Where to invest money to ensure tax free returns

With the end of the financial year approaching fast we’re all on the lookout for the best places to put our money in.  You can invest it with an endowment policy or savings plan. But the most important question is which investments are going to help me save the most amount of tax. Saving on income tax is a big way to save money and to help you do that there are multiple plans and policies out there.

These policies are designed to ensure that you get high returns on your investment while saving on taxes. Here are some endowment plans and tax saving plans that’ll help you invest better this year.

1. Unit Linked Investment Plan (ULIP): ULIPs are a great way to invest your money. They provide insurance cover as well give you returns through equity. 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.
2. 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. The life insurance claim that you receive on maturity of the policy is tax free.
3. 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.

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.