SAVE, WITH THE SMART MOVES

There are multiple investment avenues for you to save tax

In recent years, tax planning has become a buzz word, thanks to increasing advertising by mutual funds, insurance companies and even banks. Growing number of financial planners and a distribution community that continues to expand across India has also helped.

However, financial planning is a tricky affair. As India’s financial services industry has grown exponentially over the last few years, the basket of offerings has also gone up. There are insurance policies, they offer annuity or pension plans; asset management companies also offer pension funds, apart from tax saver mutual funds; the government in recent years has been pushing the national pension system. Then there is the traditional and always favoured public provident fund. It is literally a maze out there, enough for a common taxpayer to get lost in.

So where do you put your hard-earned money to save tax? The answer will depend on how much you can save, your appetite for risk-taking and your patience. For instance, tax saver mutual funds come with market risk, pension funds are good to save for the retirement, but have a long holding period, typically till you retire, a fixed deposit like national savings certificate has shorter duration, but interest rates on deposits have been generally moving southwards. So, what do you do?