Top 5 Investment Plan with High Returns Tax Saving Benefits 2018

Best Investment Policies For Saving Tax With High Return 2018

What is Investment Plan – In Simple Words –

Investment Plan Investment plan is financial product that provides the opportunity to create wealth for future. Every person wants to earn as much as he/she can with the maximum possible saving. And there are several smart and legal approaches by which you can save your income tax.

To do this you need to choose a best investment or insurance plan so you get maximum returns at low risks with tax saving benefits.

What is Income Tax – Definition and Meaning –

An income tax is a tax that governments impose on financial income generated by all entities within their jurisdiction. By law, businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. Income tax is a key source of funds that the government uses to fund its activities and serve the public.

How to save Income Tax by Investment Plan legally –

Under Section 80C of the Income Tax Act a person have the savings up to a maximum of Rs 1.5 Lakhs. The Government of India provides the facility to the Indian citizens that they can save their Income Tax up to a certain limit (presently no Income Tax up to the income Rs 2,50,000 for below 60 years, Rs 3,00,000 for 60 or above but less than 80 years, and Rs 5,00,000 for 80 years or above) and give saving benefits on their savings earned through investment or insurance plans.

What factors should be consider before buying an insurance or investment plan –

An investor should look out for 4 factors while making a tax saving investments –

  1. Maximum tax savings
  2. Minimum risk
  3. Low cost of investment
  4. Substantial returns

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  1. Life Insurance: What is Life Insurance Policy and its importance

Life Insurance is not a pure form of tax saving investments but it plays an important role as it offers security to the individual’s family in case of any mishappening to the policy holder. It also offers tax benefits to the policy holder on the premiums paid by them which are covered under Section 80C of the Income Tax Act up to a maximum of Rs 1.5 Lakhs. Proceeds on death or maturity are tax-free under Section 10(D).

There are various Life Insurance plans like Term Plans, Endowment Plans, ULIPs or Unit-Linked Plans and Money back Plans. This can help the policy holder to secure the future of his/her family and save income tax.

  1. Public Provident Fund (PPF): What are the PPF Tax Benefits

It is a long term saving scheme issued by the Central Government. Interest earned on deposits in PPF is not taxable.  Under section 80C, deposits made towards PPF accounts can be claimed as tax deductions. It offers 7.8% interest per annum (Oct-Dec, 2017). The Govt. of India keeps revising this every quarter. PPF has a lock-in period of 15 years. The interest received at the time of maturity is completely tax free. You can also avail the facility in PPF account from the 3rd financial year to a 5th financial year. The rate of interest charged on loan shall be 2% per annum above the interest paid.

  1. Senior Citizen Saving Scheme (SCSS): What are the SCSS Tax Saving Benefits

This scheme is designed for the people who are 60 years or above. They can open SCSS account for the tax saving purpose and provides assured returns for Senior Citizens. The maximum investment you can make is 15 Lakhs and the interest earned is taxable like any other Fixed Deposit Scheme. The interest rate is 8.6% per annum (Oct to Dec 2017). The maturity period in this scheme is 5 years, but you can prematurely close of your account after one year on deduction of an amount equal to 1.5% of the deposit and after 2 years, 1% of the deposit.

  1. ELSS Tax Saving Mutual Funds: Tax Benefits Investment Plan

ELSS or Equity Linked Saving Schemes are one of the most popular tax-saving plans where you can get tax benefit on the savings up to Rs 1.5 Lakhs per annum. ELSS is a form of open-ended Mutual Funds that offer tax benefits falling under Section 80C of the Income Tax Act. The returns are amazing you would get ranges between 12-18% which are also tax free. ELSS has the lock-in period of 3 years.

  1. Sukanya Samriddhi Yojana (SSY) Account Scheme: Tax Benefits under SSY Account Scheme

If you have a girl child and want to start making investments towards her higher education or her secure future, you can consider the SSY scheme. The parent/guardian of the girl child can open the account and operate it on her behalf till she turns 18 years. They can make deposits up to Rs 1,50,000 till the girl attains 15 years of age and after 21 she can close this account but it is not mandatory and continues to earn internet. The interest rate you would get under this scheme is at 8.3% per annum (Oct to Dec 2017) and the interest received on maturity is tax free.


Question 1.  What is Small cap, Mid cap and large cap companies?

Answer: Small Cap Companies:  They are the companies who have market value less than 2 Cr.

Mid Cap Companies: They are the companies who have market value between 2 Cr. to 10 Cr.

Large Cap Companies: They are the companies who have market value more than 10 Cr.

Question 2. How to invest money in ULIP online?

Answer: Some websites provide the option to invest and compare the policy plans. You should have a debit card, a credit card or net banking to invest online.

Question 3. What is the minimum lock period for SIP?

Answer: There is 3 years of a mandatory lock-in period in the SIP.

Question 4. Can I take my money out of a mutual fund?

Answer: Some mutual funds charge a redemption fee, which is a percentage of the amount that you withdraw by selling shares.

Question 5. Can a grandparent or parent buy a policy in the name of child or grandchild and claim tax benefit?

Answer: Yes, and they shall be eligible for tax benefit under the section 80C on the premium paid by them.

Question 6. What is Net Asset Value (NAV) of a scheme?

Answer: The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV).

Question 7. What is a direct plan?

Answer: SEBI has mandated mutual funds to compulsorily launch a direct plan for direct investments. Such separate plan has a lower expense ratio excluding distribution expenses, commission, etc., and no commission is to be paid from such plans. The plan also has a separate NAV.

Question 8. I have 2 daughters, can we both me and my wife be nominated for 2 daughters separately?

Answer: Yes, you can be nominated as guardian for one daughter and your wife can be nominated for one daughter and both of you can get tax exemption benefits under section 80C.