Which one of the following is not a tax saving investment?

The Correct Answer is Fixed Deposit (FD).

 Key Points

• Interest income from Fixed Deposits is fully taxable.
• This Tax is Deducted at source by the bank at the time they credit the interest to the account, and not when the FD matures.
• Suppose a person has an FD for 3 years – banks shall deduct TDS at the end of each year. 

Additional Information

Home loan principal repayment:

• Under Section 80C of the Indian Income Tax Act, the principal component of a home loan repaid during a financial year is eligible for tax deduction.
• This deduction can be claimed up to a limit of ₹1.5 lakh. However, other conditions like possession and completion of property need to be met.

Public Provident Fund (PPF)

• The Public Provident Fund is a savings-cum-tax-saving instrument in India, introduced by the National Savings Institute of the Ministry of Finance in 1968.
• A minimum yearly deposit of Rs. 500 is required to open and maintain a PPF account.
• It is a savings-cum-tax-saving instrument in India.
• The maximum amount that can be deposited in a financial year is Rs.1.5 lakh.
•  It is a 15-year scheme, which can be extended indefinitely in block of 5 years.  

Insurance Premium:

• An insurance premium is the amount of money an individual or business pays for an insurance policy. Insurance premiums are paid for policies that cover healthcare, auto, home, and life insurance.
• The life insurance premium should be classified as unearned revenue because against this amount still the company has to render service.  
• Actually, the insurance company will treat each year pro-rata amount of premium received as income.