Modified : 15 Dec 2018

Investment, Tax Planning and Tax Saving Options


Investment involves selection of the right kind of instruments / schemes with the objective of maximizing returns on investments. The instruments carrying higher risk usually yield higher returns but they may not yield any return or may even result in loss. The decision regarding the type of instrument/investment depends upon the risk taking capabilities of individuals. As the risk taking capability vary from person to person according to their risk taking nature, age, family and other responsibilities/obligations, availability of surplus funds for investment etc., the choice of investment instruments will vary from individual to individual. For example, a retired person may accord priority to invest major portion of his savings in more safe i.e. less risky and regular income yielding investments than in higher income yielding and more risky investments.

Tax Planning

Tax Planning involves making investments with the objective of minimizing the tax liability and maximizing returns. Everyone should try to do tax planning to maximize his income by saving on taxes.

The amount of tax to be paid is related to the source(s) of income viz. income from salary, income from business, income from house property, interest income, income from dividends etc. and the amount and type of investments made. The income from different sources is taxed differently. There are provisions exemption of certain incomes, deductions from aggregate income and from the tax computed on total income. The deductions/exemptions are available on different tax saving instruments/schemes are also different. Therefore, tax planning will involve selection of right kind of instruments/schemes for investing the surplus income/savings keeping in view the source(s) of income, period for investing the funds, type and amount of tax benefits available, liquidity and safety of investments etc.

Exemptions and Relaxations Available:

Tax Saving Options:

Public Provident Fund (PPF) Accounts :

Sukanya Samriddhi Account :

Special Bank Term Deposit Scheme (BTDS)

National Savings Certificates NSCs

Post Office Time Deposit Scheme:

Post Office Senior Citizen Scheme

Life Insurance

Health Insurance:

House Property

Educational Loans

Mutual Funds

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