so, even though they help you save tax for the current year, the interest income becomes a tax liability in each year till the tenure ends. For example, for someone who pays 30.9 percent tax, the post-tax return on a 5-year bank FD of 7 per cent is 4.8 per cent per annum!They can still be tax-exempt income if even after adding the interest income, the individual's total income remains within the exemption limit as provided by income tax rules. Illustratively, a taxpayer between ages 60-80 earns only interest income from such taxable investments of about Rs 3 lakh a year. The principal invested qualifies for deduction under Section 80C of the Income Tax Act, 1961 and the income in all of them is tax exempt under Section 10.Here are few such tax savers that not only help you save tax but also help you earn tax-free income . Further, the dividends in an equity scheme are tax-free.

Source: Economic Times April 26, 2017 05:16 UTC