Call Us

FOR EXISTING POLICY

Have query on premium, payout or any servicing need?

Call us:

1 860 266 9966

Monday - Saturday | 10 am - 7 pm IST

Call charges apply

Dedicated NRI Helpdesk:

+91 22 6251 9966

Monday - Saturday | 10 am - 7 pm IST

Call charges apply

FOR NEW POLICY

Want to buy a new policy online?

Call us:

+91 22 6984 9300

Give missed call for a call back:

+91 11 6615 8748

Monday - Sunday | 8 am - 11 pm IST


Exclusively for NRIs:

Call us:

Give missed call for a call back:

+91 11 4473 0242

Available All Days | 24 x 7

Language

Back Arrow Icon
Close Button
Back Arrow Icon
Close Button

Need assistance in choosing the right insurance plan? Get a call from our Expert.

Need assistance in choosing the right insurance plan?Get a call from our Expert.

+91 dropdown arrow

Select Plan dropdown arrow
  • Term plans
  • Saving plans
  • Wealth plans
  • Retirement plans
  • I don't know/I need help

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in. T&C apply.

What are the Short-Term Investment Options for Income Tax Benefits in India?

19-10-2022 |

Nowadays, you may be quite familiar with different investment options and the tax* benefits they offer. But are all investments the same, and will they all offer tax* savings for your benefit? The only way to find out is to consider all tax saving investment plans.
 

Many short-term investment plans in India offer apt returns, but these also carry some risks that may not appeal to all types of investors. To understand which investments you should opt for, here is what you should know.
 

Some Short-term Tax-saving Investments
 
  • Unit-Linked Investment Plan (ULIP)

    Though a Unit-Linked Investment Plan (ULIP) has a lock-in period of 5 years, it can be considered a short-to-mid-term investment plan. The main benefit of a ULIPis that it offers investment and life insurance under the same policy and with a single premium payment for both components. You can also choose from different fund options to balance your portfolio.

    Under Section 80C of the Income Tax* Act, you can claim tax* deductions up to ₹1.5 Lakh on the policy premiums each year. Moreover, the death benefit offered under the life insurance coverage is exempt from tax* under Section 10(10D) of the Income Tax* Act.

  • Debt-Based Mutual Funds

    Debt-based mutual funds are generally preferred for their investment in instruments that offer a fixed interest and capital appreciation, as predetermined by the issuer of the funds. These funds invest in government securities and corporate bonds. Short-term debt funds can offer tax* benefits where you can avoid paying a 15% capital gains tax* on your returns if you do not redeem your investment before the end of one year.

    But it is important to note that the short-term capital gains will be compulsorily taxed as per applicable rate., and you cannot avoid this taxation.

  • National Saving Certificate (NSC)

    The NSC is a short or medium term tax saving investment plan in savings bonds, suitable for less-risk investors. You can open an NSC account at your nearest post office, either on an individual basis or as a joint account with another person. Investing in National Saving Certificate helps you claim a tax* deduction of up to ₹1,50,000 under Section 80C of the Income Tax* Act. Moreover, there is a fixed interest rate of 6.8% per annum on this investment.

    For the NSC to be a short-term investment option, you should choose a maturity period of 5 years on the scheme instead of 10 years.

  • Senior Citizen Saving Scheme (SCSS)

    The SCSS helps senior citizens in India above the age of 60 years save money for their retirement. This short-term investment plan comprises an account that is opened at a bank and or a post office. If you are a senior citizen, you can claim a tax* deduction of up to ₹1,50,000 under Section 80C of the Income Tax* Act.

    As the maturity period of SCSS is 5 years, it is among the most suitable short-term investment plans for the elderly citizens of India. Once the maturity period is over, the account offers a source of income for the retired person and their family.

  • Equity Linked Saving Scheme (ELSS)

    ELSS is the only equity-linked scheme that offers tax* benefits under Section 80C. The diversified investment comes with a 3-year lock-in period and is a short-term tax saving investment. Many people invest in Equity Linked Saving Scheme mainly to invest in equities and enjoy a short investment tenure for their short-term goals. Apart from the income tax* benefits, ELSS also offers capital appreciation.

    ELSS funds, being equity funds, carry certain risks which may not be suitable for everyone and all types of investors. Hence, before you opt for an ELSS fund, be sure to check your risk profile.
     
How to Choose from Various Short-Term Investments?
 


As an investor, you may and should have some important considerations before you narrow down on one or few short-term investment options. It is important that the investment should offer tax* benefits while also helping you fulfil your short-term investment goals. Take note of the following factors before you choose some short-term investment plans:
 

  • Your investment goals

    Before you start any investment, plan your investment goals. Since your short-term investment goals need to be fulfilled in the next few years, your investment should be able to offer you the apt returns within that period. It is important that your goals and the investment’s maturity are aligned.

  • The investment limit.

    Since you need a desired amount of funds within the short term, opt for investments that allow you to invest a large sum of money which will then appreciate over the next few years. Find out which investments allow you to invest with a lumpsum amount.

  • Your risk appetite

    Most investors select investment options only after checking if the option is in sync with their risk profile.

  • Your financial needs

    Just like your goals, you will need to chalk out what your financial needs are before you invest in any instrument. This will help you understand how much money you need to fulfil any financial obligations. Also, be sure to consider the financial needs of your family before making any investment.

Conclusion


One may be wary of short-term investment plans because of the popular notion that only long-term investments are reliable. However, not all short-term investments are risky; in fact, the list mentioned above also offers tax* benefits which makes it easier for you to choose a suitable investment plan for your needs.


L&C/Advt/2022/Oct/2583

Want to Keep More of Your Hard-Earned Money? Speak to out expert

+91 dropdown arrow
  • +93 Afghanistan

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.


 

Looking to buy a new insurance plan?

Our experts are happy to help you!

+91

Select plan
  • Term plans
  • Saving plans
  • Retirement plans
  • Wealth plans
  • I don't know/I need help

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in

People Like You Also Read

Difference Between Close Ended & Open Ended Mutual Fund | Tata AIA
Read More
Index Funds vs. Mutual Funds: What is the Difference?
Read More
How to Choose the Right Payout For Your Term Policy?
Read More
5 Smart Investment Options That Can Give You A Monthly Income | Tata AIA Blog
Read More
ELSS vs ULIP: Understanding the Key Differences | Tata AIA Blogs
Read More
Difference Between Recurring Deposit & Fixed Deposit | Tata AIA Blogs
Read More
What is KYC? The Only Guide You Need | Tata AIA Blogs
Read More
NFO vs IPO: Understanding the Key Differences | Tata AIA Blogs
Read More
How To Invest In NFO? | Tata AIA
Read More
Top 5 Questions Asked About NFO | Tata AIA
Read More

People Like You Also Read

Difference Between Close Ended & Open Ended Mutual Fund | Tata AIA
Read More
Index Funds vs. Mutual Funds: What is the Difference?
Read More
How to Choose the Right Payout For Your Term Policy?
Read More
5 Smart Investment Options That Can Give You A Monthly Income | Tata AIA Blog
Read More
ELSS vs ULIP: Understanding the Key Differences | Tata AIA Blogs
Read More
Difference Between Recurring Deposit & Fixed Deposit | Tata AIA Blogs
Read More
What is KYC? The Only Guide You Need | Tata AIA Blogs
Read More
NFO vs IPO: Understanding the Key Differences | Tata AIA Blogs
Read More
How To Invest In NFO? | Tata AIA
Read More
Top 5 Questions Asked About NFO | Tata AIA
Read More
Website Logo Image Icon

Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

 
Frequently Asked Questions

How many investments do I need to fulfil my short-term goals?

To fulfil your short-term or long-term goals, your portfolio should be adequately diverse. However, do not over-diversify your portfolio and choose too many investment options, as this can lead to bad portfolio management. How many investment options you want to go for should be your choice.

Are some investment options better than others?

No, each investment option will offer certain benefits of its own. Depending on your risk profile and your investment goals, you should choose an investment that can help you meet these goals. It is not necessary that the investment which gives you the desired results will work the same way for another investor.

Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and does not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
  • IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
  • THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
  • Past performance is not indicative of future performance.
  • All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
  • Please make your own independent decision after consulting your financial or other professional advisor.