Tax-Saving Schemes with  Returns

Beyond NPS: Unlocking the Hidden Gems of Tax-Saving

In the realm of tax-saving, there are paths we often overlook, paths that stretch beyond the familiar NPS. Each one, with its own unique rhythm, calling out to those who dare to listen. While the NPS serves as a strong guide for many, the road is not always for everyone. Let’s walk down the lesser-known paths, discovering the treasures they hold—along with the burdens they carry.

PPF: The Timeless Guardian

The Public Provident Fund (PPF) stands as a guardian, serene and steadfast. It cradles your savings in its arms, offering tax-free returns and the kind of safety that only time can offer. A tranquil river, flowing gently, whispering promises of a stable future.

Pros:

• Tax-Free Returns: The interest and maturity are free from tax, a sweet song of peace.

• Low-Risk: Government-backed, it promises safety when the world feels uncertain.

• Flexible Contributions: You can start with as little as ₹500, slowly building your dream.

Cons:

• Long Lock-In (15 years): A long wait, like the slow growth of a tree, makes it hard to reach the fruits of your labor soon.

• Limited Contribution: With a cap of ₹1.5 lakh, your aspirations may feel bound, unable to soar.

• Partial Withdrawals After 6 Years: The journey is long, and only at the end can you truly touch your treasure.

Tax-Saving FDs: The Quiet Builder

The Tax-Saving Fixed Deposit (FD) is the quiet craftsman, working silently, building your wealth with guaranteed returns. It provides stability, like a solid stone foundation. Yet, beneath the calm surface, you feel the weight of time - slow and steady, but perhaps too modest in its rewards.

Pros:

• Guaranteed Returns: Like a steady heartbeat, it gives you a sense of safety.

• Short Lock-In (5 years): The wait is much shorter compared to others, offering a quicker taste of success.

• Tax Benefits: Under Section 80C, it reduces your tax burden, a small but sweet relief.

Cons:

• Taxable Interest: The interest earned is taxed, stealing a portion of your hard-earned returns.

• Low Returns: The returns are lower compared to other options, leaving you yearning for more.

• Inflation Erosion: The modest growth may not keep pace with inflation, leaving you with less in the end.

ELSS: The Brave Dreamer

ELSS (Equity-Linked Savings Scheme) is the bold dreamer, dancing in the winds of the stock market. It promises high returns-a thrilling ride for those who dare to embrace the storm. With a 3-year lock-in, it offers freedom sooner than most, but the risk is high, like sailing on a turbulent sea.

Pros:

• High Returns: The potential for greater growth, like a star rising in the sky.

• Short Lock-In (3 years): A fleeting moment in the grand scheme of time, offering quicker access to your funds.

• Tax Benefits: Like a bonus, it grants tax deductions under Section 80C.

Cons:

• Market Risk: The waves of the stock market are unpredictable, and you might find yourself caught in a storm.

• No Guaranteed Returns: The future is uncertain, and the returns are not promised-only hoped for.

• Requires Knowledge: To sail these waters, you must understand the market or seek guidance from an expert.

NSC: The Patient Keeper

The National Savings Certificate (NSC) is the patient keeper of your dreams. With fixed interest and a 5-year lock-in, it grows quietly, like a plant that needs time to bloom. But the interest it gives you is taxable, and the waiting feels long for a promise that is simple yet secure.

Pros:

• Fixed Interest: A steady flow, a constant reassurance.

• Tax Benefits: Contributions are tax-deductible under Section 80C.

• Government-Backed: You can rest easy, knowing it’s a safe choice.

Cons:

• Taxable Interest: The interest is taxable, which dulls the shine of its promise.

• Lock-In Period (5 years): The waiting game-long enough to feel the weight, but not long enough to yield the deepest rewards.

• Limited Liquidity: Your hands are tied; you cannot touch it until maturity.

SSY: The Precious Blossom

For a daughter’s future, the Sukanya Samriddhi Yojana (SSY) is a precious bloom. High interest and tax-free returns bring forth a sense of hope—a dream for your child’s tomorrow. But like all things cherished, it takes time—21 years before you see the fruits of this labor.

Pros:

• High Interest: One of the highest returns among tax-saving schemes.

• Tax-Free Returns: Like sunlight that never fades, the interest earned is exempt from tax.

• Encourages a Secure Future for Your Daughter: A gift that promises a bright tomorrow for your little one.

Cons:

• Lock-In Period (21 years): A long wait, as you tend to the garden of her future.

• Limited to a Girl Child: A promise only for those with daughters, leaving others behind.

• Cannot Withdraw Until Marriage: The funds are only accessible under strict conditions, limiting flexibility.

Choose the Path That Speaks to Your Heart

Each tax-saving scheme offers a different melody - some soft and steady, others bold and adventurous. While NPS may be the rhythm that suits some, others may find solace in these quieter, yet powerful, instruments of growth.

The journey of tax-saving is yours to define. Whether you seek safety, bold growth, or quiet patience, each path has its own beauty, its own sacrifice.

So, walk ahead - toward the future that you choose.