When it comes to tax planning
there are variety of investment instruments yielding different returns,
depending on the risk you are willing to take and the flexibility you desire
from the instrument. As you know ELSS is a great investment avenue from tax
planning perspective as it yields market based return. which could be sometimes very high but is also
subjected to volatility. This particular instrument is good for young
professionals who have time by their side. Young investors are also able to
withstand volatility better than elderly professionals as markets beat all
other asset classes on a 10-year time period by a wide margin.
But if you are risk averse then
Tax Saver Fixed Deposits, National Saving Certificates & Public Provident
Fund are the popular choices in India. FD
Interest Rates are generally lowest among these three but FDs offer
quarterly compounding which results in somewhat similar yields. PPFs are
similar to EPFs, with relatively lesser benefits, but available to all citizens
of India irrespective of their profession. Since EPF or Employee Provident Fund
is available to most salaried individuals, they can choose between Tax Saver
FDs & NSCs for further investments from tax-saving point of view. In this
article we will explore the similarities and differences between these two
instruments.
