Tax Saving Mutual Funds:

Equity Linked Saving Scheme (ELSS) is probably the most sought after tax saving schemes in the country, which also offers decent returns. The scheme is locked for at least 3 years, on which you can avoid tax up to 1 lakh in a fiscal year 2016-15 with an average interest return of 17 percent. Further, ELSS starts with minimum 500 a month and returns received after a year are tax free.

Tax Saving Deposits:

Tax Saving Deposits are a bit unlike the normal Fixed Deposits (FD) as banks do not offer any overdraft facility on these fixed deposit investments. Under these saving deposits an investor can avoid up to 1, 00, 000 taxes in a fiscal under Section 80C of the Income Tax Act. Nevertheless as per the investor’s income tax slab, interests earned by these saving deposits are taxable. Tax Saving Fixed Deposits come with a 5 year lock-in period with an average return ranging from 8 percent to 9percent per annum. Similar to that of fixed deposits, tax saving deposits also offers returns ranging from 8 to 9 percent per annum.

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