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Investing wisely can help reduce your taxable income and save money on taxes. Certain investments offer tax benefits under various government schemes. This article highlights some of the top tax-saving investments available to taxpayers.
Public Provident Fund (PPF)
The Public Provident Fund is a popular long-term investment option with a lock-in period of 15 years. Contributions to PPF are eligible for deduction under Section 80C of the Income Tax Act. The interest earned and maturity amount are tax-free, making it an attractive choice for tax savings and wealth accumulation.
Equity-Linked Savings Scheme (ELSS)
ELSS funds are mutual funds that invest primarily in equities. They come with a lock-in period of three years and qualify for deduction under Section 80C. ELSS offers the potential for higher returns compared to traditional fixed-income instruments, along with tax benefits.
National Savings Certificate (NSC)
The NSC is a government-backed savings bond with a fixed maturity period of 5 or 10 years. Investments in NSC qualify for deduction under Section 80C. The interest earned is taxable but is eligible for deduction under Section 80C in the year of investment, making it a secure option for tax planning.
Other Tax-saving Instruments
- Unit Linked Insurance Plans (ULIPs)
- Sukanya Samriddhi Yojana
- Tax-saving Fixed Deposits