rate is similar (slightly lower) to the PPF interest rate and the maturity amount is tax free. The EPF contribution of the employee goes towards the 80C tax savings. Therefore they should opt for ELSS, unless they are near retirement.
What is the maximum amount I can invest in PPF?
Investment and Withdrawal: PPF has a minimum investment of Rs 500 and a maximum investment of Rs 1.5 lakh. You can make deposits in the PPF account up to 12 times in a year. Premature closure is only allowed on limited grounds such as serious ailments.