Senior Citizen Savings Scheme: SCSS offer 9% annual returns on deposits. Only people above the age of 60 can opt for this scheme. Though one can open multiple saving scheme accounts, the total amount of investment cannot exceed R15 lakh. SCSS qualifies for deduction under Section 80C, but the interest earned is taxable.
National Pension Scheme: An ideal investment vehicle for retirement planning, it offers tax-saving under Section 80C. But the deductions are allowed only for contributions to a Tier-I NPS account with a minimum annual investment of Rs 6,000. Also, no premature withdrawals are allowed.
National Savings Certificates and Bank FDs: NSC and bank FDs are widely used financial instruments. Deposits, however, are not tax-free, as is widely believed. Government regulations offer deduction of up to Rs 10,000 on interest earned in the savings bank account.
Life Insurance Policies: The premium paid for a policy covering an individual and his/her immediate family members is deductible up to Rs 1 lakh.
Rajiv Gandhi Equity Savings Scheme: RGESS offers tax savings for a year for first-time investors. They can claim a deduction of 50% of the invested amount. The maximum investment amount is fixed at Rs 50,000 with a maximum deduction of Rs 25,000. This deduction is over and above the Rs 1 lakh limit available under Section 80C.
Pension Plans: Pension plans initiated by life insurance companies also provide tax deductions under Section 80C since 2013. The downside is high fund-management charges.
The writer is CEO, BankBazaar.com