Best Tax Saving Investment Options Under Section 80C

2. Unit Linked Insurance Plans

Unit linked Saving Schemes are popularly known as ULIPs. Life insurance with benefits of equity investments is covered by ULIPs. They have attracted the attention of investors and tax-savers not only because they help us save tax but they also perform well to give decent returns in the long-term like contribution for participating in the unit-linked insurance plan (ULIP) of LIC Mutual Fund, Payment for notified annuity plan of LIC or any other insurer and contribution for participating in the Unit-Linked Insurance Plan of Unit Trust of India.

3. Equity linked savings scheme

There are some mutual fund schemes specially created for offering you tax savings, and these are called Equity Linked Savings Scheme, or ELSS. Whatever investments that you make in ELSS are eligible for deduction under Sec 80C. Equity Linked Saving Schemes of mutual funds are nothing but diversified equity funds that have a lock-in period of three years and provide tax benefit.

Since a major portion of the amount is invested in equities or equity stock markets, the earning potential is higher as compared to other tax saving investments. Investors can invest up to Rs. 1,00,000 in an ELSS fund and deduct the investment from their taxable income u/s 80C of Income Tax Act, thereby effectively reducing their tax liability.