Best 10 Tax Saving Investments 2021 Under Section 80, best online investment schemes with High Returns


Best 10 Tax Saving Investments : Nowadays in India there are lot of options available for us to invest in many forms that can secure us handsome returns in future but we think there is no bad in thinking that how can we just have some extra returns on these investments.

But by hearing tax saving investments people generally know only quite less such instruments namely, Life insurance, Fixed deposits, Public Provident Fund

But here we have listed best 10 tax saving investments that you can do online and also with high Returns.

So now let’s find for ourselves some investments that are exempted in the law from paying hefty taxes and earn some good returns even without having tension of paying taxes on the investments out of your hard-earned money.

Section 80C of Income tax act in present times provides us rebate of 150000 INR (80CCD ) on our investments and we can avail additional rebate of 50000 INR (80CCD ) as well. So, lets discuss all these investments and the also the risk associated with them and also their lock-in period.

Best 10 Tax Saving Investmmets with high Returns

1) Employee provident fund

-Every salaried person knows that EPF is deducted from their salary, it is nothing but an investment for your future only and is composition of 12% of our basic salary and Dearness Allowance (DA).

It is a type of fixed income as you earn fixed rate of return here. Risk associated with it is low as it is backed by government.

Lock in period is very long as we can only withdraw on our retirement or else, we have left the job and unemployment period is more than 2 months. Returns are fully exempted as it comes under EEE category. Post taxes returns are generally somewhere around 8 to 9 %.

2) Home Loans

Yes even they are rebated investments, the principal amount that you need to repay is covered under section 80C under the limit of 1,50,000 INR annually.

3) Tuition fees

Annual expense on tuition fees is also deductible under this section of your child’s school or college.

4) Term Insurance

Insurance is a kind of investment that everyone should make at some point of time of their lives as it gives us and our loved one’s financial security at any unforeseen risky situation as this covid has also given many people a lesson for this.

Annual premium of your insurance scheme can also be claimed and deducted under this act. These are pure insurance schemes and not kind of an investment scheme

5) Endowment plans

Anendowment policy is essentially a life insurance policy which, apart from covering the life of the insured, helps the policyholder save regularly over a specific period of time so that he/she is able to get a lump sum amount on the policy maturity in case he/she survives the policy term.

These types of investment generally yield a lesser return as when the annual premium exceed 10% of the sub-assured, we need to pay tax on it. So, post tax earning may range between 4-6% only. Lock in period for such kind of investments is minimum 5 years.

6) ULIP’s (Unit Linked Insurance Policies)

In this kind of investment the insurer pools money from all the policyholders and invests the same in the funds chosen by them.

Once the money is invested, the total corpus is divided into ‘units’ with a certain face value. Each investor is then allocated ‘Units’ in proportion to the invested amount. It is package where some money is in insurance form and other is in form of investment in stock markets.

However, returns are not taxable as they are counted as long term capital gains. They generally yield 11-12 % returns out of your investments.

They also have a time horizon of 5 years or more and can be variedWhen choosing ULIPs, policyholders should keep the following points in mind so they receive the maximum returns based on their risk handling capacity:

• Based on personal investment goals: most policyholders choose ULIPs to meet personal investment goals, such as funding a child’s education, retirement planning, building a corpus of funds etc.

•Depending on the investment goal, select the type of ULIP scheme that best suits the achievement of that goal.

 •Compare ULIP offerings: after ascertaining the goal and the type of ULIP that will achieve it, compare the ULIP offerings in the market. Focus on expenses, premium payments and ULIP performance.

•Look at the mix of shares, bonds and equities the ULIP invests in to get a broad picture of the security and returns possible from such a scheme.

 •Policy term flexibility: when choosing a ULIP, check if the selected policies offer flexibility in terms of benefits. Depending on the duration of the investment policy, look at short, medium or long term ULIPs.

•Investment flexibility: look for ULIPs that allow for investments across classes, from bonds to stocks to equities. This will result in higher returns and permit high-risk investments when the market is up even if the initial investment was low-risk.

7) NPS (National Pension Scheme)

Thisinvestment as the name suggests if government offered investment opportunity hence, it is considered as one of the safest investments’ plans.

This gives the additional limit of 50,000 INR to be exempted from the tax liability. So, in my opinion without giving a second though we must invest here so as to at least get benefits from the extended limit that is provided in section 80CCD (1B).

It is a mixed type of investment of both equity and debt market providing opportunity to ride both benefits of good returns as well as fixed returns through debt market.

Lock in very long as the name suggests only, we can have it claimed only after retirement or in specified two three emergencies in the Act itself.

It is partially taxable form of investment as we can withdraw a lump-sum amount of money after retirement that is not taxable but the money which we will receive monthly as pension in future will be taxable if it comes under income tax slab rates.

Returns varies between 8-13 % according to the investment whether it is equity or debt market.

8) ElSS (Equity Linked Savings Schemes)

Thesecomes under the mutual funds where you can invest your money according to your will in debt or equity market as per your risk-taking efficiency.

If you can put money in equity at long horizon of time, say 10-15 years you can yield exceptionally good returns. Risk here is moderate as your money is invested in stock market but it is diversified in many stocks of various sectors.

Minimum lock-in period as of now is 3 years in various offered schemes in the market. They are taxable only if you yield more than 1,00,000 INR annually in form of returns under long term capital gains. Investment returns can be expected of 13-14% that is higher than any other such tax saving investments.

9) Sukanya Samridhi

Itis a government initiative for girl child welfare as here you can invest money for your girl child’s marriage or studies, it yields fixed income in form of interest and is secured with government backing.

Lock in period is long as of 21 years, you can definitely withdraw money for her studies or marriage in between maturity. It is completely exempted it comes under EEE as well. Interest rate is somewhere 8-9 % in the current times.

10) Others

There are other investments such as 5-year FD, Nation Security certificates, post office deposits etc. More or less all these schemes are operated in same ways annual investments under these are deductible under section 80C.

They yield fixed rate of interest with low risk profile and general lock-in period of 5 years. Interest yield are taxable of these investments if you fall under tax slabs rates and in general, they all yield 6-7% returns.

Post offices offer many investment schemes of various time horizons but only 5 or more years fixed deposit is only deductible under this law.

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