Saving taxes is an essential part of financial planning for salaried professionals. The right tax-saving investments not only reduce your taxable income but also help you build wealth for the future. In this article, we’ll explore the best options under Section 80C and beyond, so you can make the most of the 2024 tax season.
What Are Tax-Saving Investments?
Tax-saving investments are financial products that offer deductions or exemptions under the Income Tax Act. For salaried professionals, these investments help lower taxable income while securing financial goals like retirement, education, or wealth creation.
Top 10 Tax-Saving Investments in India
1. Public Provident Fund (PPF)
Why Choose PPF?
Tax-free returns
Guaranteed by the government
Eligibility: Any Indian resident.
Tax Benefits: Deduction under Section 80C (up to ₹1.5 lakh).
2. Employee Provident Fund (EPF)
Why Choose EPF?
Mandatory for salaried employees in organized sectors.
Employer contributions add to your savings.
Tax Benefits: Exempt-Exempt-Exempt (EEE) status; contributions up to ₹1.5 lakh deductible under Section 80C.
3. National Pension System (NPS)
Why Choose NPS?
Additional deduction of ₹50,000 under Section 80CCD(1B).
Flexible investment options.
Who Should Invest? Professionals planning for retirement.
4. Equity-Linked Savings Scheme (ELSS)
Why Choose ELSS?
Shortest lock-in period (3 years) among Section 80C options.
Potential for high returns.
Tax Benefits: ₹1.5 lakh deduction under Section 80C.
5. Tax-Saving Fixed Deposits (FDs)
Why Choose Tax-Saving FDs?
Safe investment with guaranteed returns.
Lock-in period: 5 years.
Tax Benefits: ₹1.5 lakh deduction under Section 80C; interest taxable.
6. Unit Linked Insurance Plans (ULIPs)
Why Choose ULIPs?
Combines investment and insurance.
Flexible premium payment options.
Tax Benefits: Deductions under Section 80C.
7. Sukanya Samriddhi Yojana (SSY)
Why Choose SSY?
Designed for the girl child.
High interest rates compared to PPF.
Tax Benefits: Full exemption on deposits, interest, and maturity amount.
8. Health Insurance Premiums
Why Choose Health Insurance?
Protects against medical emergencies.
Deductions under Section 80D:
Up to ₹25,000 for self/family.
Additional ₹25,000 for senior citizen parents.
9. Home Loan Principal and Interest
Why Choose Home Loans?
Build an asset while saving taxes.
Tax Benefits:
Principal repayment: Deduction under Section 80C.
Interest payment: Deduction up to ₹2 lakh under Section 24(b).
10. Voluntary Provident Fund (VPF)
Why Choose VPF?
Earns the same interest as EPF (higher than FDs).
Voluntary contribution beyond mandatory EPF.
Tax Benefits: Contributions up to ₹1.5 lakh deductible under Section 80C.
Frequently Asked Questions (FAQs)
Q1. Can I claim deductions under multiple sections?
Yes, you can combine deductions from Section 80C, 80D, 80CCD, and more to maximize tax savings.
Q2. Is ULIP better than ELSS for tax-saving?
ULIPs offer insurance benefits, but ELSS usually delivers higher returns due to equity exposure.
Q3. What if I exceed the ₹1.5 lakh limit under Section 80C?
Explore additional deductions like NPS under Section 80CCD(1B) or health insurance under Section 80D.
Disclaimer - - This article does not provide any recommendation, investors are requested to consult there financial advisor before making any decisions. Above information may be incorrect due to changes in sections and deduction amount.