Before it gets too hectic, you are advised to start the procedure and check your tax liability. But before you do that, here are the top six options that can help you save tax for the FY These options are deemed best because they have been assessed on seven major parameters which are safety, returns, costs, transparency, flexibility, liquidity and tax saving ability with equal weightage. You can consider any of these as per your requirement: Showing tremendous potential along with maximum transparency and high liquidity in comparison to other options, ELSS funds have given an average return of If anyone opts for the dividend option in such funds, they can even get some of their investment back.

This is more than what anyone can ask for. There is also an option to invest in an ELSS fund online, provided one should have met their KYC requirements.

The fund houses also facilitate a new investor by picking the documents from their house and guiding them through screening of KYC. ELSS funds carry the market risks as any other diversified fund but are good for the long-term. One expert advice would be to opt for a direct plan as the returns are higher. New Pension Scheme NPS NPS was made even more advantageous as a tax saving option last year when the budget was declared. Such investments offer an additional tax deduction of INR 50, Pension fund managers have further been given the freedom to invest largely in stocks.

They need not make a passive investment by duplicating the index. NPS as a tax-saving tool has a limitation in form of the equity exposure cap. What further adds to the woes is taxability when NPS matures. Currently the money earned from an annuity has normal tax rate and the government is considering its exemption. One expert advice would be to make active investment in stocks as it will offer better returns. Unit Linked Insurance Plan ULIP ULIPs stand at third place in the list of tax saving options because they are highly affordable, flexible and some of them cost even lesser than the direct mutual funds.

80C Tax Saving Options & deductions (FY ) | Wealthcom

One advantage of opting for ULIPs over ELSSs is that one can easily switch the corpus from debt to equity and vice versa. Additionally, there is no tax implication on the gains that are reaped after the switch is made as these are exempt under Section 10 10d.

One expert advice would be that only those who know how to utilize the switching option should try ULIP. Another one would be to opt for debt or liquid fund of ULIPs and gradually shift the investment to equity. Public Provident Fund PPF and Voluntary Provident Fund VPF Good old PPF and VPF have slipped down to the fourth position from the last year but they continue to be ultra-safe.

Four years have passed since PPF was first linked to bond yields.

Are ULIPs the Best Tax-saving Investment Options?

But since the yields have not changed, the PPF rate has still not seen a fall. However, the government has shown some signs of reviewing the interest rates. If this is becoming a matter of worry for you, you can opt for the VPF which offers the same tax saving benefits and interest rate as EPF. The chances of the interest rate falling in the near future are very slim for VPF in comparison to EPF. Another lucrative benefit is that there is a cap on investment in VPF.

Besides, the necessary contribution gets deducted every month from the salary so it does not feel like an added responsibility.

The interest amount is paid quarterly on a particular date, regardless when the investment has been made.

Save Tax Get Rich - Best Tax Saving Investment Options in India

The investment in this scheme is limited to a sum of INR 15 lakh per individual and is open to people who are above the age of In a special case where an investor has opted for voluntary retirement and is still not employed, the minimum age is If someone would want to invest more than the limit, they can gift the remaining amount to their spouse and make an investment in their name. Since it is open for girls who are below the age of 10, making its advantage limited, the scheme is ranked quite low in the table.

If one has a daughter of the mentioned age, they can reap the benefits that the scheme has to offer. Accounts under the scheme can be opened in any designated branch of a PSU bank or a post office with minimum investment being INR 1, and maximum in a financial year being INR 1. Deposits in this account can be made for a period of 14 years after it is operational.

Best Tax Saving Investment Options - BankBazaar

However, the combined investment in both the account cannot exceed the maximum limit in a financial year. Such an account matures when the girl reaches The vintage ones like bank fixed deposits, NSCs, pension plans and insurance policies follow these top six.

Planning the tax beforehand allows you to choose a tax saving instrument that is most favorable. So find the one that suits you the best and get going. Happy investing and saving!

Equity-Linked Savings Schemes ELSS ELSS funds have continued to top the list for the second consecutive year now. If undefined, will take the window.

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