Tax saving option

Hello sir I want to invest my money but I don’t want to give tax on it so can you provide me some investments options which doesn’t required the tax.

[Shaleen]

Tax-saving is an important part of financial planning. An intelligent tax-planning strategy can serve the dual objective of helping individuals meet their financial goals and save tax in the process.

List of best tax saving options, plans

1. Life insurance

Life insurance plays an important role inthe individual’s financial portfolio offeringsecurity to the individual’s family in case of an eventuality.

Life insurance, be it traditional (endowment) or market-linked (ULIP), offers tax benefits to policyholders on the premiums paid.
There are various life insurance plans like:

Term plans
Endowment plans
ULIPs or unit-linked plans
Money back plans

2. Pension plans
Pension Plans is another form of life insurance.

They serve a different end-objective from other insurance plans like term plans and endowment plans – which are called protection plans.

Contributions towards pensionare covered under Section 80CCC(sub-section under Section 80C) of the Income Tax Act.

The aggregate limit of deduction under all the sub-sections of Section 80C cannot exceed Rs 1.5 lakhs.

On maturity 1/3rd of the accumulated pension amount is tax free with the balance 2/3rd treated as income and taxed at the marginal tax rate. The amount is tax free upon death of beneficiary.

3. Health insurance or Mediclaim
Health insurance or Mediclaim as it is more popularly known, covers expenses incurred from an accident/hospitalization.

Mediclaim also covers pre and post-hospitalization expenses, subject to the sum assured

Health insurance offers tax benefits under Section 80D.

Insurance premium upto Rs 20,000 for senior citizens and Rs 15,000 for others is eligible for tax benefit.

4. NPS

The NPS or the New Pension Scheme is regulated by the Pension Funds Regulatory and Development Authority – PFRDA.

Any citizen of India over the 18 – 60 years age bracket can participate in it.

It is extremely cost effective since fund management charges are low.

The fund managers manage the money in three separate accounts having distinct asset profiles viz. Equity (E), Corporate bonds (C) and G Government securities (G).

Investors can choose to manage their portfolio actively (active choice) or passively (auto choice).

5. Tax-saving mutual funds

Investments in tax-saving mutual funds, also known as equity-linked savings scheme (ELSS), qualify for tax benefits.

Tax-saving mutual funds invest in stockmarkets, among other assets, and are more suited for investors with medium to high risk appetite.

Investments are locked in for three years.