tax saving investments

Best Tax-Saving Investments & Schemes

In 2024, the landscape of tax-saving investments in India may have evolved, but several traditional options are likely to remain popular. According to some tax advisors, many taxpayers typically wake up every year around this time to finalize their tax saving investments. It is always good to start better planning your investments and taxes in advance than make the wrong moves at the FY24-end. Here’s an overview of some of the best tax-saving investments available in India!

Best Tax-Saving Investments in India

Public Provident Fund (PPF)

Public Provident Fund (PPF) is the most popular long-term tax saving investment product among the several investors due to its safety, fixed returns, and tax benefits. Contributions to PPF accounts qualify for deductions under Section 80C, and the interest earned is tax-free. It is most suitable for the ones who want to save funds for their retirement.

PPF allows contribution to a limit of INR 1,50,000, which can be done by small investments or lump-sum. The lock-in period for PPF is 15 years. After the completion of 7 financial years from the date of initiation, amount can be withdrawn partially subject to certain conditions.

Unit Linked Investment Plan (ULIP)

ULIPs offer a combination of insurance coverage and investment opportunities in equity, debt, or a mix of both. It covers the risk but no guaranteed returns. The returns can range from 5% to 11% depending upon the scheme. The maturity revenues earned are tax-exempted U/S 10(10D) of the IT Act. A Ulip has the lock-in period of 5 years but can have a duration of 15 or 20 years.

Equity Linked Saving Schemes (ELSS)

Equity Linked Saving Schemes (ELSS) is the diversified mutual funds which are linked to equity. It has two differentiating features – one, investment of up to a maximum limit of INR 1.5 lakh a year in ELSS schemes is eligible for tax exemption under Section 80C of the Income Tax Act, 1961 and secondly, the amount invested in ELSS has a lock-in period of 3 years.

Sukanya Samriddhi Yojana

The government launched Sukanya Samriddhi Yojana (SSY) as a part of the ‘Beti Bachao, Beti Padhao’ campaign. Investments made towards this scheme are eligible for tax deduction under Section 80C of the Income Tax Act. This deduction is subject to a maximum of Rs 1.5 lakh

Parents or guardians can open the SSY account for girl children below the age of 10 years. The account matures in 21 years from the time it is opened.

As a great tax saving investment, the plan ensures that the future of your girl child remains safe and secure.

National Pension Scheme

The Pension Fund Regulatory and Development Authority (PFRDA) regulates the National Pension Scheme (NPS), a voluntary and long-term investment plan for retirement.

The contributions can be claimed as a deduction under section 80C of the Act. One cannot make any withdrawals in NPS till the person retires, except in some specific situations. It aims to provide adequate financial security to individuals during retirement.

National Saving Certificate

National Savings Certificate (NSC), a post office savings product is a fixed income tax saving investment scheme with a host of benefits. Similar to fixed-income instruments like PPF and Bank FDs, this scheme too is a secure and low-risk product, which offers guaranteed return on investment.

It comes with two fixed maturity periods – five years and ten years. There is no maximum limit on the purchase of NSCs, but only investments of up to Rs.1.5 lakh can earn you a tax break under Section 80C of the Income Tax Act.

Senior Citizens Savings Scheme (SCSS)

Senior Citizens Savings Scheme (SCSS) is for the senior citizens to save tax. It is a government-backed tax savings financial product offered to Indian residents aged over 60 years. Under this scheme, depositors are allowed to make a lump sum deposit of minimum Rs.1000. The maximum SCSS limit deposit is Rs.15 lakh.

The interest is taxable, but it is mostly covered in the taxable limit. There is a lock-in period of 5 years also. After the maturity of 5 years from the date of account opening, the depositor can extend the deposit once by an additional 3 years.

Senior Citizen Savings Scheme interest rates for the 1st quarter (April-June) of FY 2024-25 is 8.2% p.a.

These are some of the best tax-saving investments in India in 2024, catering to different risk profiles and investment objectives. It’s essential to assess your financial goals, risk tolerance, and investment horizon before choosing the most suitable option for your tax-saving needs.

Want to make wise investment decisions?? Let us help you to make the best decision for your financial health.

Financial InstrumentReturnsLock-in Period
Public Provident Fund (PPF)7.1% p.a.15 Years
Unit Linked Investment Plan (ULIP)11% to 20% p.a. (depending on the chosen plan)5 Years
Equity Linked Saving Schemes (ELSS)Returns vary as per the performance of underlying assets3 Years
Sukanya Samriddhi Yojana (SSY)8% p.a.21 Years
National Pension Scheme (NPS)9% to 12% p.a.3 Years
National Saving Certificate (NSC)7.7% p.a.5 Years
Senior Citizens Savings Scheme (SCSS)8.20% p.a.5 Years

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