Income Tax Saving: 5 investment options offering fixed interest rate without stock market volatility

If you are looking to save income tax, there are several tax savers available in the market. Some of them such as NPS, ELSS mutual funds, Ulips are market linked investments but as returns are not fixed in them, many investors find it as one of the many reasons to shun them.

For those looking for fixed interest bearing tax saving investments, without stock market volatility, Public Provident Fund (PPF), Post Office Time Deposit Account (POTD), National Savings Certificates (NSC), Bank 5-year tax saver and Senior Citizens Savings Scheme (SCSC) are some of the popular ones to choose from.

You can invest up to Rs 1.5 lakh a year in them to save tax under Section 80C.

Public Provident Fund
PPF is a 15-year scheme, which can be extended indefinitely in a block of 5 years. It can be opened in a designated post office or a bank branch. It can also be opened online with few banks. PPF suits those investors who do not want volatility in returns akin to equity asset class. However, for long-term goals and especially when the inflation-adjusted target amount is high, it is better to take equity exposure, preferably through equity mutual funds, including ELSS tax saving funds and not solely depend on PPF.

Post Office Time Deposit Account (POTD)
Post Office Time Deposits are available for tenures of 1, 2, 3 and 5 years but it is only the 5-year deposit that enjoys Section 80 C tax benefit.

National Savings Certificates
National Savings Certificates (NSC) is a 5-year scheme with a lump sum amount to deposit. NSC does not offer monthly or yearly interest payout and only has the cumulative option. Further, the interest accruing annually, but deemed to be reinvested, also qualifies for benefit under Section 80C except in the last year.

5-year notified tax saving fixed deposits
For someone who has not exhausted the Section 80C limit of Rs 1.5 lakh in a year and is looking for a debt tax saver, investment in 5-year notified tax-saving fixed deposits in banks are a popular choice. Such deposits come with monthly, quarterly or cumulative interest payout options on the investment made in them.

Senior Citizens’ Saving Scheme
Senior Citizens’ Saving Scheme (SCSS) is probably the first choice of most retirees. SCSS has a five-year tenure, which can be further extended by three years once the scheme matures. The maximum investment limit of SCSS is Rs 15 lakh and one may open more than one account. The scheme is available only to senior citizens or early retirees and can be availed from a post office or a bank by those above age 60. Early retirees can invest in SCSS, provided they do so within one month of receiving their retirement funds.

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