Best 10 Tax-saving Investments You Can Choose in 2024

  • Updated on: 1 Feb 2024
  • Published on: 29 Jan 2024
Best 10 Tax-saving Investments You Can Choose in 2024

Choosing tax-saving investments has dual benefits:

  • They help reduce your tax liabilities
  • They enable you to build a better financial future

You can choose from various government and private options, which allow you to invest as per your goals and availability. 

However, before you decide on any investment option, there are two important strategies you must consider:

  • Analyse different schemes properly 
  • Make a well-informed decision after extensive research 

Read on to learn about top investment options, how much investment is needed to save tax and more. 

Tax-Saving Investments in India in 2024

To decide which scheme is the best for you, here’s a quick overview of their return rates, lock-in period and tax benefits sections. 

SchemeReturn Rate (per annum)Lock-in PeriodTax Benefits
Employee Provident Fund8.15%5 years Section 80C
ELSS Mutual FundAs per the asset performance 3 years Section 80C Section 10(D)
Life Insurance PolicyDepends on the planVaries as per the scheme Section 80C (Premium) Section 10(D) (Claim)
National Pension Scheme9% – 12%5 years Section 80CCD
National Savings Certificate7.7%5 years Section 80C
Public Provident Fund7.1%15 years Section 80C
Senior Citizen Savings Scheme8.2%5 years Section 80C
Sukanya Samriddhi Yojana8%21 years Section 80C and Section 10(D)
Tax-Saver Fixed Deposit Scheme5.5% – 7.75%5 years Section 80C
Unit Linked Insurance Plan11% – 20%5 years Section 80C and Section 10(D)

Note that returns can vary according to revisions in government policies or market conditions in the case of mutual funds.

Also Read: Tax saving investment options in India

Now, dive deeper into the key features of these tax-saving investments.

Employee Provident Fund (EPF)

  • Interest earned is completely tax-free
  • Can opt for withdrawal after a 5-year lock-in period without paying any tax
  • Employers also contribute to the funds, which is not included in the taxable income  

Equity-Linked Savings Scheme (ELSS) Mutual Fund

  • ELSS allows an annual deduction of ₹1.5 lakhs from your taxable income
  • The returns after the 3-year lock-in period are long-term capital gains and are taxable
  • One way to save tax on the dividend is to reinvest the amount

Life Insurance Policy

  • The scheme is for the protection of the nominees against unfortunate circumstances 
  • Eligible for deduction up to ₹1.5 lakhs from the net income 
  • Maturity proceeds of 5 lakhs are eligible for taxation 

National Pension Scheme (NPS)

  • You can claim 10% of your salary as a tax deduction
  • The deduction allows up to ₹1.5 lakhs within a fiscal year 
  • This is one of the government-backed tax-saving investment options for retirement

National Savings Certificate (NSC)

  • You can claim a deduction of ₹1.5 lakhs on the investment amount per year
  • Earning within the first 4 years is tax-free; after that, it’s taxable as per the income tax slab
  • This scheme deducts TDS from the source

Public Provident Fund (PPF)

  • Ideal for long-term investment with a 15-year lock-in period
  • 100% tax-free investment option 
  • Maximum deduction of ₹1.5 lakhs per annum allowed

Senior Citizen Savings Scheme (SCSS)

  • Tax deduction allowed up to ₹1.5 lakhs per financial year
  • No TDS on interest up to ₹50,000 
  • Interest earned after maturity is completely tax-free 

Sukanya Samriddhi Yojana (SSY)

  • This tax-saving investment aims for the welfare of the girl child as part of the ‘Beti Bachao Beti Padhao’ campaign
  • It’s eligible for an annual deduction of up to ₹1.5 lakhs
  • Interest earned is also exempt from taxation 

Tax-Saver Fixed Deposit Scheme

  • The maximum deduction allowed is ₹1.5 lakhs in a fiscal year
  • Interest earned is taxable

Unit Linked Insurance Plan (ULIP)

  • Premiums paid toward this scheme are eligible for deductions of up to ₹1.5 lakhs annually
  • In case of untimely demise of the investor, the claim amount is 100% tax-free
  • Maturity benefits are also tax-free if the total premium doesn’t exceed ₹2.5 lakhs

In conclusion, these schemes offer two of these most crucial benefits:

  • Help you to save on taxes 
  • Enable you to build a financially strong future through excellent returns on investment

However, if you need funds for immediate financial needs, apply for an Instant Personal Loan instead of liquidating your investment or other assets. You can get up to ₹5 lakhs with quick disbursal and interest rates starting at 2% monthly, making it a comfortable and pocket-friendly option. So, visit our website or download our  Cash Loan App to apply now! 

FAQs on Tax-Saving Investments

Which investment is 100% tax-free?

Here are a few top tax-saving investment options in India. 

  • Equity Linked Saving Scheme (ELSS)
  • National Savings Certificate (NSC)
  • Public Provident Fund (PPF)
  • Senior Citizens Saving Scheme (SCSS)
  • Unit Linked Insurance Plan (ULIP)

Is SIP tax-free?

Yes. Here’s what you need to know:

  • Systematic Investment Plans (SIPs) are tax-saving investments under the Exempt-Exempt-Exempt or EEE scheme
  • All earnings and withdrawals under this are exempt from taxation

Is LIC maturity tax-free?

According to the Budget 2023 guidelines, this is what you need to know:

  • The maturity amount is tax-free 
  • The above condition applies only if you have paid a premium of more than ₹5 lakhs annually

Is it compulsory to file an ITR?

You must file an ITR:

  • If your income crosses the basic exemption limit
  • The first one holds true if your taxable income exceeds ₹5 lakhs

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