NSC vs PPF vs FD vs ELSS: Best options for last minute tax saving before March 31 – Financial Express

Equity Linked Saving Scheme is one of the most lucrative tax-saving options for all taxpayers due to its lower lock-in period and high returns.

March 31st is just round the corner and it is your last time to make the desired investments and save tax for the Financial Year 2017-18. If you have still not done it or are still wondering how and where to invest, then you need to remember that time is running fast and you have to make a quick move to save tax. Given below are some of the best investment options which may be considered for investment:

ELSS Funds

Equity Linked Saving Scheme is one of the most lucrative tax-saving options for all taxpayers due to its lower lock-in period and high returns. You get a deduction under Section 80C when you purchase tax-saver ELSS. In addition to this, at the time of redemption (in form of long-term capital gains), returns from equity funds are also tax free under Section 10(38). However, “as per the proposals of the Budget 2018, LTCG exceeding Rs 1 lakh will be taxable from FY2018-19. In order to avail the tax-saving benefit under Section 80C, you are required to hold for a minimum 3 years. However, the funds can be held for as long as required as there is no compulsion to redeem the funds after 3 years. Further, it is advisable to keep it for a long term for better returns. Since ELSS is a risky option, so while opting for it consider your risk appetite as well,” says CA Abhishek Soni, Founder, tax2win.in.


National Pension Scheme is a government-sponsored scheme. It is, therefore, a safe option to invest in. This pension scheme enables one to save taxes under Section 80C even after exhausting the limit of Rs 1,50,000, i.e. Rs. 50,000 extra deduction is available if you invest in NPS. Another advantage of investing in NPS is that the contributor is assured a minimum amount of pension irrespective of his contribution. There is no specific interest rate that’s set for the NPS scheme as it picks and choose different investment options. However, NPS has earned interest rates of up to 12% to 14% in recent times depending on the scheme chosen.

Public Provident Fund

PPP is a long-term investment plan which provides lucrative tax-free interest. In PPF your money remains locked in for 15 years. However, it provides some options of early withdrawal also. The best thing is that your PPF investments and withdrawals are exempt from tax. Moreover, the interest earned as well as the corpus received at the time of its maturity are also exempt from tax.

5-Year FD (Time Deposit)

It is one of the oldest and the safest methods to save tax. Interest earned through your FDs is added to your income and is considered as taxable. However, for the investment amount you get the benefit of tax exemption under Section 80C. “To get the tax exemption benefit under Section 80C, bank FDs should be of 5 years, i.e. the FD of 1 year or 2 years won’t give you tax benefits. Currently the returns vary from 6% to 7.7%, depending upon the banks,” says Soni.


Securing the health of your family along with tax benefits is like the icing on the cake. It is good for the health of your family as well as your pocket.

“Under Section 80D, the limit for deduction on the medical premium of yourself, your spouse and your dependent kids is Rs 25000 (30,000 for senior citizen) and for your parents also it’s Rs 25,000 (30,000 for senior citizen). However, as per the proposals of the Budget 2018, the deduction allowed under Section 80D for health insurance for senior citizens has been enhanced to Rs 50,000. So from FY18-19, a maximum deduction of Rs 50,000 can be claimed to secure the health for senior citizens,” says Soni.

Life insurance is also a good option to save tax and has twin benefits i.e. saving the life and tax both. Its scope is widen in comparison to health insurance as it covers not only the dependent children but independent ones as well.


This is one of the most popular tax-saving instruments for small taxpayers. This is also a government instrument available at post offices. “You get deduction under Section 80C of the Income Tax Act and the interest earned on NSC is taxable under the head ‘Income from other sources’. There is no maximum limit for investment in NSC. However, minimum 100 needs to be invested. Reinvestment of NSC interest is also eligible for the deduction u/s 80C,” says Soni.

NSC is for a much shorter duration than the Public Provident Fund, where your money is locked in for 15 years. Here your money stays invested for five years from the date of investment.

In addition to investing in these tax-saving options, make sure you submit the home loan interest certificate & tax-saving expenses and investment proofs to your employer to save as much tax as possible.

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