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Mint
a day ago
- Business
- Mint
Top 5 income tax saving options with low or no lock-in periods
As the date of income tax submission nears, taxpayers across the country are actively seeking ways to bring down their taxable income without locking in their funds for years. While many popular investment instruments such as Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS) among others require long term commitments, several provide quick liquidity, lower risk and efficient Section 80C or other related deductions, thus making them ideal for those aspiring to prioritise financial flexibility. Keeping the same factors in mind below are five tax saving options that investors can avail without decadal or very long lock in periods and ensure that they are able to save money smartly. Several banking institutions provide 5 year tax saving fixed deposits (FDs) under Section 80C. Given these fixed deposits do have a five year lock in period, still they also provide premature liquidity in emergencies through a personal loan or overdraft, unlike PPF or NPS. Do keep in mind, the interest earned on such deposits is taxable, but the principal invested qualifies for deduction up to ₹ 1.5 lakh. Health insurance continues to be a reputable tax saving recommendation by banking institutions and financial advisors. Premiums of up to ₹ 25,000 ( ₹ 50,000 in case of senior citizens) are deductible under Section 80D. It is also important to note that there is no lock in and deductions can be claimed every year upon renewal, making it one of the most lucrative and flexible options. For salaried individuals, all contributions made to the Employee Provident Fund (EPF) automatically qualify for Section 80C deductions. Though EPF has a retirement oriented vision and structure, still partial withdrawals are permitted for marriage, education, home ownership and medical emergencies such as serious surgeries and procedures. Thus providing partial liquidity without breaking the investment. The repayment of home loan principal amount qualifies under Section 80C. The interest up to ₹ 2 lakhs is deductible under Section 24(b). There's no fixed lock in and deductions can be claimed yearly throughout the tenure of the home loan. It remains one of the most utilised tax saving strategies for home owners. National Pension System (NPS) provides deductions under Section 80CCD(1B) of up to ₹ 50,000 over and above the deduction provided under Section 80C. Though tier I is long term, tier II accounts offer flexible withdrawals. Do keep in mind that tier II is tax exempt only for government employees. Withdrawal of partial amounts are also permitted after three years under specific terms and conditions. Disclaimer: This article is for informational purposes only and should not be considered financial or tax advice. Please consult a qualified tax advisor or financial planner before making any investment or tax-saving decisions.
Time of India
5 days ago
- Business
- Time of India
ELSS funds: Go-to scheme for tax saving loses traction as new tax regime picks favour; Rs 1,600 crore outflows in Q1 FY26
Once a go-to choice for tax-saving investments, equity-linked savings schemes (ELSS) are slowly slipping off investors' radar. More taxpayers are pulling out of the ELSS as they are switching to a new tax regime, which provides no tax benefits under section 80C, according to an ET report. Data for the first quarter of FY26 reveals net outflows of Rs 1,616 crore from ELSS funds, indicating a drying up of fresh inflows and increasing withdrawals from investors whose three-year mandatory lock-in period has ended. Over the past 12 months, ELSS schemes managed a modest net inflow of Rs 535 crore, against the Rs 56,309 crore that poured into the flexicap category during the same period. "Many taxpayers have switched or are switching to the new tax regime, which is now very much attractive," Gautam Nayak, partner at CNK and Associates was quoted as saying. "Since there are no tax benefits available under Section 80C, these investors would not want to invest in ELSS schemes and lock in their investments for 3 years." Why did people prefer ELSS earlier? Traditionally, ELSS was favoured for offering a shorter lock-in compared to other tax-saving products like Public Provident Fund (PPF), National Savings Certificates (NSC), and five-year tax-saving fixed deposits. Being equity-oriented, it also offered superior returns. Under the old tax regime, investors could invest up to Rs 1.5 lakh annually in ELSS and claim deductions under Section 80C. But the appeal seems to be fading over time. Since the past year, ELSS has registered the slowest growth among equity funds, with assets under management (AUM) rising just 6.9%, from Rs 2.33 lakh crore to Rs 2.49 lakh crore. In contrast, total equity scheme AUM grew by nearly 22%, from Rs 26.82 lakh crore to Rs 32.69 lakh crore. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
News18
5 days ago
- Business
- News18
PPF, Sukanya Accounts May Be Frozen After Maturity. Check What You Must Do In Time
Last Updated: Accounts that are not extended for reinvestment or closed within three years of maturity will be frozen, as per the advisory, restricting any further access or transactions The Postal Department has issued an important advisory for investors in popular small savings schemes like the Sukanya Samriddhi Yojana, Public Provident Fund (PPF), National Savings Scheme, and the Senior Citizen Savings Scheme. The department has warned that discrepancies or errors in managing these accounts could lead to them being frozen, restricting all withdrawals and transactions until the issues are resolved. The advisory highlights that accounts which have not been extended for reinvestment or closed within three years of maturity will be at risk. If three years have passed since the maturity date and no action has been taken, the department will freeze these accounts. Consequently, account holders will be unable to access their funds. This measure is designed to protect accounts from fraudulent activities. The Postal Department states that inactive accounts are vulnerable to scams, and freezing them is a preventive step to safeguard investors' money from illegal withdrawals. The department stated that this process will now be carried out twice a year to safeguard investors' hard-earned money. Investors in small savings schemes should note that within three years of maturity, they must either withdraw the funds or reinvest them to avoid complications. The accounts under scrutiny include PPF, Sukanya Yojana, NSC, RD, fixed deposits, monthly income schemes, Kisan Vikas Patra, and the Senior Citizen Savings Scheme. Once frozen, these accounts will be inaccessible for any transactions, including online transfers. How Can The Account Be Reactivated? For reactivating a frozen account, the Postal Department has provided a clear procedure. Account holders must visit the postal office and submit their account passbook, KYC documents, and account closure form SB 7A. The account will then be closed, and the remaining balance will be handed over to the account holder. Account freezing will be carried out twice a year, on January 1 and July 1, as per the new schedule. The entire freezing process will be completed within 15 days. view comments First Published: July 18, 2025, 16:21 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Economic Times
5 days ago
- Business
- Economic Times
Is ELSS losing its appeal in the new tax regime?
Getty Images The equity scheme assets grew by nearly 22% from ₹26.82 lakh crore to ₹32.69 lakh crore in this period. Mumbai: Is it the beginning of a slow death for equity-linked savings scheme (ELSS), the once-popular tax-saving offering by mutual funds? With several investors shifting to the new tax regime, the demand for this equity scheme category is dwindling as fresh money is drying up, while old-timers are pulling money out after the three-year mandatory lock-in. ELSS has seen net outflows of ₹1,616 crore in the first quarter FY26. Over the last 12 months, the ELSS category has seen net inflows of ₹535 crore, compared to flows into the flexicap category worth ₹56,309 crore. "Many taxpayers have switched or are switching to the new tax regime, which is now very much attractive," says Gautam Nayak, partner, CNK and Associates. "Since there are no tax benefits available under Section 80C, these investors would not want to invest in ELSS schemes and lock in their investments for 3 years." ELSS was a popular category for individuals as it had the lowest lock-in period compared to comparable tax-saving options such as public provident fund (PPF), national savings certificates (NSC) and five-year tax-saving fixed deposits, among others. Moreover, its returns have been superior because it's an equity-oriented product. Investors could park up to ₹1.5 lakh in a financial year and get tax savings under Section 80C of the Income Tax Act in the old tax regime. However, in the new tax regime, this benefit is not the last year, the ELSS category has seen the slowest growth, with assets under management moving up from ₹2.33 lakh crore to ₹2.49 lakh crore-a rise of 6.9%. The equity scheme assets grew by nearly 22% from ₹26.82 lakh crore to ₹32.69 lakh crore in this period.
News18
6 days ago
- Business
- News18
From PPF To Gold: Smart, Low-Risk Ways To Build Wealth Over Time
Last Updated: Low-risk, high-return investments like PPF and gold offer salaried employees steady growth and peace of mind. For salaried employees, building long-term wealth is key to a financially secure future. They can choose from a range of investment tools to build their retirement corpus based on risk appetite and target. While some investments are high-risk, there are also low-risk investment options that offer higher returns than fixed deposits and give you peace of mind. Products like public provident funds, gold, etc come with steady and higher returns than FDs. Moreover, they are lower risk than investments like equations which are very volatile. In any case, starting investments as early as possible is one of the best gifts one can give themselves. Time is an important factor in multiplication and ensures that you benefit from the power of compounding. With this in mind, here are some low-risk investment options that salaried employees can benefit from: PPF (Public Provident Fund): PPF is a long-term, government-backed savings scheme with a 15-year lock-in. In PPF, not just contributions but interest earned and maturity corpus are also tax-free. Currently, the government offers 7.1 per cent returns in this scheme, which is reviewed periodically. PF (Provident Fund): Employees' Provident Fund (EPF) is a retirement benefit scheme for salaried individuals. It earns tax-free interest and is managed by EPFO, currently offering 8.25 per cent p.a. A portion of an employee's monthly salary is contributed by the employee and a similar amount is matched by the employer towards PF. Gold: Gold is a traditional, trusted investment in India. It is considered a hedge against inflation and currency fluctuations. Traditionally, god has offered 10 per cent annual returns and adds stability and diversification to an investment portfolio. Arbitrage Mutual Funds: Arbitrage funds profit from price differences in equity and derivatives markets. One of the lowest risk mutual funds, these are ideal for conservative investors seeking short-to medium-term parking of funds. Many arbitrage funds have offered at least 8 per cent returns in the last year. RBI savings bonds: These bonds have been introduced by the government, open to Indian residents, HUFs, charitable institutions, and universities. These bonds are available through designated bank branches and Stock Holding Corporation of India Ltd. They don't have an upper investment limit and mature in six years with an 8 per cent annual interest, paid half-yearly. Corporate bonds: These moderate-risk investment tools are debt instruments issued by companies to raise capital. Typically, they offer higher returns than government securities but carry credit risk. view comments Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
