4 Tax Saving Plan Types That Can Be Bought Online

Are you one of those who always wonder why only a few people succeed in saving tax while earning good returns on their investments? Well, every one of us aims to save money. However, many of us struggle to find the best-suited investment plans that will also give you the advantage of tax benefits. Striking a balance in financial planning is crucial, and many of us can’t achieve it due to a lack of knowledge. How to plan investments and save tax is an important aspect of financial planning. Indeed, tax planning is crucial; however, tax-saving investments are also significant. Your goal is not just tax saving. 

Several options are out there that will help you save taxes while making the maximum savings possible. Different factors, including liquidity, returns, safety, etc., must be considered while selecting the best tax-saving investments plans. One can save tax and earn returns with the best investment plans in India. Let’s have a look at some of the best tax savings plans that will help you find the best-suited investment option –

• Fixed deposit - This is considered one of the safest tax savings instruments. As a tax-saving investment plan, the fixed deposit option offers tax-free income. This can be best suited for those looking for a low-risk option that will help save money over a long-term period. One can get a guaranteed return on investment with this option. Investments in tax saver fixed deposits are eligible for deduction under section 80C while calculating the taxable income. One can claim a deduction of a maximum of Rs.1.5 lakh by investing in tax saver FDs. There is a tenure lock-in period of 5 years for such fixed deposits and interest rates are decided by the banks.
• PPF ( Public provident scheme ) - PPF (Public Provident Scheme) has always been a popular investment option as a long-term savings cum investment option amongst taxpayers. PPF account can be opened with a bank or a post office. This option can let you earn guaranteed income while enjoying the tax benefits. The reason behind the popularity of this investment option is PPF falls under the exempt category, and the interest and maturity amount are exempted from tax. One can claim deductions under Section 80C up to Rs. 1.5 lakh.
• Life Insurance - Life insurance offers security to the family of the insurer in case of any mishap. Moreover, it is an important aspect of the financial portfolio of every individual too. Various life insurance plans are available in the market and offer tax benefits to a policyholder on the premiums paid.
• ULIP – ULIPs (Unit linked insurance plans) work as a useful financial tool that is flexible and can be switched between funds while syncing with the added advantage of significant tax savings. In this insurance plan, the premium paid is invested in debt, equity, or money market. ULIP premiums can be deducted from your taxable income up to the permitted limit under sections 80C and 10(10D) of the Income Tax Act, 1961.

A well-planned tax-planning strategy can spell the dual benefits of achieving financial goals and saving tax. Several tax savings plans are out there. Understanding how the returns will be taxed will help you plan your investments well.