Salaried Individuals while opting for best suited tax saving tools, often get confused when to invest in a ‘Public Provident Fund (PPF)’ plan or avail a’ Life Insurance Coverage (LIC)’.   It becomes very important to understand the tax implication of investment in either of the two options before making the selection. ‘Public Provident Fund (PPF)’ still holds as one of the best tax saving and investment plan especially for Salaried Individuals because of its three – tier exemptions; a)      Yearly investment is eligible for deduction under Section 80C to the extent of Rs.100000; b)      Interest accruing thereon @ 8% is exempted u/s 10(11) and c)      Total amount withdrawn is also fully exempt from tax. While applying for ‘Life Insurance plans’ look for schemes which not only provide high returns but also maximize your insurance policy. The maximum and minimum limit of investment, it lock-in period and returns depends on the terms and conditions of the cover. The premium paid to keep the insurance policy in force is eligible for deduction under Section 80C to the extent of 20% of the sum insured either in his own name or in the name of spouse or children, subject to the ceiling limit of Rs.100000. Moreover, any sum received under a life insurance policy (including bonus) is wholly exempt from tax u/s 10(10D). However, on maturity any sum received under certain policies are not exempt from tax like amount received under Keyman Insurance Policy etc. Hence it is well understood from taxation point of view that the benefits associated with investment in PPF outruns investment in LIC. But this just one side of the scenario, other factors should be also taken into consideration like the lock in period of the policy, the returns and other terms and conditions as well. Please visit “Tax due-Diligence and Save Taxes” Section on our “Home Page” to read more on save taxes tips. The tax experts at Taxmantra.com have the expertise in handing individual taxation issues, assisting thousands of Individual in India and abroad.