This document provides a guide to various tax saving investment instruments that offer low risk and high capital gains. It discusses the key features of tax free bonds, equity linked savings schemes (ELSS), Rajiv Gandhi equity savings scheme (RGESS), National Savings Certificates (NSC), Public Provident Fund (PPF), tax saver fixed deposits, life insurance, and health insurance. All of these instruments provide tax benefits under various sections of the Income Tax Act and allow investors to achieve their financial goals through long-term savings and investment.

1. Tax Saving
Investments
A Guide To The Instruments That Can Help
You Achieve The Goal Of Low Risk And High
Capital Gains
PREPARED BY: CA. JIMMIT D MEHTA
MODERATOR: SHINING STARS: A GROUP OF PROFESSIONALS

2. TAX FREE BONDS
 Issued by Public Sector Entities
 Long Term Savings Option
 Interest earned on these bonds is non-taxable.
 Bonds having credit rating AA and AAA are likely to meet
their financial commitments.
 Returns on these bonds are beneficially only after lock-inperiod because the returns are guaranteed at maturity.
 If sold before lock-in-period ends, then you may get an
amount higher or lower than the initial amount investment.

3. EQUITY LINKED SAVINGS SCHEME (ELSS)
 It is an equity-oriented mutual fund in which the returns
are tax free as per Section 80C of Income Tax Act, 1961.
 3 Years lock-in-period.
 Since the gains are earned through equity investments,
they may be relatively higher than the Fixed Deposits and
Debt-Oriented Savings Instruments.
 Good Short Tern Investment Cum Savings Options
 Investors must be well aware of its past performance and
befine with taking a moderate amount of risk while
investing.

4. RAJIV GANDHI EQUITY SAVINGS SCHEME
(RGESS)
 Introduced to encourage first time investors into adopting
the equity culture.
 Maximum Investment amount is Rs.50000/- and 50% of
the investment can be used for tax benefits under Section
80CCG.
 Returns are market based with a moderate to high
amount of risk.
 Dividends are tax-free.
 1 Year lock-in-period.
 A smaller investment amount and a lesser lock-in-period
definitely makes the RGESS a more appealing option if
you are investing in equity savings scheme for the first
time.

5. 5 YEARS AND 10 YEARS NSCS
 NSCs are savings certificate issued by post office.
 Good Tax Saving Instrument.
 5 Year and 10 Year lock-in-periods offer guaranteed
returns at maturity.
 Interests earned are taxable as per individual’s
Income Tax Slab.
 No TDS.

6. PUBLIC PROVIDENT FUND (PPF)
 Traditional yet highly preferred retirement planning
instrument.
 Great Long Term Saving Investment providing an
interest of 8.7% annually for the year 2013-2014
term.
 Maximum Investment Rs.100000 per annum.
 Additional benefits include the option of taking loans
from the start of third year to the end of the 5th year
as well as withdrawals from the sixth year onwards.
 Accumulated amount plus the interest received on
maturity is no-taxable.

7. TAX SAVER FIXED DEPOSITS
 Under Section 80C, fixed deposits with the bank for
a lock-in-period of not less than 5 years is exempted
from tax.
 Applicable with Rs.100000 limit which includes life
insurance and provident funds.

8. LIFE INSURANCE
 Gives assured returns on maturity.
 Risk cover to protect your family in case of untimely
events.
 Tax benefit under Section 80C for the premium paid
for the policy.
 Additional benefits, once the policy term finishes.
 Under Section 10(10D), if premium paid per year for
the policy is less than 10% of the sum assured, then
the amount received on maturity is exemption from
tax deduction.

9. HEALTH INSURANCE
 Benefit under Section 80D upto Rs.15000 on policies
for yourself, spouse and children.
 And if you are paying health insurance premium for
your parents as well, then you can get an additional
benefit of Rs.15000 taking total benefit of Rs.30000.
 These benefits are subject to couple of conditions,
you must be less than 65 years of age and policy
premium must be paid through cheque or credit card
and not cash.

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