Tax Saving Plans

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    Tax saving investment plans are instrumental in effectively achieving your financial goals. Investment schemes available in the market provide tax exemptions and tax deductions.

    Are You Liable to Pay Income Tax?

    Indian direct tax system offers a calculation of tax liability based on tax slabs. It also offers a minimum threshold for zero tax liability, based on the age of the taxpayer. Meaning, if your taxable income falls within the first (lowest) slab, your tax liability would be zero.

    The Minimum Threshold

    The minimum income threshold depends on the age of the taxpayer (Resident/ Non-resident). The minimum threshold is:

    Rs. 250,000 if you are below the age of 60 or filing tax as a Hindu Undivided Family (HUF)

    Rs. 300,000 if your age is 60 to 79 years

    Rs. 500,000 when you are 80 years and above

    Best Tax-Saving Investments Under Section 80C

    Although there are various tax-saving investment plans available in the market. We’ve come up with some of the best tax-saving investments u/s 80C of the Income Tax Act, 1961.



    Lock-in Period

    ELSS Fund


    3 years

    National Pension Scheme (NPS)


    Till Retirement

    Unit Linked Insurance Plan (ULIP)

    Returns vary from plan to plan

    5 years

    Public Provident Fund (PPF)


    15 years

    Sukanya Samriddhi Yojana



    National Savings Certificate


    5 years

    Senior Citizen Saving Scheme


    5 years

    Bank FDs


    5 years


    Returns vary from plan to plan

    3 years

    ELSS (Equity-Linked Saving Scheme) Mutual Fund

    This is a tax saving mutual fund in wich you can save upto ₹46,800 in taxes under Section 80C with a proven track record of consistent returns. The investment is made in equity, aiming for higher returns of about 15% in the long term. There is no guarantee for such returns but the study shows that they are achievable. It offers the lowest lock-in period of just three years.

    National Pension Scheme (NPS)

    As, one of the best tax-saving investments scheme National Pension Scheme help to provide tax-exemption under three different sections as mentioned below.

    1. The contribution, up to the maximum limit of Rs.1.5 lakh can be claimed for tax exemption under section 80C of IT Act.
    2. Under Section 80CCD (1b) one can get additional deduction up to Rs.50,000.
    3. If 10% of the basic salary of the individual is contributed by the employer in the National Pension Scheme, then the amount is not taxed.

    Low-cost investment options are available. The returns are also fluctuating 3% to 10%. It is not such an attractive and recommendable scheme due to its restrictions.

    Public Provident Fund (PPF)

    The PPF scheme offers an attractive rate of interest and no tax is required to be paid on the returns that are generated from the interest rates.

    Eligibility to open a PPF account

    The eligibility criteria to open a PPF account are mentioned below:

    • Indian citizens are eligible to open a PPF account.
    • An individual can open only one account under his/her name. However, another account can be opened by the individual on behalf of a minor.
    • Non-resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not allowed to open a PPF account.


    Any kind of Insurance is considered as a tax saving investment products available in the market. Insurance are not only Tax saving plans but also important as the main objective of these insurance policies is to provide insurance coverage.

    Tax Saving Investments - FAQs

    Some of the top tax-free investment options are:

    • Sukanya Samriddhi Account
    • Public Provident Fund (PPF)
    • Senior Citizens Saving Scheme
    • National Pension Scheme (NPS)
    • Employee’s Provident Fund (EPF)

    The easy tax saving investments that should be known by all the taxpayers of India are:

    • 5 years Bank Fixed Deposit
    • Public Provident Fund (PPF)
    • National Savings Certificate (NSC)
    • Equity Linked Saving Schemes (ELSS)
    • Unit Linked Investment Plan (ULIP)
    • National Pension Scheme
    • Life Insurance
    • Senior Citizen Savings Scheme (SCSS)

    The taxes on the investments depend on the type of investment you are making. Here are some of the investment types wherein the taxes are levied:

    • Capital Gains: This means when you sell some of your investments at a profit, you are taxed.
    • Dividends and Other Income Types: With profits of selling the investments, you have to pay the interest on dividends, interest, rental or other types of income that you get.
    • Tax on Interest: Even though the interest gained from various tax saving schemes is tax-free, but there are many cases wherein you have to pay taxes on the interest you gained.

    There is no limit on the number of tax-free investment instruments that one can take. However, there is a limit of deduction under which one can claim the tax benefits. These limits are according to different Income Tax Act’s Sections.

    You can save taxes by making investments in the tax-free investment instruments. In this way, you will be able to pay lesser taxes on high income.