Tax Saving FDs

Liquidity: Fixed Deposits have a lock-in period of 5 years
Rate of Interest: Interest rate across different banks
Tax Treatment: Interest earned is taxable.

Public Provident Fund(PPF)

Liquidity: Lock-in period of 15 years, can be further extended by 5 years
Partial withdrawals allowed after 7 years
Rate of Interest: Currently is 7.1% p.a.
Tax Treatment: Interest earned is tax-free.

Employee Provident Fund(EPF)

Liquidity: Can withdraw PF balance after 2 months of leaving the job and does not take up employment within two months with an employer covered by PF Act
Rate of Interest: The interest rate on the EPF is 8.5% for the financial year 2020-21
Tax Treatment: Entire PF balance (including interest) is tax-free if withdrawn after continuous service of 5 years

Equity Linked Saving Scheme

Invests in equity shares, hence no return is guaranteed
Liquidity: Can be redeemed 3 years after investments
Tax Treatment: Carries Long Term Capital Gains Tax. If gains of more than 1 lakh are redeemed in a year,10% tax needs to be paid

National Pension Scheme

Eligibility: People between the age of 18-65
Liquidity: Generally locked in till 60yrs
Premature exit allowed
Tax Treatment: Up to 60% of corpus tax-free. You are mandatorily required to use the remaining 40% of your corpus to buy an annuity.

Unit linked Insurance Plans

Eligibility: An investor can buy ULIP for self/spouse/ child
Liquidity: Interest rate varies as it is market-linked
Tax Treatment: Investment and withdrawals & maturity amount are tax-free

Sukanya Samriddhi Yojana

Eligibility: Parents can open an account for girl child till the age of 10
Liquidity: The scheme has a maximum lock-in period of 21 years
Rate of Interest:7.6% currently
Tax Treatment: Investment and withdrawals & maturity amount are tax-free

Senior citizen savings scheme

Eligibility: Senior citizens aged above 60 years
Liquidity: The lock-in period for this scheme is five years.
Premature closure allowed after one year with a penalty of 1.5%. After two years, investors can withdraw with a penalty of 1%
interest rate: 7.4% currently and revised every quarter
Tax Treatment: Interest earned is taxable.

National Savings Certificate

The National Savings Certificate is a fixed income investment scheme that you can open with any post office
Interest rate: Currently 6.8% p.a., which the government revises every quarter
Maturity period: The maturity period is 5 years.

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