How to allocate Rs 1 lakh for tax saving and better returns?

POSTED BY Avadhut ON March 13, 2014 3:25 pm COMMENTS (8)

Hi,

I’m 36 year old self-employed.

How much can I invest to save tax on my income? I assume it’s 1 lakh.

I have read PPF and ELSS MF would be the right options apart from medical and term insurance. I have term and medical insurance. The premium per year is Rs. 17000  (both insurance included), so I am looking for advice where and which % should I invest rest of this Rs.83,000 for this year ending 31st March, 2014.

ELSS MF which is best and should I pay lump-sum for both PPF and ELSS MF?

Thanks,

Avadhut

8 replies on this article “How to allocate Rs 1 lakh for tax saving and better returns?”

  1. ashalanshu says:

    Dear Avadhut, please check the health insurance policy provided by ICICI Lombard and compare the 2 policies. You ‘ll get the answer for your counter question.

    thanks

    Ashal

  2. Avadhut says:

    Hi Ashal,

    I’ve purchased a separate term insurance.

    What do you mean by “basic health insurance”? As the above policy is health insurance with SA Rs.2,50,000. Can it not be termed as health insurance?

    Thanks,
    Avadhut

  3. ashalanshu says:

    Dear Avadhut, please do note the whole prem. of health advantage is not available for section 80D benefit. In my personal opinion, please purchase adequate term cover and basic health insurance and then invest the tax saving related amount into PPF and ELSS.

    Thanks

    Ashal

  4. Avadhut says:

    Hi Ashal,

    I’m paying Rs. 10,000 for Health Advantage Plus ICICI plan. The sum assured is Rs. 2,50,000 (including added SA for non-claim years) Rs.2500 our of this is refundable when I produce medical bills.

  5. ashalanshu says:

    Dear Avadhoot, how much prem. you are paying for your medical insurance and what is the sum assured there?

    thanks

    Ashal

  6. Hemanth Chandra says:

    Hi Avadhut,

    Go through below links. 1st one is an article on ELSS. 2nd one is the ELSS funds available in market.

    http://tips.thinkrupee.com/articles/equity-linked-savings-scheme-elss.php

    http://www.moneycontrol.com/mutual-funds/performance-tracker/returns/elss-2.html

    If you want to start investing in an ELSS mutual fund from the above list, better confirm the eligibility of the investments of that fund under 80 C from the AMC before you start investing.

    Regards,
    Hemanth.

  7. Avadhut says:

    Hi Hemant,

    Thanks for your response.

    Can you please advise as to how to go for ELSS MF and which ones are good?

  8. Hemanth Chandra says:

    Hi Avadhut,

    Please read articles on PPF, ELSS MF and depending on the risk apetite, time frame you have, decide which one to opt for.

    PPF – lock in period of 15 years with 8.7 % interest (interest might change yearly as per budget)
    ELSS MF – Only few funds are eligible under this. Please check the portfolio before you invest.

    One suggestion is that please do your investment decisions in April at the start of financial year only as you will have lot of time to decide. Now, see you must take some quick decisions because of which you might end up investing in some junk products.

    Regards,
    Hemanth.

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