How to save tax and grow your wealth

Q: There are many tax saving options that can help you grow your wealth.

Bikram, Mumbai

8th July 2015

Other in Mumbai

ppf

nsc

tax saving schemes

investment strategy

elss

bank fd

life insurance

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Replies (4)

Hi everybody,
What is NPS? Is it a safe investment?

Chandra Kantraut, Pune

8th July 2015

Comment

Good evening Chandrakant,
National Pension Scheme is a lot like investing in mutual funds with its Safe, moderate and Risky options. The returns are not guaranteed. You cannot withdraw until 60 and the corpus amount must necessarily be invested in an Annuity. The withdrawals are also taxable.

Pravallika, Hyderabad

8th July 2015

But for people who want superior returns and also have higher risk appetite i would suggest them ELSS. And those who want returns at per with inflation and have very low risk appetite, i would recommend them PPF.

Deepankar Godbole, Mumbai

8th July 2015

Comment

One more question Deepankar,
What is ELSS Tax Saving Mutual Funds? How much i can invest in ELSS Funds?

Lalit Verma, Mumbai

8th July 2015

Good question Lalit,
Equity Linked Saving Schemes are a kind of equity linked mutual funds. As they invest in equity or stocks, ELSS funds have the ability to deliver superior returns – 14-16% over the long term. That’s a full 6-8% above inflation.This return is not guaranteed but previous history suggest that these returns are achievable over the long term.You can inves tup toRs 150000 in ELSS funds either as a lump sum or SIP.

Deepankar Godbole, Mumbai

8th July 2015

Thanks deepankar,
How can i utilize my 1.5 lakh limit? What are the lock in period of these investment and how much i can expect as a return?

Lalit Verma, Mumbai

8th July 2015

Comment

Well Lalit,
The best way to look at the various 80C investment options. At the same time you can see what is pre-determined and what is optional.
Suppose you are investing in ELSS, your lock in period will be 3 yrs. and the pre-tax return will be 15-16% which is tax free.

If you are making Bank FD, your lock in period will be 5 yrs. and the pre-tax return will be 9.50% where interest is taxable.

Similarly, if you are investing through PPF, lock in period will be 15 yrs. and the pre-tax returns will be 8.50% and you have to pay no tax.

Whereas in NSC, lock in period will be 5-10 yrs. and the pre-tax returns will be 8.50% similar to PPF but here your interest is taxable.

And if you are choosing Life Insurance, lock in period will be 5 yrs. and pre-tax returns will be 0-%5 and you don't have to pay tax.

Manisbapu, Mumbai

8th July 2015

Hi Bikram,
I belong to a upper middle class and my family income is Rs. 7.5 lacs per annum. Can you tell me which are the best way to grow our wealth as well as can save tax?

Lalit Verma, Mumbai

8th July 2015

Comment

Hi Lalit,
There are so many tax saving options like ELSS, 5 year Bank FD, Life Insurance, PPF and NSC. It based on your risk appetite and expected returns. These options usually have a lock in period and vary in the nature and the amount of return they provide. In the above mentioned tax saving schemes ELSS is the best way to increase your wealth as well can save tax.

Deepankar Godbole, Mumbai

8th July 2015