“Death and taxes are the only two things that are certain in life,” Benjamin Franklin reportedly remarked. Regarding the former, we are unable to make many plans. Regarding the latter, however, you can arrange and discover a practical method to determine your annual payment amount.
Tax saving investment plans assist you in reducing the amount of taxes that you must pay. In order to reach your financial objectives, they also assist you in growing your money. We are running out of time to invest in tax-saving plans as the fiscal year 2024–2025 draws to a close. We at Tax2win are here to help you save as much money on taxes as possible. The first Tax saving tool in India, “Tax Planning Optimizer,” was released by Tax2win. It offers step-by-step instructions on how to save taxes by using the tool’s advice to plan your investments and savings. The tool is available to all taxpayers, regardless of their income or the complexity of their tax situation.
List of Indian Tax-Saving Plans and Investments
| Tax Saving Investment | Returns | Lock-in Tenure |
|---|---|---|
| ELSS Fund | Not Fixed | 3 years |
| National Pension Scheme (NPS) | 9% to 12% | Till Retirement |
| Unit Linked Insurance Plan (ULIP) | Not Fixed | 5 years |
| Public Provident Fund (PPF) | 7.1% (as of today) | 15 years |
| Sukanya Samriddhi Yojana | 7.6% | 21 years or till marriage |
| National Savings Certificate | 6.8% | 5 years |
| Senior Citizen Saving Scheme | 7.4% | 5 years |
| Bank FDs | 5.5% to 7.75% | 5 years |
Mutual Fund for Equity-Linked Savings Schemes (ELSS)
Let’s go over the Tax saving investing possibilities in more detail:
Two characteristics of the Section 80C tax-saving investment option known as the equity-linked savings scheme are: Initially, up to Rs. 1.5 lakh in investment funds may be free from taxes under the ELSS system. Second, there is a three-year lock-in period for investments made through the Equity-Linked Saving Scheme.
The ELSS funds provide an annual return of roughly 5% to 18%. The interest rate they give is variable and contingent on the performance of the underlying stocks. An equity-linked savings plan’s returns fluctuate based on the success of the fund in the market.
This Tax saving investment plan is best suited for risk-takers and provides liquidity and flexibility in investments.
If the gain exceeds Rs. 1 lakh in a fiscal year, the profits from ELSS are subject to 10% long-term capital gains tax (LTCG). But the best ELSS fund for one time does not necessarily have to be the best for the next. The performance of the top ELSS fund during both bull and bear market periods should be taken into consideration.
Additionally, it is easy and hassle-free to track one’s investment in the ELSS online.
(NPS), or the National Pension Scheme
The National Pension Scheme is intended to assist people in saving for retirement, according to the Pension Funds Regulatory and Development Authority (PFRDA). Both public and private employees are covered by the National Pension Scheme (NPS). The NPS program is open to everyone between the ages of 18 and 70.
Because fund management fees are relatively modest, NPS is a smart investment choice for Tax saving. In the NPS plan, fund management is carried out through four accounts: government securities, corporate bonds, stock, and alternative investment funds (AIFs), which make investments in assets like real estate, private equity, and venture capital. Investors can use these accounts to actively or passively manage their holdings.
Self-contribution to NPS is eligible for a Rs. 1,50,000 tax deduction under Section 80C. An extra Rs. 50,000 can be deducted from the NPS payment under Section 80CCD(1B). As a result, up to Rs. 2 lakh in tax benefits are offered under this scheme.
The Income Tax Act’s section 80CCD(2) addresses the employer’s NPS contribution.
Plan for Unit Linked Insurance (ULIP)
The most flexible duty- saving investment choice is the Unit Linked Insurance Plan, which lets you invest in debt, equity, or both, depending on your requirements and threat forbearance. As a result, copping
insurance has advantages for both saving and investing.
Insurance offers a duty-free lump sum payment upon maturity as well as fiscal stability for the entire family. Section 80C of the Income Tax Act allows for a deduction of over to Rs. 1.5 lakh for the decoration paid when buying a life insurance policy. In addition, Section 10( 10D) of the Income Tax Act states that the total quantum entered at maturity is duty-free.
(PPF), or the Public Provident Fund
PPF is a expression that numerous taxpayers are familiar with. PPF’s success can be attributed to its impunity from levies. You can open a PPF account with the post office or a bank. PPF accounts can be opened at a bank or post office, and they can be moved between branches, from one post office to another, or from one bank to another.
Section 80C of the Income Tax Act allows for a deduction of over to Rs. 1.5 lakh for PPF investments made during the financial time. Section 10 of the Income duty Act exempts the interest and the maturity quantum from levies. The cinch- in period for PPF accounts is 15 times.
Yojana Sukanya Samriddhi (SSY)
One of the most important investment possibilities for tax savings is the Sukanya Samriddhi Yojana. SSY was started as part of the government’s “Betis Bacchae, Betis Padano” initiative with the goal of enhancing the lives of girls and children. The plan enables the taxpayer to earn interest while making regular deposits into the account. Under Section 80C of the Income Tax Act, the Sukanya Samriddhi Yojana is also eligible for deductions up to Rs. 1.5 lakh. The system matures 21 years or until the girl kid gets married, whichever comes first after the account is opened, and has a minimum value of Rs. 250.
According to section 10(11A) of the Income Tax Act, interest earned on the SSY Account, which is compounded annually, is exempt from taxes.
Section 10(11A) of the Income Tax Act also exempts maturity proceeds and any withdrawal amount from taxation.
Certificate of National Savings (NSC)
Small and middle-income investors are the target market for the National Saving Certificate, a fixed-income investment plan. Given its low risk and similar level of security to the provident fund, NSC is a smart choice for tax-saving investments. Additionally, Section 80C of the Income Tax Act allows for a deduction of up to Rs. 1.50 lakh for investments made in NSC.
Additionally, the interest collected is tax-exempt and added back to the original investment:
- The following are the characteristics of the NSC tax-saving investment option:
- An annual interest rate of 6.8% is assured.
- You can invest as little as Rs. 1,000 (or multiples of Rs. 100) and receive a tax benefit of up to Rs. 1.5 lakh.
- The full maturity value will be paid to the investor and taxed by the taxpayer.
Senior Citizen Savings Plan
Senior persons who live in India are eligible to participate in the Senior Citizen Savings plan, as the name implies. Out of all the other saving plans, this one has one of the highest rates. The depositors have the option to prolong the maturity time by an additional three years, despite the scheme’s five-year lock-in period. Depositors can also invest with a minimum of Rs. 1000 and multiples of that amount.
Section 80C allows for a deduction of up to Rs. 1.50 lakh for investments made through the Senior Citizen Saving Scheme. If the interest on these deposits reaches Rs. 50,000, it is taxable and subject to taxation.
Bank FDs
One of the risk-free, Tax saving investment options is a fixed deposit. The interest rate is set by the bank with a minimum five-year lock-in period. When determining the taxable income in a joint account, the primary holder may benefit from a tax deduction. Additionally, a greater interest rate on investments maximizes the benefits for senior residents. Premature withdrawals from Tax saving bank fixed deposits are prohibited.
Investing in a tax-saving FD A/c allows investors to claim a maximum deduction of Rs. 1.5 Lakh.
Alternatives to Section 80 C for Tax saving
The Tax saving investing options listed below, aside from Section 80C, can help you boost your yearly savings.
| 80TTA | Interest received on deposits made into savings accounts under 80 TTA |
| 80E | Interest paid on the Education Loan repayment |
| 80D | premiums paid for health insurance plans or, in the case of older persons, actual medical costs |
| 24(b) | Interest paid on a home loan |
| 10(10D) | payouts when the life insurance plan matures |
| 10(13A) | Exemption from paying house rent (if specified in the breakdown of salaries) |
| 80GG | deduction for paid housing rent (if not included in the breakdown of salaries) |
| 80G | Contributions to Charitable Organizations |
| 80GGA | Contributions to Rural Development and Scientific Research |
| 80GGC | Contributions to Political Parties |
| 80DD | The disabled person’s medical costs |
| 80U | Based on the degree of disability, a disabled individual receives a flat deduction. |
| 80DDB | People With Specific Diseases or Disabilities Diagnosed |
| 80TTB | Interest received by senior citizens on their deposits |
Interest received on deposits made into savings accounts under 80 TTA
Within certain restrictions, all taxpayers are eligible for a tax deduction on interest earned from savings account deposits. This interest may come from bank savings accounts, post office savings accounts, or accounts in cooperative organizations that operate as banks. Ordinary taxpayers, not older persons, should choose this Tax saving investing option.
Under the current tax regulations, individuals can claim a deduction of up to ₹10,000 on the interest earned from their Tax saving accounts. This limit applies to the combined interest from all savings accounts held by the taxpayer. Any interest income exceeding this ₹10,000 threshold is subject to taxation.
For senior citizens, the tax benefits are more generous under Section 80TTB. This provision allows them to claim a deduction of up to ₹50,000 on interest income earned from savings accounts, fixed deposits, and recurring deposits. This deduction is applied to their total gross income, helping them reduce their taxable income and ease their financial burden during retirement.
Interest paid on the Education Loan repayment
Students who take out education loans to pursue their academic goals are eligible for a tax exemption on interest repayment under Section 80E. The amount of the deduction that can be taken is unlimited. Claims for tax deductions may be filed beginning at the beginning of the year when the payer begins to pay interest on the student loan and during the seven immediately following fiscal years, or until the interest is paid in full, whichever comes first.
premiums paid for health insurance plans or, in the case of older persons, actual medical costs
Section 80D permits tax deductions for the entire amount of taxable income related to health insurance premiums and medical costs. The taxpayer’s family circumstances determine the maximum amount they can deduct:
| Eligibility | Exemption limit | |
|---|---|---|
| Personal and family health insurance (spouse and dependent children) | Rs. 25,000 | |
| For oneself, one’s family, and one’s parents | Rs.25,000 + ₹25,000) = Rs.50,000 | |
| For oneself and one’s family (under 60) plus parents over 60 | Rs.25,000 + Rs.50,000 = Rs.75,000 | |
| For oneself, one’s family (including parents who are over 60), and |
|
Interest paid on a home loan
Interest paid on house loans may be recovered under Section 24(b). If the home property is self-occupied, the taxpayer’s maximum limit on interest payments on a home loan is Rs. 2 lakhs.
Furthermore, there is no cap on the maximum tax deductions in situations when the house loan obtained for the property is rented rather than self-occupied. The entire amount of interest may be deducted.
payouts when the life insurance plan matures
Section 10(10D) states that all income received from a life insurance plan upon the policyholder’s death, surrender, or maturity is tax-free.
Impunity from paying house rent( if specified in the breakdown of hires)
if you work for small or medium- sized businesses and your pay breakdown doesn’t include HRA. In this case, Section 80GG allows you to abate the rent paid for furnished or unfurnished casing. This also holds true for independent contractors. In order to be eligible for the deductions, you must
- HRA mustn’t have been entered at any point during the financial time.
- Having a home in the megacity of occupation isn’t respectable.
- A home in the megacity of occupation shouldn’t be possessed by an individual in the names of their partner, minor child, or
- Hindu Undivided Family( HUF), of which they’re a member.
Up to the lowest value of the specified parameters, the deduction amount under this section is exempt:
- Over 10% of the entire revenue, or 25% of the total income after adjustments,
- is paid in rent each month, up to a monthly limit of ₹5,000.
- Therefore, ₹60,000 is the most deduction that can be taken in a single year.
deduction for paid housing rent (if not included in the breakdown of salaries)
The Income Tax Act’s Section 10(13A) provides tax benefits with a minimum value of the following:
- If the house is located in a metro area, the employer will pay 50% of the basic salary plus dearness allowance (DA) as the actual
- yearly rent allowance; if the house is located in a non-metropolitan area, 40% of the basic salary plus DA will be paid.
- Ten percent of basic wage plus DA is the actual rent paid for the house.
- If DA is included in retirement benefits, it will be taken into account in the calculations above.
Contributions to Charitable Organizations
Under Section 80G of the Income Tax Act, gifts made to recognized charity organizations are eligible for deductions. The requirement is that the donation must have been given in a way other than cash because cash contributions beyond Rs. 2,000 are not deductible.
A stamped receipt from the organization where the donation was made, along with information about the trust’s name, address, PAN number, donation amount, etc., is also required in order to claim this deduction.
Contributions to Rural Development and Scientific Research
Section 80GGA allows taxpayers to deduct contributions to rural development and scientific research. If the donation exceeds Rs. 10,000, there is no cap and 100% of the income spent can be deducted as long as the transaction is performed through a bank account.
Contributions to Political Parties
If the donation is made through a bank account, the full amount of the revenue used to support political parties is exempt from taxation under Section 80GGC. Additionally, Section 29A of the Representation of People Act (RPA) of 1951 requires that the political party to which the donation is made be registered.
The disabled person’s medical costs
Individuals and Hindu Undivided Families (HUF) may deduct expenses related to the care and welfare of a dependent family member with a disability under Section 80DD. This claim, however, is only available to these dependent people’s legal family. A deduction of up to Rs. 75,000 can be claimed by those with 40–80% disability, depending on the percentage of disability. More than 80% of people with disabilities are eligible to receive up to Rs. 1.25 lakh, which covers all associated costs.
Based on the severity of their disability, a disabled person receives a flat deduction.
A registered medical authority must document a disability with a minimum 40% impairment in order for the disabled person to be eligible for tax deductions under Section 80U.
The disabled person is eligible for a deduction of up to Rs. 75,000 if their disability is between 40 and 80 percent.
People who are more than 80% disabled are eligible to receive up to Rs. 1.25 lakh, which covers all associated costs.
People With Specific Diseases or Disabilities Diagnosed
People can claim exemptions under Section 80DDB from paying future income taxes for the treatment of dependent family members who have been diagnosed with certain illnesses. These serious conditions include AIDS, chronic kidney disease, neurological problems, hematological disorders, and malignant tumors. A maximum of Rs. 40,000 is paid out to people under 60, while Rs. 1 lakh is paid out to senior and super senior citizens.
Interest Earned on Deposits by Senior Citizens
Managing finances during retirement can be challenging for senior citizens, especially with rising medical expenses. To ease this financial burden, the government offers tax relief through Section 80TTB of the Income Tax Act.
Under this provision, individuals aged 60 years and above can claim a deduction of up to ₹50,000 on the interest earned from their deposits, including savings accounts, fixed deposits, and recurring deposits. This deduction is applied to their gross total income for the financial year, helping senior citizens retain more of their hard-earned money and simplify their financial planning during retirement.
How to Effectively Plan Your Annual Tax-Saving Investments
A careful approach is necessary when planning your Tax saving investments in order to reduce your tax liability and assist you in reaching your financial objectives.
The following useful advice can help you plan effectively:
1. Recognize Your Tax Obligation
Determine your total taxable income for the year first. To determine how much tax you owe, use the applicable tax slab rates. You can clearly see how much you need to contribute in order to lower your liabilities after doing this step.
2. Determine Where Exemptions and Deductions Apply
Look into ways to reduce your taxable income by examining several provisions of the Income Tax Act. Typical choices consist of:
Section 80C:Investments in PPF, ELSS, LIC premiums, and tax-saving fixed deposits are covered under Section 80C.
Section 80D: Health insurance policy premiums.
Section 24(b): Home loan interest.
3. Match Financial Objectives With Investments
Select Tax saving options that support your long-term goals, such as building wealth, saving for retirement, or protecting your family’s future, in addition to helping you save money on taxes.
4. Make Your Investments Early in the Fiscal Year
Plan ahead to avoid last-minute investments. You can:
- Distribute investments evenly throughout the year
- Reduce financial stress
- Increase returns on long-term investments by investing at the start of the fiscal year.
You may maximize your Tax saving and make sure your investments support your overall financial well-being by following these measures.
Assess Your Risk Tolerance
- Depending on your risk tolerance, choose investments such as PPF for a longer-term, safer option or ELSS funds for adventurous investors.
- To balance risk and growth, think about combining various investment kinds.
Make a Long-Term Goal Plan
- To protect your retirement and long-term financial objectives, as well as to save taxes, concentrate on long-term growth instruments like PPF or NPS.
- To optimize growth, refrain from taking frequent withdrawals from Tax saving options.
- Think About Tax-Free Income
Invest in tax-free securities that earn interest without increasing your tax liability, such as tax-free bonds or the Public Provident Fund (PPF).
Think About Tax-Free Income
Invest in tax-free securities that earn interest without increasing your tax liability, such as tax-free bonds or the Public Provident Fund (PPF).
Track and Modify Your Portfolio
Make sure your investments are in line with your evolving financial and tax requirements by reviewing them on a regular basis.
Every year, rebalance your portfolio, particularly if tax regulations change or if Tax saving limits are reached.
Make Purchases Prior to the Due Date
Keep in mind that the deadlines for claiming deductions for the current year are usually before the end of the fiscal year (March 31st).
2025’s Top Tax-Saving Investments for Seniors
Savings Plan for Senior Citizens (SCSS)
Interest rate: 8.2% annually, subject to quarterly adjustments.
Features: Specifically created for elderly persons, the SCSS is a government-backed investment scheme that provides a safe means of increasing funds. The RBI’s Monetary Policy Committee reviews the interest rate every three months and modifies it in accordance with the state of the economy.
The interest rate for the Public Provident Fund (PPF)
Interest rate: is 7.1% annually, subject to periodic modification by the government.
Features: PPF is a long-term, government-backed investment plan that offers tax advantages and capital protection, with a 15-year lock-in period. Because the interest generated is tax-free, it’s a great way to save for the future or establish a retirement corpus. It is an investment with minimal risk that also provides tax advantages under Section 80C.
Saving on Taxes with Fixed Deposits
Interest rate: 8.5% to 8.5% annually, plus an extra 0.50 percent for senior persons.
Features: These fixed deposits offer assured returns and liquidity and are accessible through banks, post offices, and other financial organizations. They are eligible for tax exemption under Section 80C of the Income Tax Act, which permits you to invest up to Rs. 1.5 lakh for Tax saving benefits, but there is a five-year lock-in period. Senior citizens are given special rates on interest income, even if it is taxable.
government bonds
Interest rates : on government bonds typically range from 7-8% annually.
Features: Over time, government bonds provide steady yields and safety. Interest may be free from taxes or provide additional tax advantages, depending on the bond plan. For investors looking for a reliable source of income, these bonds are perfect.
Returns on mutual funds
Interest:(debt funds) are usually between 10 and 12 percent annually, though they might fluctuate.
Features: Unlike equities funds, debt mutual funds invest in fixed-income assets and are appropriate for cautious investors seeking modest returns at a reduced risk. The tax benefits offered by Equity Linked Savings Schemes (ELSS) under Section 80C, which permits deductions of up to Rs. 1.5 lakh from taxable income, are contingent upon the fund type and holding duration.
The National Pension System (NPS)
Interest : yields 8–10% annually, depending on the state of the market.
Features: NPS offers post-retirement pension income and tax benefits, making it ideal for long-term retirement savings. A combination of government securities, corporate bonds, and equities make up the investment portfolio, which has the potential to increase in value.
Making the most of your hard-earned money requires careful Tax saving. In addition to offering professional guidance on investments that can save you money on taxes, Tax2win also makes it easy, accurate, and stress-free to file your income tax return (ITR).
