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To save on taxes, you can explore various tax saving investments. These avenues can offer deductions under the Income Tax Act of 1961. You can choose from several schemes under the following sections:
10D
80C
80D
80CCD (1B)
24(b)
80TTA/ 80TTB
To know more about these tax saving instruments, read on.
These are investments with maximum exposure toward equity-based securities
These have a lock-in of 3 years
You can invest a lump sum amount or through a systematic investment plan (SIP) in an ELSS fund
You can claim exemptions of up to ₹1.5 lakhs on your taxable income u/s 80C
The returns on this scheme are market-linked and can fluctuate regularly
You also have the option to earn high returns in comparison to fixed-income options
Public Provident Fund (PPF)
This is a government-backed small savings scheme to help you save tax
It is a debt scheme with a tenure of 15 years
You earn fixed returns and the government revises the rates every quarter
It allows you to claim tax deductions of up to ₹1.5 lakhs in a financial year
The interest that you earn on your PPF investment is entirely free from taxation
Comparison of Various Tax Saving Instruments
Check out this table for a quick comparison of various tax-saving investments:
Instrument
Lock-in/Maturity Period
Tax Exemption
Return on Investment
Unit-Linked Insurance Plans (ULIPs)
5 years
₹1.5 lakhs on principal and premium
Fixed (depends upon the interest set by the government)
National Savings Certificate (NSC)
5 years
₹1.5 lakhs on principal
Fixed (depends upon the interest set by the government)
Tax-Saving Fixed Deposits
5 years
₹1.5 lakhs on principal
Fixed (depends upon the interest set by the concerned financial institution)
Equity-linked Savings Scheme (ELSS)
3 years
₹1.5 lakhs on principal
Depends on the market
Public Provident Fund (PPF)
15 years
₹1.5 lakhs on principal
Fixed (depends upon the interest set by the government)
Want to upgrade your lifestyle but have funds tied up in tax saving investments? Think before you withdraw from such schemes. After all, your future is as important as your present.
Fibe can help you cover additional expenses with an Instant Personal Loan of up to ₹5 lakhs easily and affordably. So, you can keep your investment secure without compromising on your needs. Get the loan at affordable rates in minutes by downloading our Personal Loan App or by logging in to our website.
FAQs on Tax-Saving Investment Options
Where to invest for tax savings?
You have multiple options if you wish to park your funds in tax saving investments. These include:
NPS
Tax-Saving FDs
NSC
ELSS
PPF
ULIPs
How to save taxes in India?
Investing in tax-saving options allows you to avail of tax deductions under:
80C
80D
80CCD (1B)
24(b)
80TTA/ 80TTB
10 (10D)
How much investment is needed to save tax?
The minimum investment depends on the scheme you choose. For instance, you need to invest at least ₹500 in NPS and PPF.
How can I save 100% income tax?
Here is how you can save cent percent of your tax liabilities:
If your earnings are up to ₹2.5 lakhs or ₹3 lakhs a year, you do not have to pay any tax under the old and new tax regimes, respectively
You can also get a tax rebate if your annual income is up to ₹5 lakhs or ₹7 lakhs under old and new tax regimes, respectively
You can use the standard deduction as well as deductions under 80C, 80CCD, 80D and 24(b) to save 100% on taxes if your income is higher
What is an 80D tax-saving plan?
You can claim deductions u/s 80D of the IT Act on:
Medical bill payments
Payment of health insurance premiums
Here are the maximum deductions:
Up to ₹25,000 paid for spouse, dependent children, self or parents
Up to ₹50,000 if family or parents are senior citizens
