Here are the top ten best tax-saving investment instruments in India:
Equity Linked Saving Scheme (ELSS)
ELSS is a type of mutual fund that invests primarily in equities, offering the potential for higher returns. As they invest at least 80% of the capital in stocks, the return potential is generally higher than other investment instruments. Investments up to Rs. 1.5 lakh in ELSS qualify for deductions under section 80C.
Public Provident Funds (PPF)
The Public Provident Fund is a long-term savings scheme backed by the Indian government. It pays regular interest to the account holders on the balance amount. Contributions up to Rs. 1.5 lakh in a financial year qualify for a deduction under section 80C. The interest earned and the maturity amount are tax-free.
Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme (SCSS) is a savings scheme for senior citizens over 60 years of age. Investments up to Rs. 1.5 lakh qualify for deductions under section 80C. The interest earned is taxable, but the scheme offers a higher interest rate compared to other fixed-income options.
Sukanya Samriddhi Yojna (SSY)
Sukanya Samriddhi Yojana (SSY) is a scheme offered by the Indian government as a savings scheme for single girl children in India. Under the scheme, tax deductions up to Rs. 1.5 lakh on the contribution amount is provided under section 80C. The interest and maturity amounts are also tax-free.
Tax Saving Fixed Deposits
Tax saver fixed deposits are fixed-income instruments that are designed to offer tax benefits to investors. Although the interest earned is fully taxable, contributions up to Rs. 1.5 lakh are eligible for tax deduction under section 80C.
National Pension Scheme
NPS is a government-backed retirement savings scheme that allows individuals to save for retirement. Investors can claim a tax deduction of up to Rs. 1.5 lakh on the contribution amount under section 80C, with an additional deduction of Rs. 50,000 available under Section 80CCD(1B).
National Savings Certificate
NPS is a fixed-income investment scheme offered by the Indian Post Office which provides regular interest to investors. Investments in NSC up to Rs. 1.5 lakh are eligible for tax deductions under section 80C.
Unit Linked Insurance Plans (ULIP)
Unit-linked insurance plans are unique investment instruments that combine the features of insurance and investments for earning returns. Premiums paid are eligible for tax deductions under section 80C up to Rs. 1.5 lakh. The maturity amount is tax-free under section 10(10D) if the policy is held for more than five years.
Life insurance
Life insurance plans provide financial protection against any eventuality to help secure a financial future. Premiums paid for life insurance policies are eligible for deductions under section 80C up to Rs. 1.5 lakh. The maturity proceeds are tax-free under section 10(10D) if conditions are met.
