Save Income Tax with These 5 Fantastic Investment Plans

As the first half of the financial year 2024-25 comes to a close, many salaried individuals are pondering where to invest their savings to secure their future while also saving on income tax. The old income tax regime allows taxpayers to claim deductions on selected investments under Section 80C of the Income Tax Act, offering a tax deduction of up to ₹1,50,000. This presents an excellent opportunity for taxpayers to not only earn guaranteed returns but also save significantly on taxes. Here’s a detailed look at five lucrative investment schemes that can help you achieve both.

Kisan Vikas Patra (KVP): This small savings scheme, operated by the India Post, offers a higher interest rate compared to some other savings plans. The maturity period for KVP is 115 months (9 years and 7 months), with a minimum investment of ₹1,000.

Public Provident Fund (PPF): A popular long-term investment option, PPF offers attractive interest rates and a 15-year lock-in period. Contributions to PPF are eligible for tax deductions under Section 80C, making it a wise choice for tax-saving.

National Pension System (NPS): NPS is designed to provide retirement benefits and offers tax deductions under Section 80CCD. Contributions made to NPS are eligible for additional tax benefits, enhancing your overall savings.

Equity Linked Savings Scheme (ELSS): ELSS funds are mutual funds that invest primarily in equities and offer tax benefits under Section 80C. With a mandatory lock-in period of three years, ELSS not only provides tax savings but also the potential for higher returns.

Senior Citizens Savings Scheme (SCSS): Tailored for senior citizens, SCSS provides a safe investment avenue with a higher interest rate compared to standard savings accounts. Investments made in SCSS are eligible for tax deductions under Section 80C.

Tax-saving Fixed Deposits: Bank fixed deposits that offer tax benefits under Section 80C are a secure way to save and earn interest. These deposits have a minimum lock-in period of five years.

Sukanya Samriddhi Yojana: Aimed at encouraging savings for the girl child, this government scheme offers a competitive interest rate and tax benefits under Section 80C. The account can be opened in the name of a girl child until she turns 10.

Unit Linked Insurance Plans (ULIPs): ULIPs combine insurance and investment, providing tax benefits under Section 80C. They offer flexibility in choosing investment options and have a lock-in period of five years.

National Savings Certificate (NSC): This government-backed savings scheme is an excellent option for risk-averse investors. Investments made in NSC qualify for tax deductions under Section 80C.

Investing Wisely: While choosing the right investment plan, it’s crucial to assess your risk appetite, investment horizon, and financial goals. A balanced approach can maximize returns while minimizing tax liabilities.