What are the tax implications of long-term savings?

The tax implications of longterm savings in India depend on the type of investment and the duration of the investment.

For example, longterm investments in taxsaving instruments such as Public Provident Fund (PPF), EquityLinked Saving Scheme (ELSS), National Pension Scheme (NPS), and taxsaving fixed deposits are eligible for tax deductions under Section 80C of the Income Tax Act, 1961. The interest earned on taxsaving instruments such as PPF is also taxfree. However, withdrawals before the completion of the lockin period attract penalties and taxes.

Longterm capital gains on equity investments are taxed at 10% without indexation if the gains exceed Rs. 1 lakh in a financial year. Longterm capital gains on debt funds and fixed deposits are taxed at 20% with indexation.

It is advisable to consult with a tax professional to understand the tax implications of longterm savings and investments based on your specific financial situation.