Want to save on taxes? Tax saving investment options are an excellent way to make your money yield more and still secure tax advantages over time.
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We have selected the best tax saving investment options, showing the amount you can invest, the tax benefits offered, the risks involved and the payback period of each alternative.
You will also discover all the advantages and precautions that each of the tax saving investment options requires. Thus, in a few minutes you will understand what you need to make smart and safe choices for your financial future.
1. Sukanya Samriddhi Yojana (SSY)
The Sukanya Samriddhi Yojana (SSY) is an initiative of the Indian government, aiming to promote financial security and a promising future for girls across the country.
The program encourages families to adopt the habit of saving money, while also offering tax benefits.
Contributions made to SSY can generate tax deductions of up to ₹1.5 lakh.
The initial investment amount is only ₹250, being accessible to families of different financial conditions.
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Accrued interest is tax-free, as is the final amount received.
2. ELSS Mutual Fund (Equity-Linked Savings Scheme) – Tax saving investment options
Among the investment options aimed at saving taxes, the ELSS Mutual Fund stands out for offering a combination of tax benefits and potential returns.
In principle, the ELSS allows investments of up to ₹1.5 lakh per annum to be deducted from the taxable base.
One of the advantages is the short lock-up period of only three years, the shortest among traditional tax saving alternatives.
It is important to know that the performance of the ELSS is directly linked to the stock market, with yields ranging between 5% and 18% per year, although there are no guarantees of return due to market volatility.
Mostly, capital gains above ₹1 lakh are taxed at 10% (LTCG).
3. Public Pension Fund (PPF)
Having a safe and stable investment is one of the pillars to build long-term financial planning.
The Public Pension Fund (PPF) is an option that combines everything, from security to tax benefits.
Therefore, it is the ideal option for those who want to grow their wealth in the long term. Accounts can be opened in banks, allowing PPF to generate a deduction of up to ₹1.5 lakh, as well as full exemption from interest and maturity taxes.
Therefore, when thinking about long-term investments, consider options such as the PPF, which offer no predictable return, not to mention the benefits linked to taxes.
4. National Pension Scheme (NPS) – Tax saving investment options
The National Pension Scheme (NPS) was created to encourage the formation of a fee-free long-term financial reserve and a wide variety of investments, for example:
- Actions;
- Corporate bonds;
- Government bonds;
- Alternative funds.
In this way, NPS allows financial management in a structured and organized way.
In addition, it offers tax benefits, with the deduction of up to ₹2 lakh under Sections 80C and 80CCD(1B), as well as advantages for employer contributions.
5. Unit-Linked Lockout Plane (ULIP)
In principle, the Unit-Linked Insurance Plan (ULIP) combines investments in debt assets, equity, or both, offering flexibility to suit different investor risk profiles.
In addition to seeking wealth growth, ULIP generates financial security for the family in case of unforeseen events, ensuring tax-free benefit payment.
Therefore, carefully analyze the potential return, the protection offered, and the tax benefits, such as the deduction of up to ₹1.5 lakh per year.
6. National Savings Certificate (NSC)
The National Savings Certificate (NSC) is a fixed income option suitable for investors looking for security combined with tax benefits.
In principle, the guaranteed return is 6.8% per annum and deduction of up to ₹1.5 lakh as per Section 80C of the Income Tax Act, allowing you to protect your wealth while optimizing the tax burden.
Therefore, when planning your finances, consider investments such as NSC, which offer stability and a solid foundation for your financial future.
How to plan your investments to save taxes in the year?
- Understand your tax liability: Review your total taxable income and estimate the tax liability based on the percentage of tax you will be required to pay;
- Choose the right investment tools: Invest in options such as PPF, ELSS, NSC that offer up to ₹1.5 lakh in deductions. Another option is to invest in the National Pension Plan (NPS);
- Assess your risk tolerance: Select investments according to your risk profile, opting for ELSS funds if you are more aggressive or PPF for a more conservative alternative;
- Plan long-term goals: Focus on instruments that provide growth over time, such as NPS and PPF. Thinking not only about tax savings, but also about guaranteeing retirement and other financial goals;
- Monitor and adjust your portfolio: Review your investments to ensure that they remain aligned with your financial and tax goals;
- Make investments ahead of schedule: Be mindful to make investments before the end of the fiscal year.
Investment brokers where you can invest in tax saving investment Options
Now you know almost everything you need to start investing safely. However, there is still a doubt, where to invest?
There are many brokers on the market and you need to know them to make sure you have made the best choice. Some alternatives are:
- Groww
- Zerodha
- Angel One
- Upstox
- ICICI Direct
- HDFC Securities
- Box Securities
- Mirae Asset Sharekhan
- 5paisa
- Paytm Money
We recommend that you research each of them to learn about the services they offer, fees charged, and their level of reliability. These 3 points are the pillars that will guide your decision-making.
Conclusion (Tax saving investment options)
Based on the tax-saving investment options we’ve explored, it’s clear that there are plenty of surefire ways to grow your money while saving on taxes.
Today, there are several options for those who want to invest better and ensure more security for the future.
The alternatives mentioned stand out for offering important tax benefits and growth opportunities. Each investment has its particularities.
Some are suitable for those looking for long-term stability and security. Others are ideal for those who accept more risk in exchange for better returns.
Furthermore, in addition to understanding the risks, the deadlines and aligning the choices with their personal goals. Therefore, he also learned about a guide on how to plan your investments to save taxes and adjust your portfolio when necessary.
However, there is no point in knowing investments without being able to organize your money in the right way. Therefore, we recommend that you know the best personal finance apps in India, they will help you with this task.