Savings bank account: This is an interest bearing deposit account which provides an interest rate, the bank that the account is held in may charge fees if you don’t maintain a certain credit balance monthly and they can also limit the number of monthly withdrawals. This is one of the most common investment. There is no tax on interest earned up to the thousand rupees but after that amount there is a tax is added to the income and taxed at income tax slab rates, there is no TDS.
Bank Fixed Deposits: This is a fixed deposit where a certain amount is deposited and kept for a period of time and Interest is calculated as per the tenure of the account and the time period. The Interest earned is taxed according to the income tax slab rates, interest received from bank or post office up to fifty thousand is tax exempt, a TDS of 10% is deducted if the annual interest is more than then thousand and fifty thousand in case of senior, if no PAN is linked then the TDS is 20%.
Public Provident Fund: This investment has a good interest rate, a fixed tenure of 15 years which can be extended for a period of 5 years each time and the maximum amount that you can deposit every year is 1.5 lakhs. Any interest, deposit and withdrawals are exempt of tax.
Senior Citizen Saving Scheme (SCSS): Suited for the senior citizens, it provides a steady monthly income, the interest rates are high and you can deposit a maximum of 15 lakhs. The interest is taxed at marginal income tax rates and a TDS of 10% is deducted if the annual interest is more than 50,000 rupees.
National Pension Systems (NPS): This is an investment plan to receive pension during the investor’s retirement, your contribution is invested in assets such as equity, bonds, governmental securities and more either by your choice or by your age, the scheme mature when the investor is 60 years old and the lock in period depends on the investor’s age. 20% of the maturity corpus is taxed at income tax slab, 40% is tax exempt and the monthly pay is taxable per your income.
Gold Bonds: This is when people buy Sovereign gold bonds the price of gold keeps changing. Interest received thought binds is taxed at marginal rates, bonds that mature have no tax on capital gains, investment held for more than 3 years but not yet matured are taxed at 20% after indexation, Short term capital gains are taxed at marginal rates.
Gold: This is when people buy gold in physical form like jewellery, bullions, coins etc. The tax is similar to Gold Bonds where 20% is taxed for long term capital gains and short term gains are added to the income and taxed at marginal rates.
Unit Linked Insurance Plans (ULIP): Common investment which acts as both insurance and investment, has a lock in period of 5 years, the maturity amount is tax free only if the premium paid is less than 10% of the amount, after 5 years early partial withdrawals is tax free, TDS is 2% if the total receipts is more than 1 lakhs.
Equity oriented mutual Fund Schemes: Type of schemes where you invest at least 65% of the scheme corpus in stocks of companies. Gains from investment held more than 1 year are long term capital gains and taxed 10.4%, short term capital gains are taxed at 15.6%, Dividends received are exempt of tax, 11.648% of DDT is deducted before payment.
Recurrent Deposit: In this type of a fixed amount is deposited every month for a time period in the account, it shares a similar tax and TDS structure as a Fixed Deposit.