The 'Capital Gains Tax' is determined by various factors, including the fund's type and holding period.
Public Provident Fund (PPF): The interest earned on PPF is completely free from tax. It also qualifies for tax benefits under Section 80C of the Income Tax Act. It is a good tax-saving investment option for retirement.
Voluntary Provident Fund: VPF is a voluntary contribution over and above the EPF. It can only be invested in by salaried EPFO members. VPFs are eligible for tax deductions under Section 80C and it also enjoys exempt-exempt-exempt (EEE) status, which means interest earned and maturity proceeds are tax-exempt.
Tax-Free Bonds: Some government-owned institutions like HUDCO, REC, PFC, Indian Railways Finance Corporation, etc. are allowed to raise money through tax-free bonds. The interest earned from these bonds is completely tax-free in India.
Unit Linked Insurance Plans (ULIPs): ULIPs provide insurance at 10 times the premium paid. Investors will benefit from tax deductions of up to Rs 1.5 lakh under the 80C of income tax provisions. There is also a lock-in period of 5 years and in some cases it could be more.
It is always better to keep money in “sweep-in FD”, a fixed deposit that is linked to your savings account
