Tax savings Instruments

Ø      Additional taxable Income Rs 60,000

Ø      Rate of return 8.5%

Ø      Total amount after 15 years compounded at 8.5% Rs 2,03,984

Non- Tax savings Instruments

Ø      Additional taxable Income Rs 60,000

Ø      Tax at 30% of Total Income Rs 18,000

Ø      Net income after tax Rs 42,000

Ø      Rate of return 15%

Ø      Total amount after 15 years compounded at 15% = Rs 3,41,756

Net wealth destroyed

Ø      Rs 3,41,756  -- Rs 2,03,984 = Rs 1,37,720

• The rate of return of 8.5% is available only with the Public Provident Fund
• If India grows at 12% nominal stocks should yield north of 15%
• Empirically the returns of the Bse Index have been of close to 20% since inception.

ELSS is the best option it saves tax and is an equity instrument.