The five-year bank deposits and NSCs score high on safety, flexibility and costs, but the tax treatment of income drags down the overall score. The interest rates are a tad higher than those offered by the PPF, but the income is fully taxable at the slab rate applicable to the individual. So bank deposits and NSCs are best suited to taxpayers in the 10% bracket (taxable income of less than `5 lakh a year).
The five-year bank deposits and NSCs are also very liquid. If faced with a cash crunch, you can use them as collateral to raise a loan. The biggest advantage is that these are widely available. Just walk into any bank branch and invest in its tax-saving fixed deposit. Of course, you will have to comply with the KYC norms while doing so.
If the interest income exceeds `10,000 in a year, the bank will deduct TDS. Some investors try to avoid the TDS by splitting their investments across 2-3 banks. This is not a good idea because one has to pay tax on this income. In fact, the TDS is only 10% on the interest earned. If the taxpayer is in the higher income slab, he will have to pay additional tax.
This is not something that you can sweep under the carpet. Tax authorities sniff out such cases when they pick up income-tax returns for random scrutiny. If your tax return is picked up for scrutiny, the tax department might want to know why the income from the tax-saving deposits (for which you claimed deduction under Section 80C) has not been included in your total income. If TDS has been deducted, it will reflect in your Form 26AS, so don't even think of ignoring this income in your tax return. Those in the lower tax brackets can build a ladder of tax-saving FDs and NSCs. Just reinvest the maturity amounts in fresh tax saving deposits. After the fourth year, your tax planning will be taken care of by the maturity proceeds of the deposits.
1.ICICI Prudential Tax Plan
2.Reliance Tax Saver (ELSS) Fund
3.HDFC TaxSaver
4.DSP BlackRock Tax Saver Fund
5.Religare Tax Plan
6.Franklin India TaxShield
7.Canara Robeco Equity Tax Saver
8.IDFC Tax Advantage (ELSS) Fund
9.Axis Tax Saver Fund
10.BNP Paribas Long Term Equity Fund
You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds
Invest in Tax Saver Mutual Funds Online -
For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
---------------------------------------------
Leave your comment with mail ID and we will answer them
OR
You can write to us at
PrajnaCapital [at] Gmail [dot] Com
OR
Leave a missed Call on 94 8300 8300
---------------------------------------------
Invest Mutual Funds Online
Download Mutual Fund Application Forms from all AMCs
Posts
No comments:
Post a Comment