As we get closer to the end of the financial year and the scary prospect of income tax, we decide on looking for some form of tax-saving investment options within our budget. It is this time of the year when we think it is a good time to start some savings for the future and plan ahead.
Though it is never too late, you can still plan your investments accordingly. There are many tax saving schemes available in the market. These investment products can save you taxes under various sections of the Indian Income Tax Act.
Whatever be your tax bracket, no matter what you earn, this blog post discusses some of the best tax-saving investment options available in India that can be used to reduce your tax burden. We’ll also take a look at some of the most prominent tax-saving schemes available.
Public Provident Fund
Public Provident Fund (PPF) is a long-term savings scheme by the Central Government that’s designed to encourage savings among Indians. is one of India’s most tax-efficient long-term savings schemes. You can enjoy deductions of up to Rs 1.5 lakh in it each year.
PPFs offer a triple exemption benefit of tax-free returns, deduction on deposits, and no wealth tax. In addition, the interest earned from PPF deposits is tax-free as well. That’s why they’re considered as one of the best tax-saving investments in India.
Unit Linked Insurance Plans (ULIPs)
ULIPs combine investment and insurance in a single investment plan so you get double benefits. If you invest in a Unit Linked Insurance Product, your premium will be partly allocated to equity, debt, or other securities. The remaining amount will be used to purchase an insurance policy.
ULIPs are tax-efficient investments because the premium paid toward them can be claimed as a tax deduction under Section 80C. The money you make when the policy matures is also exempted from taxation under Section 10(10D), which makes ULIPs a great tax-saving scheme in India.
Life Insurance
Life insurance is an investment product that can help you secure your family’s future. By paying monthly premiums, your policy will provide your family with financial benefits in the unfortunate event that you die.
Although life insurance is not a pure form of investment per se, it can act as an effective way for you to save on taxes. Section 80C of the Income Tax allows you to claim a deduction from your total income when you invest in a life insurance plan.
The tax payable on the maturity proceeds is also exempted under Section 10D of the Income Tax Act.
Senior Citizens Saving Scheme
The Senior Citizen Savings Scheme is primarily for seniors, who are over 60 years old. The SCSS is great because it allows a senior citizen to get a regular income stream after retirement and gets deposited into your account regularly, and you can enjoy tax-saving benefits.
If you invest in the Senior Citizens Savings Scheme, you can get a tax deduction of up to Rs 1.5 lakh each year and your principal will not be taxed if it’s withdrawn by a legal heir or nominee. Therefore, if you want to save money on taxes while planning for your retirement, make sure you invest in SCSS.
Best Tax Saving Plans in India
Now when you know about the several options to save taxes in India, it’s time to make your process even more lenient by providing you insights on some of the best tax saving plans available in India:
SBI Life – Smart Wealth Assure
SBI Life’s Smart Wealth Assure offers individual, unit-linked, non-participating life insurance that cannot be cashed out for 5 years. It features certain tax benefits as per section 80C and 10(10D) of the Income Tax Act.
This plan offers security in case of any eventuality, flexibility to manage the invested money, affordability with one-time premium payment for long-term benefits, and liquidity in partial withdrawals from the 6th policy year.
It also enables you to reap the benefits of market-linked returns, along with an insurance cover. You can also withdraw money from this plan after paying a certain amount of fees through the partial withdrawal feature of the plan.
Canara HSBC Oriental Bank Of Commerce Invest 4G
The Canara HSBC Oriental Bank Of Commerce Invest 4G life insurance policy offers you complete control over your savings and insurance needs. With an unmatched combination of portfolio management options and flexibilities, this life insurance policy enables you to customize it as per your changing requirements and goals.
You can choose to pay the premiums for the entire policy term, for limited years, or once. The plan even allows you to choose from three different cover options, depending on your life stages. Moreover, if you choose a regular premium policy, the mortality charges are deducted during the term.
HDFC Life Pro Growth Plus
HDFC Life Pro Growth Plus is a unit-linked non-participating life insurance policy that you can use to get both life cover and benefit from market growth. You have 10 fund options, so you can invest in each of them to diversify your risk.
You can also make partial withdrawals from your investment to deal with unexpected costs. In the event of your unfortunate death due to an accident, an additional sum assured is also paid to your chosen nominee in addition to the death benefit.
Final Words
With the prevailing uncertainty in the Indian economy and growing inflation, it is important to keep your finances in check. Although you can invest in mutual funds and stocks, they are not tax-efficient investment instruments like PPF or NSC.
You can open a PPF account with any bank today to start saving on taxes while getting good returns over the long term. This is one of the best tax-saving investment options available in India and should be utilized by everyone in addition to the other opportunities shared above.