I M IN 30 % SLAB SHOULD I INVEST RS 20000 IN 80CCF @ 8%INTERST WHICH IS TAXABLE OR IN MUTUAL FUND FOR LONG TER?



MUTUAL FUND RETURN ARE TAX FREE AND CAN GIVE RETURN AROUND 15% WHICH IS TAX FREE .ON 20000 IN U/S 80CCF I WILL GET TAX REBATE OF AROUND 6100IN INVESTMENT UNDER 80CCF WHICH HAVE THE LOCKING PERIOD OF 5 YRS

I M IN 30 % SLAB SHOULD I INVEST RS 20000 IN 80CCF @ 8%INTERST WHICH IS TAXABLE OR IN MUTUAL FUND FOR LONG TER?
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6 Replies to “I M IN 30 % SLAB SHOULD I INVEST RS 20000 IN 80CCF @ 8%INTERST WHICH IS TAXABLE OR IN MUTUAL FUND FOR LONG TER?”

  1. 80 ccf is over and above 80c limit so it is always recommended to invest in that. also after five year bottom limit will get increase so save it now.

    Tulsi


  2. Investing in mutual fund for long term would be a preferred option since, it will carry a lower tax rate & will possibly give a higher return than fixed income bonds. For the sake of your knowledge I would like to let you know that dividends & even long term gain on mutual funds, which were hitherto exempt will be taxable from next year, but the tax rate would in any case be lower than the slab rate. therefore investing in mutual fund is a good option.


  3. Your mutual fund invest will be covered under Sec 80C, so if your savings is below 1 lakh you invest in Mutual funds. If you have savings more than 1 lakh, then invest in infra bonds to avail rebate under Sec 80CCF. Unless you have extra money in your hand and have savings upto 1 lakh in various funds under sec 80C, infra bonds investment is not advisable for the following reasons. It has longer locking period 5 years, 7 years, returns are limited i.e., 8%, 8.5% or so. Even if you have savings worth 1 lakh try for some Mediclaim policies, which will give you rebate under Sec80D, plus health benefits. Keep the investment in infra bonds as a last option.


  4. When you save 30.9% on tax + cess, you save Rs 6180/-.

    So you already got a return of 30.9% on your investment of 20,000. Further if you invest this 6180 you will get additional returns. The original Rs 20,000 will also fetch you some returns in 5 years.

    Since you are in the 30% bracket you have sufficient money to invest in both, 80CCF & MFs.

    HMT


  5. You can invest in ELSS maximum of one lakh only. In addition to that, can invest in Bonds like
    L&T Infra another 20k, at 8% for 5 years. Tax saving Mutual funds like SBI Tax Gain, Pru Icici Tax saver give better returns for the one lakh. it is tax free too.
    savit






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