The government gives tax benefits to encourage people to make long-term investments. Tax deductions under section 80C and other similar sections also help people inculcate saving habits as the tax saved on such investments gives immediate returns in the form of the amount of tax saved. For example, if a person, who falls in the 10 per cent tax bracket, makes tax-saving investments of Rs 1,50,000, which qualifies for deductions u\/s 80C, he will save tax of Rs 15,000, thus getting an immediate return of 10 per cent. Similarly, for the same investment, a person in the 20 per cent tax bracket will gain 20 per cent and a person in the 30 per cent tax bracket will gain 30 per cent. There are various options available for tax-saving investments. Some of those are discussed below: PPF The Public Provident Fund or PPF is a very secure and good tax-saving vehicle, as it gives tax exemption in all three stages and falls in the EEE (exempt, exempt, exempt) category. The investment is tax exempt in the form of deduction u\/s 80C, interests earned are also tax free and so is the maturity amount. Moreover, the PPF investments also enjoy sovereign guarantee of the Government of India. The tax benefits of Sukanya Samriddhi Yojana are also similar to that of PPF. NPS The National Pension System (previously New Pension Scheme) is a new contributory pension scheme introduced by the Central government for the benefit of its employees, who have joined after December 31, 2003, unorganised sector employees and self-employed professionals. NPS, which was earlier restricted to government employees only, has been made available to general citizens with effect from 2009. For government employees, the contribution to NPS is deductible u\/s 80C up to the prescribed limit. Additional deductions of Rs 50,000 u\/s 80CCD has also been allowed over and above the 80C limit for contribution to NPS by any individual. Withdrawals up to 40 per cent at the time of retirement at the age of 60 years has been exempted. Rest of the amount must be used to purchase a life annuity from any Irdai-regulated life insurance company. If withdrawal is made before retirement, at least 80 per cent of the withdrawn amount must be used to purchase life annuity. NSC The National Savings Certificate (NSC) is a fixed income investment scheme of the Government of India, which may be purchased from Post Offices. The amount invested in NSC qualifies for tax rebate under u\/s 80C. The interest accrues annually but is deemed to be reinvested. So the interest will be added to 'income from other sources' every year on accrual basis and the same amount will be eligible for deduction u\/s 80C. In case the investment amount, without the accrued interest on NSC exceeds the limit of Rs 1,50,000, the interest included under 'income from other sources' will become taxable. Thus, the interest on NSC is taxable on accrual basis. However, like other Post Office savings, NSC also enjoys the guarantee of the Government of India. PF The Provident Fund (PF) scheme is compulsory for private sector employees having a basic salary of Rs 15,000 (which is revised periodically) and is optional for employees drawing more salary. The scheme is optional for the organisations having less than 20 employees and for PSUs. As per the provident fund rules, 12 per cent of an employee's salary goes into the fund along with a matching contribution from the employer. Employee's entire contribution and contribution of the employer up to Rs 15,000 per month or 12 per cent of basic salary, whichever is lower, are eligible for deductions under section 80C. Any interest over and above the interest rate declared for a particular year is added to taxable income under 'Income from other sources'. Withdrawal of the PF amount after five years is tax free. ELSS Equity Linked Savings Schemes or ELSS are mutual fund plans offered by Asset Management Companies (AMCs). As ELSS are eligible for 80C deductions, there is a lock-in period of three years. In case of SIP, every installment will have 3-year lock in. Like other MF schemes, returns on ELSS are also subject to market risks. During redemption, investors have to pay 10 per cent capital gain tax if the long term capital gains (LTCG) exceed Rs 1,00,000 in a financial year. Insurance plans Investments in life insurance plans also fall under the EEE category, provided the sum assured is at least 10 times of the annual premium. So, the insurance premiums are tax deductible u\/s 80C, accumulated bonus as well as death\/maturity claims and money backs are also tax free. However, pensions received under annuity plans are taxable. The sum assured and the declared bonus of the Life Insurance Corporation of India also bear sovereign guarantee of the Government of India. As such plans also provide insurance cover, one should not consider these as pure investment products.