Tax saving Investments is one of the most hot topic of every Indians since it helps to save money.Here are the Top 5 Tax saving Investments in India.You can read more articles at BankQnA
Public Provident Fund (PPF): The Public Provident Fund (PPF) is one of the best tax saving instruments under section 80C, sponsored by the Government of India. However, PPF comes with a mandatory 15-year lockout period.
The PPF interest rate obtained in this tax saving instrument is announced by the government each quarter and remains fixed during the given period.
A minimum of Rs.500/- & a maximum of Rs. 1.5 Lakhs can be invested in a PPF account in a financial year, through a lump sum or monthly investments. The entire amount is tax-exempt, making it one of the best tax-saving investments under Section 80C. Any interest earned on the amount of an investment is also not considered for tax calculations.
Equity Linked Savings Schemes (ELSS): The Equity Linked Savings Scheme (ELSS) is one of the most popular market investment tools among investors with the primary goal of saving taxes.It’s one of the best ways to save taxes under section 80C as well as make substantial profits by taking advantage of the market.
ELSS tax savings funds invest at least 80% of the total portfolio in equities, providing the highest return of any similar instrument available on the market. This scheme comes with a mandatory lock-in period of three years on an investment amount.
Under section 80C, the following provisions are established to ensure a substantial tax reduction on funds related to the ELSS scheme.
The total amount of capital invested in ELSS is exempt from tax as long as the amount is less than Rs. 1.5 lakh.
Unit Linked Insurance Plan (ULIP): ULIP or Unit Linked Insurance Plan is a type of insurance that combines the benefits of protection & savings of taxes in a single plan.The main advantage that a ULIP has over traditional wealth building tools is the benefit of life coverage. As a result, your money can grow, and at the same time, your loved one’s future is protected from life’s unexpected turns.
A ULIP is both an insurance policy and an investment. The policy specifies a death benefit. The amount that will be paid to the nominee if the insured dies during the ULIP term. In addition, if the policy holder survives the term of the ULIP, she can also obtain the expiration value of the ULIP. This will be the amount generated by ULIP’s investments in the equity or debt market. The policyholder can generally choose ULIP funds and asset classes to generate these returns. This is the investment component of a ULIP.
Traditional Life Insurance Plans: Under section 80C, a premium paid on a life insurance policy is deductible based on income tax calculations. The total amount allocated to premium payments must not exceed Rs. 1.5 Lakh to take advantage of this tax exemption benefit
National savings certificate (NSC): The national savings certificate aims to provide a safe investment to people who are suspicious of fluctuations in the stock market. The tax saving benefits under this policy is up to Rs. 1.5 Lakh on the principal amount and the reinvested amount of interest. The maturity term of this investment remains fixed at five years and ten years and it is up to the investor to choose between either of the two periods. NSC is a fixed deposit scheme and is available from the post office
