The primary objective of investments is to provide you with profits. In India, you might be spoilt for choices when it comes to investing. As an investor, you can find everything, right from investment schemes that offer flexibility to tax saving investments. Due to the diverse range of investment options, you might tend to get confused about ‘where to invest money?’
Choosing the right investment tool for yourself can end up in a daunting task if you are unfamiliar with the numerous options. Therefore, let’s take a look to know the top six best investment plans that will give you tax-free income:
- Unit Linked Insurance Plan (ULIP)
A ULIP plan is a market-linked product, which allows you to diversify your portfolio. Under a ULIP policy, you can select between equity funds and debt funds based on your risk appetite. Since a ULIP is market-linked, your returns would vary based on market performance. In addition to this, the income received from a ULIP policy is tax-free under Section 80C of the Income Tax Act, 1961.
- IRFC Tax-free Bonds
Indian Railway Finance Corporation (IRFC) provide tax-free, redeemable, non-convertible, and secure bonds. The IRFC tax-free bonds are provided by the government sector enterprise of India. The IRFC N1 series might offer a tax rate of 0.8% as well as can be available at Rs. 1,130. Under IRFC tax-free bonds, the interest can be paid in October every year. As a policyholder, you should purchase these tax-free bonds at an attractive rate to receive high yields.
- Public Provident Fund
PPFs are government-backed plans, which allow tax exemption on the interest. Today, the current rate of interest applicable to PPF might be approximately 7.9%. In addition to this, PPFs offer tax benefits under Section 80C of the Income Tax Act, 1961. Under PPFs, you can claim a tax deduction up to Rs. 1,50,000 on your taxable income.
- Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana is a tax-saving investment plan, which can be beneficial for your daughter. It is a popular avenue for saving taxes due to the following reasons:
- It offers an interest rate of approximately 8.5%.
- It provides tax-free income.
- It is eligible for a tax deduction up to Rs. 1,50,000, as stated under Section 80C of the Income Tax Act, 1961.
- Senior Citizens Savings Scheme (SCSS)
The SCSS scheme safeguards the financial needs of senior citizens. Under SCSS, you can be eligible to invest in this scheme if you are above 60 years. As a policyholder, you start by investing a small amount of Rs. 1,000. The maximum limit of investment can be Rs. 9 Lakhs. However, the maximum amount exceeds up to Rs. 15,00,000 if you have a joint account. The interest earned from the SCSS scheme is taxable during the accrual year, while it is eligible for tax deductions at source.
- Bank Fixed Deposits
The risk appetite of every investor can be different. While some might have a high-risk appetite, the remaining can have a low-risk appetite. If you have a low appetite for risks, you should invest in bank fixed deposits. With bank fixed deposits, you can save more money over a long period. The maximum annual investment might be Rs. 1,50,000. In addition to this, it offers tax benefits under Section 80.
To sum up, investment plans listed under Section 80C are liable to provide you with tax-free income as well as tax exemptions. An investment plan, which offers dual tax benefits, can allow you to save more taxes as well as create a financial portfolio for yourself. Investing in the above-mentioned policies are simple. As a buyer, you should consult a financial expert to help you select the right plan based on your investment goals.