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Looking for Tax Saving Options? Here are The Best Tax Saving Schemes to Invest in 2021

Taxes are one of the most critical elements in the survival of any country. It is a mandatory fee or financial charge collected by most governments from individuals, firms, and institutions (taxpayers) to collect revenue for implementing public development works. In India, taxes are primarily categorized into two types - direct taxes and indirect taxes. The taxes applicable to the income of any individual or organization are the direct taxes, while the taxes applicable to the expenses of the same are the indirect taxes.

In order to reduce the income tax burden, you can go for tax-saving investments and claim currently applicable deductions under the Income Tax Act, 1961. If you are a wise investor, you will look for tax savings investments that will provide tax exemption benefits and earn tax-free income. However, many individuals do not try to understand this tax-saving investment in their early years of earning. As a result, many people are burdened by high taxes throughout their crucial working periods. Finding the best tax savings scheme is challenging, but very rewarding maximum benefits in any of those schemes.

Best tax saving schemes to invest in 2021

United Linked Insurance Plan (ULIP)

ULIP has become the most popular tax-saving investment choice for its historically high returns. It is a diversified mutual fund that invests on equity, so there are some risks involved in this investment choice. However, the ULIP offers tax exemption up to a maximum of 1.5 Lakhs under section 80C of the Income Tax Act and provides the shortest lock-in period than any other tax savings investment, i.e., five years. It is the best scheme that can give potentially high returns on long-term investment along with the benefit of tax exemption.

Guaranteed Income Plans

The Guaranteed Income Plans offer a more flexible and customizable investment option for you that can prove helpful in accommodating all your current and future needs. It provides a decent return rate that can increase over the years depending on the market trends. The Guaranteed Income Plans offer tax exemption up to a maximum of 1.5 Lakhs under section 80C of the Income Tax Act. The policy term extends between 10-30 years, but the payout period starts immediately after the premium payments get completed. If you want the benefits of life insurance, tax-free maturity benefits, death benefits, and monthly tax-free income all in a single plan, then Guaranteed Income Plans are your best choice.

Life Insurance

Life Insurance is an essential insurance product and the best tax-savings investment choice for every individual. It can provide many tax benefits and financial security to the policyholder’s family in their absence. The life insurance offers tax exemption of up to a maximum of 1.5 Lakhs per annum under section 80C of the Income Tax Act, and the insured member’s income is tax-free if the life insurance premium is not more than 10% of the sum assured. Also, the maturity amount or the lump sum paid to the nominee of the insurance plan is tax-free under section 10D of the IT Act.

Term Insurance

Term Insurance is an excellent tax-savings investment plan that can provide financial protection and tax savings deposit to the family in case something unfortunate happens to the policyholder. The term insurance offers tax exemption of up to a maximum of 1.5 Lakhs under section 80C of the IT Act, and the sum received as a death benefit is also eligible for tax exemption. In addition, the TROP ( Term Insurance Plan with Return of Premium ) can provide the policyholder or nominee with a refund of the premium paid after maturity. This refund is also considered tax-free under section 10 (10D) of the IT Act.

Health Insurance

Health insurance is a tax savings scheme other than 80C in the IT Act that can deduct up to Rs.25,000 on the premium price as per section 80D. The tax exemption is an added bonus to the primary objective of getting cashless hospital transactions and health coverage.

No matter which tax savings investment plan you choose, there will undoubtedly be a tax benefit in any of the three factors- final matured amount, interest rate or initial amount limit (like up to 1.5 Lakhs). Hence, choose the best tax savings schemes to experience a reduced tax burden on your hard-earned income and expenses.

NOTE- Income Tax benefits/exemptions are as per the prevailing tax laws in India, which are subject to change from time to time. Please consult your tax advisor for further details.

Disclaimer:

*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.

Suggested Plans

Bharti AXA Life Saral Jeevan Bima Plan

  • Non-Linked Non-Participating term insurance plan
  • Double the sum Assured on death due to Accident
  • Flexibility to choose a policy term
  • No medical examinations• Ease of purchase as no lengthy underwriting procedures are involved.
  • Tax benefits

Bharti AXA Life Flexi Term Plan

  • Covers Critical illness at the age of 75.
  • Option to select between Comprehensive cover or Major illness cover
  • Flexible benefit payout option. Payout options based on your financial requirements– a) Lump sum or b) Increasing Monthly Income or c) Lump sum plus Increasing Monthly Income.
  • Tax benefits on the Premiums paid and payout benefits received.

Bharti AXA Life Premier Protect Plan

  • Flexibility in Policy Term
  • Flexibility in Premium Payment Terms ( Single , Limited, and RegularPay Options)
  • Multiple Death Benefit Payout Option
  • Increase the Sum Assured on important milestones
  • Tax benefits