Do you know what is tax free Investments?

 Let me tell about this a tax free investment I an investment when we invest some amount of money in any assets bonds or any scheme when we earn return in this investment in that time we have to give tax to government if your investment is not big it’s just a personal investment to secure future in that case government gave some option scheme or so perks to invest their and this was totally tax free for us.

Do you know the importance about this?

As a salaried person you pay many types of tax already if you save your tax on investment than you grow this money and its can grow your wealth. And this money will help you to build your future planes.

Think you want to save tax than you have to invest in tax free assets do you know if you know than very good otherwise we discuss this, Lets gate start....

We will discuss 7 Investment option and I will explain this clearly and easily so any one can understand easily.

1)      Public Provident fund (PPF)

2)      Employee Provident Fund (EPF)

3)      National Pension System (NPS)

4)      Equity Linked Saving Scheme (ELSS)

5)      Sukanya Samriddhi Yojana (SSY)

6)      Tax free Bonds

7)      Life Insurance & ULIPs

Let’s Discus In depth all Investment option

Public Provident Fund (PPF)

In PPF you can invest in a term of 15 year lock in period and you can extend by 5 years block according to your needs.

This fund gave a good return you can gate a compound interest rate around 7% to 8% this is a pretty good return.

In this investment you gate tax benefit also, you can gate up to 1.5 lakh per year tax benefit under Section 80C  

Interest you earn from it completely tax free and maturity amount also tax free

Also you can gate loan facility from this investment at low interest rate. Maximum loan amount 25% of PPF balance at the end of the preceding year.

Employee Provident Fund (EPF)

Regulatory Body: - Employees’ Provident Fund Organization (EPFO), India

Purpose: - Retirement saving scheme for salaried employees

Criteria: - You have to work in an organization and this organization has to 20 plus working employees

In this scheme (12% or Basic +DA) from salary

Interest rate declare annually declared by EPFO

ELIGEBLITY 

Mandatory for ₹15000/month or less (Basic +DA) when you earn less ₹15000 or less than this is mandatory for you

Optional for those employ who earn more than ₹15000/month

BENEFIT

You will gate a lump sum amount on the time of retirement and also monthly pension after retirement

The employee will gate life insurance coverage

It’s also allow Partial withdraw for some emergency need like Education, Medical Emergencies, Marriage and home loans.

How to tract?

You will gate an EPF UAN (Universal Account Number):- A Unique account number assigned to employees for seamless EFP tracking

TAXATION ON EPF

The main Part how much tax we have to pay after 5 year withdrawals after 5 year there will 0 tax it was tax free, but if you withdraw before 5 year than it will taxable.

Employ contribution eligible for Section 80C tax deduction.

 

National Pension System (NPS)

National Pension System is a retirement saving s scheme by the Government of India. The eligibility criteria is you must be an Indian citizen with age 18 to 70 years. In this scheme there were two types of account Tier I and Tier II, in tier I we gate tax benefit and limited withdrawal and Tier II Non tax benefit but you get flexible withdrawal. There was many investment option also Equity, Debt, Govt. security etc. Fund return will market linked managed by professional fund managers. Time of retirement 60% lump sum (tax free) and 40% to buy annuity (regular income).

Regulated by PFRDA (Pension Fund Regulatory and Development Authority)

 

Equity Linked Saving Scheme (ELSS)

Equity linked shaving scheme is a good tax free investment option. In this scheme you are eligible for tax deduction up to ₹1.5 Lakh under Section 80C. Lock in period , Your invested amount is Locked for 3 years, the shortest among tax saving option. The return depend on stock market performances , non-guaranteed suitable for moderate risk . The return was historically higher than traditional tax saving options like PPF,NSC etc. In this scheme you can invest either lump sum or you can make sip.

Sukanya Samriddhi Yojana (SSY)

If you have a girl child than it was good news for you. If you have a girl child than you can apply, the age of the girl below 10 year must for start this. One account per you can open and maximum 2 account per family is the limit. Minimum deposit per year ₹250 and maximum 1.5 lakh per year deposit period is 15 year from opening date. After 21 years from account opening or upon girl’s marriage after 18 . Interest rate 8.2% per annually. Partial withdrawal allow 50% after age of girl 18 and for Educations. Tax benefit up to ₹1.5 lakh. You can open account in Post office or Authorize bank.

Tax free Bonds

Tax free bonds is also a good invest options for salaried employ and middle class person and even any investor can invest. Interest earned is completely exempt from income tax. It was issued by government entities Backed by companies like  NHAI, IRFC, PFC etc. Fixed interest rate typically ranges from 5% to 7% fixed for the bond’s tenure. Tenure for this type of bond usually 10, 15 or 20 years. Low risk for govt. backing. No TDS will deduct from interest.

Life Insurance & ULIPs

This is a most important insurance product it’s a life cover and a investment in market linked. Returns depends on market performances. Risk level moderate to high in this fund you can chose the fund for investment. Lock in period will be 5 years. You can also gate tax benefit from this. Good for long term investment and life cover.