Best Tax Saving Investment Options for 2016-2017

January is a month when we all re-evaluate our lives. We want to change everything from our clothes to our diets and most of all our finances. This is the time to get your finances in order and to consider saving plans and investment options. The New Year brings with it a new wave of enthusiasm. Especially this year, after demonetization and endless promises of change, we Indians are truly looking forward to a happy financial year.

Here are the six of the top tax saving investment plans that you need to put your money into to make the best of 2017:

1.      Life Insurance Plan: Life insurance plans are an investment everyone should make. It is the first step to your financial planning. It should be treated more as an investment than an insurance policy. When choosing life insurance one should opt for term insurance as it comes with low risk and high coverage. A life insurance premium is something you should add to your monthly saving plan.

2.      ELSS Tax Saving Mutual Fund: They offer the highest returns compared to any other tax saving investment plan in the country. The returns are not guaranteed but if you can afford to take some risk, your earnings can range between 12 – 15%. You can even opt for the dividend scheme and earn regular income from your investment.

3.      Public Provident Fund: This fund provides maximum tax saving benefit for the people. The interest rates are updated by the government on a yearly basis. Most banks offer a PPF facility for its customers. This scheme ensures maximum tax saving benefit for its users. At the moment the government allows around 8% interest in PPF.

4.      Rajiv Gandhi Equity Saving Scheme: This scheme offers benefits for first time investors with income upto 12 lacs. The maximum investment allowed in this scheme is only Rs.50,000 this can be invested in stocks or mutual funds. This scheme gives you a tax exemption of upto Rs.25,000.

5.      Voluntary Provident Fund: This fund is the contribution of an employee to his provident fund, it is beyond the 12% EPF.  This fund carries the same rate of interest as the Employee Provident Fund. The current rate for EPF is 8.8% per annum. However, investment in VPF can only be withdrawn during retirement and not before.

6.      Unit Linked Investment Plan (ULIP): This plan provides life risk coverage. It can provide between 5-11% returns, but they are not guaranteed. The ULIP should be held for a minimum duration of 10-12 years to seen maximum returns.

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