Conservative Investors’ Top Picks for Tax-Saving Investments
Conservative investors often seek safe investment options that not only offer assured returns but also provide tax benefits. Here are some popular tax-saving instruments:
- Public Provident Fund (PPF)
- Monthly Income Scheme (MIS)
- Time Deposit
- Senior Citizens Savings Scheme (SCSS)
- Sukanya Samridhi Yojana Account (SSY)
- National Savings Certificate (NSC)
Comparing FDs vs. Small Savings Schemes
Returns on Schemes
Most small savings schemes offer returns ranging from 7-8% per annum, whereas fixed deposits typically provide returns between 6-7% per annum.
- National Savings Recurring Deposit: 6.7% per annum
- National Savings Time Deposit:
- 1 year: 6.9%
- 2 years: 7%
- 3 years: 7.1%
- 5 years: 7.5%
- Tax deduction under 80C is given only when the deposit is made for 5 years.
- National Savings Monthly Income Account: 7.4% per annum
- SCSS: 8.2% annually
- PPF: 7.1% per annum
- SSA: 8.2% per annum
- NSC: 7.7% per annum
- KVP: 7.5% per annum
Fixed Deposits
Fixed deposits typically offer returns between 6-7% per annum. Here are some examples:
- SBI: 6.7% per annum
- Union Bank of India: 6.75% per annum
- Bank of Baroda: 6.85% per annum
- HDFC Bank: 6.6% per annum
- ICICI Bank: 6.7% per annum
- Senior Citizens: Receive an extra 50 basis points on these deposits.
Tax Saving
Investments in tax-saving instruments like post office schemes allow you to claim tax deductions under Section 80C of the Income Tax Act. No such deduction is given on fixed deposits (FDs).
It’s important to note that tax deductions are only available under the old tax regime and are limited to a maximum of ₹1.5 lakh per annum. The post office schemes that allow taxpayers to claim tax deductions include five-year time deposits, SCSS, PPF, SSA, and NSC.
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Reference : https://www.livemint.com/money/personal-finance/small-savings-schemes-vs-bank-fds-these-investments-help-investors-earn-upto-8-1-per-annum-a-year-with-tax-benefits-11746098369269.html
