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Bharata Finance Posts

How To Open A Public Provident Fund Account

Public Provident Fund is one of the most efficient schemes introduced by the government of India for all citizens of the country. The Public Provident Fund Account is liable for excellent tax benefits as the interest earned on PPF deposits are free from taxes. Then the contributors to PPF Scheme can claim tax deductions and get good returns, making it the most beneficial investment especially from the post-retirement point of view. Given below are all details regarding opening a PPF account.

PPF account

Public Provident Fund Account Requirements

Various regulations guide an investor who wants to open a PPF Account. There are certain eligibility criterions laid down along with documents to be provided to commence the account. To maintain the account there are various requirements to be fulfilled both financially and legally. Further details are specified next.

Eligibility Criteria For PPF Account

Given below are the eligibility rules that stand for individuals interested to open a PPF Account:

  • Only an Indian citizen is allowed to open a PPF account.
  • The starting age for opening a proper PPF account is 18 years. There is no upper limit in age.
  • If a PPF account is to be opened for a Minor (citizen below 18 years) then a deposit limit of 1.5lakhs is set per annum. Also, a minor’s account can be opened only the parents or legal guardian.
  • The account can only be opened by an Indian citizen residing in India. No NRI’s are allowed to open a PPF account. But, if an Indian resident becomes an NRI post opening of the PPF account, they are allowed to continue with the account until the date of maturity.
  • One person is eligible to open only one PPF Account.
  • Post-May 2005, Hindu Undivided Families have been disallowed from opening PPF accounts. If any citizen belonging to HUF is an account holder before 2005, they are allowed to maintain the account till the date of maturity.

Documents Required To Open A PPF Account

Following are the list of documents needed to open a PPF account. All the most updated copies of the documents are required.

  • Updated Passport, Aadhaar UID Card, PAN Card, Rental Documents/Residential Proof, Letter of the Employer, Driving License, Voter ID Card, Statement Records of Bank Accounts, Cheque Signed By the prospective account holder(Signature Proof). Also, keep copies of all these documents.
  • In addition to these documents, you will need recent photographs.
  • A fully filled and approved form for account opening.
  • Also, a Nomination Form has to be filled in case the account holder is naming nominees.
  • Age proof ID like Birth Certificates in the case of Minors.

Note: The bank may ask for other documents on their sole discretion.

How To Open a PPF account?

A PPF account can be opened at either bank, post offices or online. It is an initial low-cost investment account. It can be opened in the denominations of INR 100, with the total annual deposit of minimum INR 500.

How To Open a PPF account: At Banks or Post Office

The government authorised banks and post offices can be contacted for opening a PPF account. A physical copy of the Account Opening Form can be obtained from the bank or post office. This form is to be filled properly and submitted along with the copies of the required documents as specified by the bank or post office. Then, after approval, an initial deposit is to be made to commence the account.

PPF Accounts can be opened in Banks that have been authorised by the government since this scheme is totally monitored by the Government. Also, sole discretion, the government can withdraw the authority from any bank.

How To Open a PPF account Online

A PPF account can be opened online via the website of any government authorised bank or an agent bank that provides services for the authorized banks. The Account Opening form is to be filled online and submitted through the online portal of the bank. A variety of benefits is provided by some authorised banks like connecting the PPF account with the savings account, generating online statements of the financial assets. All fund transfers can be done online. Thus, with the introduction of the online option, more investors are considering it as compared to the traditional methods of physically opening it at banks or post offices.

Tax Saving Options: Where Should You Invest Your Money

Investment for tax saving is something that confuses every individual. A plethora of choices but an inadequacy of information. So here are the list of all investments and their tax benefits that will definitely help you decide further.

tax saving options

ELSS: Equity Linked Savings Scheme

The financial year 2017-2018, brings a new India under demonetisation and various schemes changing the nature of Tax Saving Act. Equity Linked Savings Scheme is a Mutual Fund which is diverse in nature. It is viable for Tax Exemption under Section 80C. It has a lock period of 3 years meaning that no withdrawal can be done from the ELSS account for 3 years.

Under this scheme, all investors will be having a two-way benefit: high returns on the investment and deduction of taxes.  The biggest advantage here is that dividends that are gained under ELSS schemes are exempt from taxes thus the profit returned is high. Also, ELSS has a short lock period enabling the investor to access the amount invested and the returns easily. All in all, ELSS is the best place to invest your money.

ELSS Rating: 10 Star

Read: Mistakes to avoid while investing your money in ELSS

NPS: National Pension Scheme

The National Pension Scheme has been revised and a New Pension Scheme has been introduced for the benefit of private and semi-government employees. Under this scheme, apart from all government employees, the private employees will also receive an annuitized pension amount on investment in NPS. A huge benefit is that an additional deduction of INR 50,000 will be made in taxes for a citizen investing in NPS.

Thus, the tax deduction on contribution to NPS will be 2lakhs rather than the stipulated 1.5lakhs. When compared to ELSS, the lock period is higher and even after retirement, only 40% of the investment can be withdrawn. Also, the returns may not be as high as ELSS dividends. But as far as tax saving is concerned NPS is an excellent scheme.

NPS Rating: 9 star

NPS: Should you invest your money in NPS

ULIP: Unit Linked Insurance Plan

The Unit Linked Insurance Plan, commonly known as ULIP is like an integrated insurance policy that gives the benefits of both an insurance policy and an investment scheme. It is a flexible scheme that enables the investor to switch between diverse options, invest in other linked schemes or surrendering of the policy. ULIP is viable for tax benefits under the section 80C.

Along with that, the returns on the investments are profitable. The only disadvantage is that withdrawal is not possible from a ULIP account till the sum matures. But apart from that, it is a risk-free scheme giving a three-way benefit: tax savings, returns on investment and insurance cover.

ULIP Rating: 8 Star

PPF: Public Provident Fund

The Public Provident Fund is an integrated monetary savings and tax savings account. This scheme aims at providing a flexible saving by allowing investments and good returns along with tax benefits. The PPF account is an attractive investment scheme as the interests on investments are completely exempt from taxes.

Related article:

How To Open A Public Provident Fund Account

The only drawback is that PPF is monitored by the government hence the interest rates may not be as high as private Mutual Funds. Otherwise, it is an excellent option for someone who is building up a long terms savings account for the period after retirement. PPF also allows benefits in taxes for nominees of the primary account holder.

PPF Rating: 8 Star

VPF: Voluntary Provident Fund

The Voluntary Provident Fund is an extended version of the PPF wherein an investor is allowed to add a stipulated value to the provident fund periodically. It is viable for tax deductions under Section 80C and an amount up to 1lakh can be saved under it. An additional benefit of VPF is that it helps an investor increase the financial assets in the provident fund from time to time. The interests gained on VPF investment is not taxable till the interest rates reach 9.5%. So the disadvantage occurs when the interest rate becomes 9.5%. Otherwise, it is an excellent tax saving and investment option.

VPF Rating: 7 Star

Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana is a government scheme introduced by Narendra Modi to empower a girl child and ensure proper education for her. The parents of the girl child investing in this scheme will get tax benefits as per Section 80C. Plus the returns on investment made to this account will be used for funding education expenses for the girl child. The disadvantage of this scheme is that it is gender specific so a large number of people cannot avail it. Also, the returns are sometimes insufficient in fulfilling all requirements. But other than that it is an excellent scheme for both tax saving and providing financial security to the girl child.

Sukanya Samriddi Yojana Rating: 6.5 Star

Senior Citizen Savings Scheme

The Senior Citizens Savings scheme is to support all senior citizens by increasing the return rates on their investments. It is an attractive tax saving scheme but the returns are taxable at source if the interest amount exceeds INR 10,000 per annum. Otherwise, it is an excellent scheme with high return rates specifically designed for senior citizens.

Senior Citizen Savings Scheme Rating: 6 Star

NSCS: National Savings Certificates

The National Savings Certificates, most commonly known as NSCS are a risk-free investment option for all working citizens. The investment in NSCS can be made for 5 years or up to a decade and it generates a fixed income like fixed deposits. An annuitized fixed income is returned on this investment at a rate of interest decided by the government of India. This scheme is viable for tax deductions under Section 80C only if the interest gained from NSCS are shown as income. An annual investment up to INR 1 lakh is to be made for tax savings. So apart from the fact that NSCS ensures tax savings only after a few hassles, it is a good investment option with high returns.

NCSC Rating: 5 Star

Bank FDS: Fixed Deposits

Bank Fixed Deposits are a long term investment schemes with fixed returns on maturity. All schemes under fixed deposits do not qualify for tax deductions. Thus to ensure tax saving through Fixed Deposits, an account known as Tax Saving Fixed Deposit needs to be commenced. These fixed deposited are viable to tax deductions up to 1.5lakhs like other tax saving schemes. Though in the long run, the returns generated will not be as high as ELSS. Also, the withdrawal policy is not flexible but it ensures tax savings and a good lump sum after maturity.

Fixed Deposit Rating: 5 star

Related Post:

5 Reasons You Should Invest In A Fixed Deposit Today

Pension Plans

Pension Plans enable an investor to contribute part of their savings in a pension scheme. This amount matures like recurring deposits and thus generates huge monetary accumulations. Thus good income can be gained from pension plans after retirement. The only disadvantage is that no returns are generated from pension funds till the investor reaches an age of 60. Also, after maturity 2/3rd of the returns are treated as income and are taxable at marginal rates. But initially, this is viable to tax deductions up to 1lakh under Section 80C. Thus pension funds help in tax savings for 1/3rd of the lump sum and provide an excellent accumulation, financially.

Pension Plan Rating: 4 Star

Insurance Policies

The tax deductions are separate for all insurance policies. In the case of life insurance, an individual is liable for tax deductions up to 1.5lakhs. After the death of the insured individual, all proceeds are tax-free. In the case of health insurance, the tax deductions are INR 20,000 for senior citizens and 15,000 otherwise.In case the insured individual is facing a life threatening health condition, all proceeds are tax-free.

Also Read: This is why you should invest in LIC

Thus from the tax saving point of view insurance policies do not have much to offer. But in the long run, insurance is an important necessity.

Insurance Plan Rating: 3 Star

 

Is NPS A Good Investment Plan?

The National Pension Scheme primarily aims at benefiting the employees of private and semi-government organisations. The ones in government sectors were liable to a pension after the retiring age. But the same did not stand for private and semi-government employees. Under the administration of PFRDA (Pension Fund Regulatory And Development Authority), the New Pension Scheme under National Pension Scheme was introduced. This provides annuitized returns to private and semi-government employees on the basis of their application for an NPS account.

Investment in NPS

Benefits of NPS (National Pension Scheme)

NPS is an investment scheme that should be given value. For an employee of a private firm, NPS has multiple benefits:

  • Low Investment Cost: The minimum amount to maintain a Tier-1 account is INR 6000 which makes a minimum INR 500 monthly. Thus the initial principal amount is very less.
  • Tax Benefit Under Section 80C: If an individual invests in a Tier-1 account, he is liable to tax deductions under section 80C of the Tax Framework. Under the new budget, an additional tax exemption of INR 50,000 will be provided for investing in NPS. Apart from that, the usual benefit states that 10% of the salary invested in NPS will stand for the deductions up to 1.5lakhs. Thus a total deduction of taxes is 2lakhs.
  • Flexibility: Opening a Tier-1 account was risky if a case of emergency occurred. This is because the withdrawal of the amount before maturity was taxable. The new flexible NPS states that after retirement 40% of the funds in NPS can be withdrawn without taxation. The remaining 60% will become annuitized for returns.
  • Diversity: NPS provides many diverse investment schemes in the form of EGC investments. E is Equity Investment, G is Government Bonds and C is Constant or Fixed Return Investments. An individual when investing can diversify the principal funds among these three options as per their needs.

Drawbacks of National Pension Scheme

  • Lower Returns Than Other Equities: The Equity Scheme under NPS is comparatively less profitable than the rest of the market. Equity Investment is an investment in stocks that generates returns on the basis of dividends. Thus the return rate is much higher in the market.
  • Withdrawal Is Restricted: The amount invested amount is taxable on withdrawal. Even after the retiring 40% funds withdrawn is not taxable. While it is not a very big disadvantage considering normal situations, but in a case of a risky scenario, this can become very disadvantageous.
  • Low Return Rates On Annuitized Amounts: For being liable to a monthly pension after retirement, a minimum of 40% of the maturity amount needs to be contributed to annuity investments. But the return rates of these investments are very low as compared to other investment schemes.

Is NPS A Good Investment Plan?

In the light of benefits provided by Mutual Funds and Employee Provident Funds (EPF), NPS is not very attractive given its low return rates on annuity investments and the withdrawal policy. To secure their retirement with annuitized funds from the government, then investments should be made in the diverse schemes, EGC. Maximal profit returns from investments can be gained by contributing to a variety of schemes together like NPS, Mutual Funds and EPF. This will help reap benefits from all and excellent returns both in terms of tax deductions and maturity amount.

Why You Should Invest In LIC

Life Insurance Corporation or LIC is the largest and most trustworthy investment policy.  Having great diversity and worth is what makes it gain the confidence of every individual who has invested in it. What makes it the best is that it understands the need of its investors and offers the appropriate policies that cater to that need. Here is why LIC should be the first choice.

LIC policy

LIC Is A Government Backed Policy

LIC was the oldest life insurance policy to be introduced in India. Therefore it gained a lot of trust from the nation making it a government-backed policy. The market of today faces a huge economic reform. In such a scenario a government-backed organisation will be in a more advantageous position than any private insurance company because it will provide better security and cover.

Flexible Organisation

Since it was first introduced LIC has been one of the most flexible life insurance companies. It recognises the demands or various investors based on their role and net-worth. Thus it has framed various different insurance plans according to the needs of its customers. These policies are not very expensive and offer a variety of benefits alongside.

Benefits Provided By Various Plans

LIC has 4 diverse insurance plans that cater to different needs:

  • New Endowment Plan
  • Money Back Plan
  • Jeevan Anand Plan
  • Jeevan Saral Plan

New Endowment Plan provides a strong financial security as it gives very high returns. On the death of the individual insured, the amount returned is 10 times the principal invested. Also, policy assures regular dividends on the principal sum.

Money Back Plan allows the customers to share in the profits of LIC and returns accordingly. A survival benefit is available which pays back 20% of the assured return at the end of 5, 10 and 15 years of investment.

Jeevan Anand Plan is a high return policy and offers a large reversionary amount (amount paid in case of death of the individual invested). Also, it provides risk benefits in case of accidental death of the insured person. Thus it acts like an endowment and life insurance.

Jeevan Saral Plan is like a premium endowment fund with very high returns. A monthly amount is to be invested into this scheme and the reversionary bonus is 250 times the monthly premium. Also, it is a flexible policy which an investor can back out from partially after 3 years. This plan also offers accidental death benefits along with the matured premium amount.

Investing in ELSS: 5 Mistakes to Avoid if you are an ELSS investor

ELSS is one of the best tax saving schemes that has been giving great returns from last few decades. However, a majority of the people who invests in ELSS does not get a good return. There can be many reasons, but mainly they commit five common mistakes which I have listed below. Avoid these mistakes while investing in ELSS, and get a return better than any other tax saving scheme is guaranteed.

ELSS investment scheme

1. Do not invest lump sum in the last three months

As per AMFI data, more than 50 percent inflow in ELSS accounts takes place in the last three months of the financial year, almost half of which comes in the month of March alone. Lump sum investments may not always help. Rather, one should consider systematic investments in SIP. To get better returns, one must consider investing when the markets are low. Plan your investment wisely.

2. Deciding looking at the short term performances

Do not make a mistake that most of the investors do. Do not decide in which ELSS you should invest look at the past few months or 1 year’s performance. This should not be your criteria for choosing the best ELSS to invest on. Rather, look at the past 3 to 5 years performances to decide where to invest. Follow Valueresearch’s website as they take into count many things including stability of the equities before rating them.

3. Are you biased towards Dividend based ELSS schemes?

We sometimes, looking at the dividend given, choose the ELSS schemes. We think, if a company offers more dividend, then our returns will be more. However, this is not always true. When a company pays a dividend, they are paying you a part of their profit which otherwise would have stayed invested. When they give you the money in the form of a dividend, the amount is no longer invested and you do not get any return out of it. You should rather see dividends as another way of profit booking.

So, the advice is: refrain yourself from dividend based ELSS if you are eyeing on a long term investment.

You may now think of investing in dividend reinvesting option. Don’t. Let me tell you why. Every time your dividend is reinvested, the lock-in period of 3 years starts and this keeps happening every single time.

4. Smaller funds = Less Returns

If you think smaller funds never give high yields then you are wrong. If you look at the performance of ELSS in the last ten years, you will notice that the Invesco India Tax Plan has given the maximum benefit. Despite being Asset Under Management value as only 320 Crore INR, this plan has given the best return. However, not many people could get the benefit from this scheme as they refrained themselves from investing in smaller funds.

By now, you may have realized smaller funds can also give you better returns. So do your homework before investing.

5. Lock-in = Maturity

Lock-in period is not your maturity period. So, when the lock-in period is over, do not think of redeeming the amount. Keep investing. You will get profit when you eye on a longer term. For a shorter term, the return may not be as expected.

5 Reasons Why You Should Invest In An Insurance

The future is unsure and the prospect of untoward incidents are many. A practical approach in dealing with life suggests that you should always be prepared for a scenario where a negative event may occur. That preparation is what Insurance is all about. Investing in it may not always alter the negative event, but it will sure help you deal with the unwanted scenario in the best possible manner. So, it is a remedy to the unwanted problems in life.

insurance

Provides Aid To Families In An Event Of Death

Life Insurance is perhaps the most important investment a person should make. In society, an individual is not alone. The dependency of one person on another is how the cycle works.  So the absence of an individual who was relied upon brings not only an immense wave of sadness but also a sense of helplessness. And that is where a Life Insurance helps. In the event of death, whether timely or untimely, if a person has the coverage of Life Insurance, it is what protect’s their family and aids them financially in fighting difficult times. Sometimes in event of death of the sole breadwinner of the family, a Life Insurance is what keeps the other members financially protected. Thus, we see why it is of utmost importance.

Makes Sure That You Can Book A Travel Without Worries

Another Insurance where investment should be made is Travel Insurance. Every one likes to treat themselves with a luxurious vacation. Flights are lengthy and costly, stays are expensive and all related expenses are equally high-priced. In case of sudden cancellation, the losses to be borne are too high, if all of this is not protected by Travel Insurances. For a person belonging to the middle-class on a financial basis, it is difficult to bear such losses in the absence of an Insurance as many cost cuttings need to be done henceforth.

Keeps Your Residential Property Ownership Stable

Real Estate is perhaps the most expensive asset in the market of today. If a person is lucky enough to purchase a residential area, under their own name, they should keep it safe. Investing in Home Insurance will help you financially in case of any loss pertaining to your resident. Thus it is another important Insurance that should be considered as soon as a property is bought under one’s name.

Ensures Stability In Personal And Professional Life

Insurances keeps our personal as well as monetary assets protected. Thus in case of any mishaps it helps retain stability. The important things about investing in an Insurance is that we have options aplenty to keep all our properties safe. Apart from the standard Insurance policies, we can also insure our other business and personal assets. So, stay insured to stay stable.

Helps Maintain Peace Of Mind

Nothing gives us greater peace of mind that to know that we are prepared for the future. Investing in insurances give us just that. Knowing that we will be aided while dealing with every unhappy and uncalled for event in our lives, we can remain stress free.

 

5 Reasons You Should Invest In A Fixed Deposit Today

Fixed Deposit is probably the most well-known method of investing money. With the introduction of many diversified schemes of investment, many have lost their faith in the concept of Fixed Deposit. But even today, they are probably the best way to invest money for a long term period. If you ask why? Here are 5 reasons.

Fixed Deposit

The Rate Of Interest Is Fixed

There may be inflation and deflation, changes in income tax rates and demonetisation, but fixed deposits depend on neither of the factors. The rate of interest is fixed and therefore the monetary returns remain same despite market rates. This is where the fixed deposit is advantageous over other schemes as the rest of the schemes have variable return rates which may fall in the scenario of an economic crisis.

Flexibility In Duration For Maturity

The duration of the fixed deposit amount to mature can be decided by the investing customer. The time span ranges from a week to two decades. Thus according to the comfort of the beneficiary, the fixed deposit account can be started.

Advantageous For Senior Citizens

For the senior citizens fixed deposits are the most beneficial option. This is because they get higher rates of interest as account holders. Also, they do not have to pay any taxes till their matured fixed deposit amount is in the lowest tax slab.

There Are Schemes For Saving Tax

When investing our money, we do not like to put all of it into the same investment scheme. Here Fixed Deposit provides you with the flexibility of investing in a different scheme under it. There are certain fixed deposits known as Tax Saving FD’s with longer maturity period. In these accounts, a principle amount can be invested and locked for a duration of 5 years. These are the stringent kinds of saving accounts that will not let you debit any amount of money until maturity.

Fast Liquidity Of Monetary Assets

The liquidity of assets means the ability of a financial investment to be converted into cash. In the case of Fixed Deposit, this provision is given to the account holder. Thus during an emergency, the money can be withdrawn from the FD before maturity period. This kind of flexibility is important in an economy where many variations are taking place at once. Therefore, the value of fixed deposit stands even today.

5 Reasons Why You Should Invest In Mutual Funds Today

Financial investment is an issue that never ceases to worry an individual. It plays a valuable role in the management of finances. We have options galore, but we never seem to find the solution we are looking for. In this scenario, it is best to consider what majority of financial advisors suggest: Mutual Funds. Mutual funds are perhaps the most flexible investment option, returning benefits that are more favorable than other investment deals. Here are 5 reasons why you should invest in mutual funds today.

mutual funds investment

It Will Be Well-Adjusted With Union Budget 2017 And The GST Bill

Union Budget 2017 is going for a complete economic reform in the country as far as taxation, monetary transactions and market values are concerned. So we need the most flexible option for financial investments. Mutual funds give us exactly that. It is an inflation and deflation adjusting scheme that will ensure that our net asset worth never falls irrespective of the market scenario. With GST bill being introduced there will be a huge economic deflation and inflation in the market prices simultaneously. In this potential market chaos, it is very necessary to have a well-adjusted investment option. Since there are many schemes under mutual funds, deflation will mean a certain amount can be withdrawn giving maximal returns and inflation will mean that a certain amount will be saved in mutual funds which can be withdrawn later with better returns. Thus it is a very flexible option.

Will Increase Ability To Purchase Valuable Assets Like Real Estate

One of the most potential effects of demonetisation and the Union Budget 2017 will be seen in real estate. Where prices were multiplying every year, there will be a major fall. But this fall will only last for the initial few years, so investment in mutual funds today is very important. With a scheme that ensures potentially high return rates, and where money can be withdrawn any time based on the net value available in the account, the purchase of real estate will become much easier. And today real estate is the trending way to increase your net worth in the market.

Income Tax Slab Rates Will Be Broadened So More Money Can Be Invested

“The more you invest, the better is your return” is the policy followed by mutual funds. Also for an emergency situation, it has various flexible schemes under it so that you can divide your monetary assets and invest them in separate schemes. Now with the income tax slab rates being broadened with the introduction of Union Budget 2017, there will be more money at the disposal of the higher earning sections of the society. Thus investing in different schemes will become easier. So, why put all your eggs in one basket? Go for Mutual Funds and invest your money smartly.

Initial Investment Amount Is Low

The most advantageous factor about Mutual Funds is that it is an investment everybody can afford. With demonetisation, India is making its economy a platform for cashless transactions. But the small-scale investors in India will go through a huge setback. They are financially weaker and sometimes are not familiar with the cashless procedure. Mutual Funds provide an option of investing a very low amount of money initially to make an account. And it is totally open to investment via cash.

Complete Transparency In Financial Transactions

The financial transactions in case of mutual funds are taken care by expert professionals and ensure complete transparency as the details are updated and sent to the beneficiary regularly. It also clearly states how the money invested is generating returns and what is the net worth of different schemes, in case a withdrawal is considered.

Where should you invest your money in 2017 for best returns

Are you a risk taker? How good are you at taking a risk? How much loss can you bear? Or, do you like to play safe? What is your age? Based on the answers to these questions, we would be able to tell where and how you should invest your money in 2017.

Generally speaking, you can invest your money in the following way:

Invest in savings

The first most thing you should invest your money is in savings. You should atleast have 1.5 lakh in your bank account for any emergency needs.

Invest in land

Investing in land always has given unmatchable profits. Even today, post demonetization, the real estate market is still a gold mine for many investors. The land price has increased at an enormous pace, and it is expected to follow the same trend. Real estate is one such sector that will continue to grow exponentially from here on.

Invest in FD

Want to play safe? Invest in a Fixed deposit. Fixed deposit is the best-assured investment plan. Nothing beats fixed deposits when you want secured interests for longer terms. The best part about FD is that you will never be in loss. However, with the development of the country, the interest rate would keep on decreasing and will be lower than the current rate. You can invest 15 percent of your money in FD.

Also Read: Why you should invest in Fixed Deposit

Start SIP

Have you started investing in SIPs? If not, then start today. Keep long-term view in mind. If you are below 30, you can start 2-3 ELSS. The best thing about ELSS is that you will be able to save tax since it comes under section 80C of income tax act.

Also Read: Avoid these 5 mistakes when investing in ELSS

Invest in Share Market

This is the best way to earn without paying taxes on the profit. As of now, you need not pay taxes on the profit you are making, provided you sell your shares after one year from the date of purchase. Plus equity market has grown a lot in the last 20 years, as it continuous to do so even today. If you invest in right stocks, there are huge chances of making a good amount of money. But for that, you may need a good knowledge of stock market. Research, learn and invest. Please note, investing in stock market is risky. If you invest in wrong companies, you may end up losing all your money in no time. It is always better to consult a certified investor and take suggestions from him/her before investing.

Invest in Mutual Fund

Don’t you understand stock market? Or if you do not have much time to keep track of the market on a regular basis, you may invest in Mutual funds. Mutual funds are taken care of by investment bankers who understand the market; they buy shares of companies after doing comprehensive research. But again, mutual funds are risky too. Chances are there that you may lose your money. So, you must read the scheme related documents carefully before investing.

Also Read: Why you should invest in Mutual Funds

Invest in LIC

Did you invest in LIC? If not, you should invest some part of your earnings. And, investing in LIC falls under section 80C of Tax, so you don’t need to pay tax (subjected to terms and conditions). It is one of the mostly used Tax saving schemes in India

Invest in Health Insurance

Get a health insurance today. With mere 10000 INR a year, you can start a health insurance in India. If not used, you may lose the entire money. But if you think in longer perspective, you can save a lot with a proper health insurance policy.

Public Provident Fund

Public Provident Fund is one among the low-risk investment options that ensure excellent returns in the long run. It is completely tax-free and liable to tax deductions under the section 80C of Income Tax Act. The only disadvantage is that in PPF the amount gets locked up to 15 years after which it matures. But from the retirement point of view this will give good annuitized returns. Also since PPF is a government managed scheme the unpredictable trends of market rates post demonetisation are not applicable. Thus this scheme also offers a certain level of stability.

How Taxation Helps in the Growth of a Country ( like India )

Economic growth is categorized by the supply chain of the financial division, the measurement being GDP or Gross Domestic Product. We all know without setting goals nothing can be achieved. So there is a scale in case of GDP. There is a potential or desired GDP calculated as per the economic scenario, and there is the actual GDP which is the turnover in practice. Our economy runs to bridge the gap between the potential and the actual GDP. Estimating a potential GDP is what imbibes focus and action to achieve it. That is where taxation comes in. Taxation involves the citizens of India paying the government a fixed amount in accordance to their earnings as PF and gratuity that is income tax in layman language. Taxation plays the essential role in economic growth and is the primary reason why the economy of India is growing and striving with increased GDP rates at the time of world recession.

Income Taxes And Growth

Taxation can make or break an economic system, so a lot of attention is given to it. Proper taxation is the primary necessity which will satisfy both citizens and the growth scale which the government is aiming at. Proper taxation involves a two-fold advantage. It creates a kind of economy termed as “slack-economy”.  This is an economy where the demand increases at a steady rate due to the mass scaleability by the citizens to meet the supply. Thus there is a synchronization in the demand and supply chain. This synchronization is what raises the GDP. Therefore with taxation it is crystal clear how revenue generation is working for the growth of the country.

GST And Economic Growth

Another angle of taxation has been recently introduced. It is the GST or the Goods And Services Tax. GST aims at creating a unified market. The GST is one common tax rate that will be applied to individual products being sold in the market. It will be independent of state-level VAT(Value Added Tax), state level sales tax and state level service and duty taxes. A central tax called GST will be imposed on all goods being produced and imported to India. This GST will be agreed upon by all state government and will be the autonomous tax throughout the country. It should be noted that GST will not negatively affect capital, corporate and income tax figures. It simply aims at creating a broader, simpler and unified economy. The entire concept has been designed to improve the ratio of tax to GDP by equalizing it all over the country. This concept of a unified market will go a long run as far as economic growth is concerned, as studies suggest that with the introduction of GST there will be an average increase in growth rate by 1.3%.

To summarize the benefits of taxation: Taxes are being used to manufacture products. Proper taxation is raising the demand for the product. Meanwhile, there is an equivalent supply to meet the demand. Therefore both in turn function to raise the revenue. The result is a steady growth of the country.