Tax Saving Market Linked Plans

If you are a earning person and planning for your tax saving then it is always advisable to choose instrument that would not only save tax but also provide long term good returns in terms of protection and saving also to fulfill your future goals. All available instruments can be classified into two categories, first category is traditional instrument and second category is Share market linked instrument. When we say instruments are Market linked means return of each instrument is depend upon performance of share market and Investor should understand the risk of investment in market linked instruments, therefore Market linked instruments can not be used as a short term investment, one should use these for long term to get good returns.

The different tax saving Market linked investments options available are,

1) Mutual Fund (Equity Linked Saving Scheme)

Different types of mutual funds are available in market, each one can not save tax on investment, Investment in special type of mutual funds also termed as Equity linked Saving Schemes (ELSS) mutual funds can only save tax on investment. Before investing in ELSS fund check top 5 ELSS funds in India and check performance of these funds of last 3 to 5 years. All ELSS funds have a lock-in period of 3 years. The investment in ELSS comes under EEE scheme means tax Exemption on invested amount, you can use to save tax of upto Rs. 1.5 lakh under Section 80C, Dividend payed by mutual fund is not taxable, and after 3 years of locking period return given by ELSS is also Exempted from income tax. Main disadvantage of ELSS schemes is that it provide long term good returns but does not provide any protection means in case of unfortunate death of  investor nominee will receive only current fund value of invested amount and nothing more than that.

2) Life Insurance (Unit Linked Insurance Plan) 

Unit linked insurance plan is a Insurance product and another option available to save tax on investment, earn good returns in long term. All ULIP plans have lock-in period of 5 years. ULIP plans are available in market in different flavors like Child plan, Wealth plan, Pension Plan, Retirement Plan, Smart Life plan and many more. You can select any plan depends upon you future goal or requirement. Advantage of ULIP plan is that it provide protection, means in case of unfortunate date of Insured person, Nominee will receive Insurance amount which is mostly 8.5 to 10 times of annual investment, and/or current fund value of invested amount and/or bonus amount if any, after that policy may terminate or insurance company can pay future premium of your policy and can return fund value on maturity of your policy. Different plans provide different benefits.