6 Investments That Offer Tax Free Income In India

In India there are many investments that offer tax free income. Some of these are more long term in nature and have a definite lock-in period. The instruments that we have mentioned have very different features, while some of them are also listed on the exchanges. Here are 6 investments that offer tax free income in India: Government owned companies offer tax free bonds from time to time. The interest income earned from these bonds is tax free. If you wish to buy these bonds, you can do so from the BSE or the NSE, where they are listed. Some of the companies that have these tax free bonds listed include the likes of Rural Electrification Corporation, IRFC, NHAI, HUDCO etc.Advertisement The maturity proceeds from the Public Provident Fund is tax free. What this means is that the interest earned on the PPF is free from tax. The only problem with the PPF is that there is a lock-in period and the tenure of the PPF is 15 years. The other benefit from the PPF is that they offer tax benefits under Sec 80C of the Income Tax Act. You can increase the allocation to your Employees Provident Fund, as the interest earned on the same is tax free.However, you should not withdraw your PF amount before the expiry of 5 years.It is also a good way of saving money for the more long term and building a retirement corpus. Agricultural income earned by a taxpayer in India is exempt under Section 10(1) of the Income Tax Act, 1961.There is a big definition of agricultural income as defined by the Income Tax Act. One needs to study the definition carefully. Hudco Tax Free Bonds are listed on the NSE and BSE.The bonds pay an annual interest, which is exempt from tax.There are various series of bonds that are listed and you can pick and choose, depending on where you get high returns.If you buy at lower rates, your yield is higher, while if you buy at higher rates, your yield tends to be lower. Like HUDCO, the Rural Electrification Bonds are also listed on the exchanges.You can buy the same from the BSE. The bonds have various tenures like 10, 15 and 20 years. Interest on these bonds is paid annually.