Two smart investment options that can help you save tax as well

It is the season when most of the salaried employees in India are asked to submit details of their tax saving investments for FY 2015-16 to avail deductions under various sections of the Income Tax Act, 1961. While it always pays to plan in advance, you can still make a smart move by choosing instruments that will save tax along with giving high returns and beat inflation.

Here are the top two options which are considered among the better ones that can help in saving tax and generating returns:

Equity Linked Savings Schemes (ELSS)

These are one of the best options for wealth creation and saving tax. They have a relatively low lock in period of 3 years and offer one of the best growth potentials along with a good degree of liquidity. What’s more, returns in the nature fo long term capital gains from these funds are also tax free. As with any market linked instrument, however, the returns are not guaranteed and past performance is no indicator of future performance as well, which means that you may stand to lose on your investment. However, ELSS options have historically provided some of the best returns among all other investment options. If you do not wish to opt for a lump sum investment, you can go for a Systematic Investment Plan (SIP) that will help you invest small monthly amounts over a period of time in the scheme.

Unit Linked Insurance Plans (ULIPs)

Life Unit Linked Insurance Plans offer another good route for making investments. You need to keep these plans in force for a minimum of 2 years to avail tax benefits under Section 80C. While protection cover is offered, the bigger benefit of these plans is that they deliver good returns since they are linked to the market. The same caveat of market risks apply here. Like ELSS, returns from the Life ULIPs are also tax free subject to conditions under Sec 10 (10D). ULIP corpuses can be linked to either debt or equity instruments and you may choose either depending on your risk appetite.

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Tax Benefits subject to prevailing tax laws. The user/investor needs to verify all the facts and circumstances with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information. Tax laws are subject to amendments from time to time.

Unlike traditional insurance products, Unit Linked Insurance products are subject to market risk, which affect the Net Asset Values. The names of the company, product nams or fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns.

Standard Chartered Bank, India having its office at Crescenzo Building C-38/C-39 G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400051 is a licensed Corporate Agent of ICICI Prudential Life Insurance Company Limited (IRDA registration no. 105) for life insurance products, Royal Sundaram General Insurance Co. Limited (IRDA Registration No. 102) for general insurance products and Max Bupa Health Insurance Company Limited (IRDA Registration no. 145) for standalone health insurance products vide composite license number CA0028. All insurance plans are underwritten by the respective insurance companies. The benefits/ features of the products are indicative only. For more details on risk factors and terms and conditions, please read sales brochure carefully before concluding sale. Insurance is the subject matter of solicitation.