As this is financial year is closing all the personal tax payers in India will be looking for tax saving options. Your tax saving investments should be based on your ability to handle risk and the time for which you are willing to stay invested.
Section 80C of Income tax act offers a deduction of Rs 1 lakh, irrespective of income brackets
Here are the options with their related benefits:
For Conservative Investors:
If you are an risk averse investor or a retired person you should chose conventional investments such as Insurance, PPF (Public Provident Fund), NSC (National Savings Certificates), Infrastructure Bonds, Bank Fixed Deposits (Minimum Lock in for Five Years) etc.,
Note: You should consider your period of requirement and Post tax returns
For Investors who can afford to take risks:
If you are an investor ready to take risks you can invest in ELSS (Equity Linked Savings Schemes) category of Mutual Fund (Lock in period of 3 years) orULIP (Lock in period as per the agreement). ULIP is a combination of Mutual Fund and Life Insurance.
As ULIP's will have high initial costs (Ranges upto 40% of premium) and recurring payments it is better to go for Plain insurance plans as the premium compared to ULIP's will be lower. ULIPs are meant to be long-term products, where the policyholder stands to gain market returns only over a period of 8-10 years.
If you are looking for tax relief and wants to invest in equity you can opt for ELSS provided your requirements are 4-6 years away. As ELSS is an equity asset it is having inherent risk element market fluctuations. SBI Magnum Tax Gain Scheme 1993 and Sundaram Tax Saver have been consistently provided the returns over the last one year, thereby proving their success even in these dark times
Disclaimer: Mutual Fund Investments are subject to market risks.
All the opinions are personal and investors should think on their own before investing in any of the investments.
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