10 Tax Saving Investment Scheme You Can Avail Tax Benefits

Life Insurance

Life insurance is one of the most important and necessary needs for providing a financially stable and pleasant life for your family members. Even in your absence, the capital advantages of life insurance help your family construct a safe and secure future. Furthermore, there are income tax benefits for life insurance under Sections 80C and 10D of the Income Tax Act. 

Section 80C allows you to deduct up to 1.5 lakh in premiums paid for a life insurance policy, while Section 10(10D) makes income on maturity tax-free provided the premium is less than 10% of the total assured or the value assured is at least 10 times the premium. 
However, if the total assured is less than 10 times the premium you would get a premium reduction of up to 10% of the sum assured. In this case, your deduction will be Rs.50,000 rather than Rs.1 lakh.

Health Insurance

Health insurance is an important investment. It provides financial protection for you and your loved ones in the event of a medical emergency. A health insurance policy offers total coverage by assisting you in paying for medical expenditures specified in the policy, whether it is an emergency or a scheduled hospitalization.
 
 Aside from protecting your finances from escalating medical costs, you can also get tax breaks on your health insurance payments under Section 80D of the Income Tax Act, subject to certain criteria. As a result, purchasing health insurance is a wise investment.

Term Insurance

Term insurance, the most basic form of life insurance policy, provides an individual with life insurance coverage for a set length of time in exchange for the regular payment of a set premium. If the life policyholder dies during the policy period, the policy nominee will receive a death benefit as stipulated in the policy inclusion conditions. 
The most basic term insurance tax benefits that every Indian taxpayer can enjoy are governed by Section 80C of the Income Tax Act of 1961. Indeed, many people believe this section to be the most popular way to save money on taxes. Term insurance premiums paid for acquiring policies are eligible for tax benefits of up to Rs. 1.5 lakh under this section.
You may optimize term life insurance tax benefits by purchasing a big life insurance policy for yourself, which will help your family members in the long run. When you purchase a term plan, you can take advantage of not one, but many term insurance tax breaks. These perks allow you to save money on taxes while also safeguarding your loved one's financial future.

Unit Linked Insurance Plans (ULIPs)

A ULIP is a type of insurance that combines insurance and investing advantages into one package. ULIPs, or Unit Linked Insurance Plans, provide life insurance, which is a significant advantage over typical wealth-building strategies. It not only helps your money grow, but it also safeguards the future of your loved ones from life's unforeseen twists and turns. When you buy a ULIP, a portion of the money is invested in equities, debt, or other securities, while the rest is used to provide insurance coverage.
 
 The premium paid for this sort of coverage is deductible under Section 80C of the tax code. Furthermore, under Section 10 of the Internal Revenue Code, the policy's maturity returns are tax-free (10D).

Employee Provident Fund (EPF)

Employers are obligated to deduct a portion of an employee's pay and direct it to the EPF. Both the employee and the employer contribute a fixed percentage of money to the EPF account on a regular basis. Currently, the interest rate on EPF contributions is 8.5%. Individuals benefit from contributions to an EPF account through a Section 80C deduction. The highest amount for tax deductions on EPF contributions is Rs 1.5 lakhs. The interest rate is calculated using the employee's basic pay plus a component known as the dearness allowance in his or her total income. On retirement, the employee receives a lump sum payment that includes both his or her personal and employer's contributions, as well as interest on the money.

Public Provident Fund (PPF)

When it comes to income tax, the PPF receives a threefold exemption; this benefit is not available to many assets. You are excluded from paying taxes on your investments, accruals, and withdrawals. It provides a deduction of up to Rs 1.5 lakh on investments made in each fiscal year under section 80C of the Income-tax Act of 1961. The current PPF interest rate is 7.1 percent. The interest you earn each year is likewise tax-free. Finally, the cumulative corpus that you remove at maturity is tax-free, making it tax-free income. Although the EPF now has the highest interest rate, the PPF interest rate is not far behind. However, this investment option is only available to salaried persons. PPF, on the other hand, is a product into which even self-employed individuals can put their money.

National Pension System (NPS)

NPS is a specified contribution product with a market relationship. The NPS, like PPF and EPF, is a voluntary defined contribution pension system that has EEE (Exempt-Exempt-Exempt) status in India, which means that the whole corpus is tax-free at maturity and the full pension withdrawal amount is tax-free.

5 Year Lock-in Tax Saving Fixed Deposit

Fixed deposit (FD) accounts have long been a popular way to save money since they are not subject to market fluctuations and offer a fixed interest rate at maturity. A tax-saving fixed deposit is identical to any other fixed deposit in that you deposit a set amount of money and receive a certain annual return. Fixed deposit accounts are divided into numerous types based on the account's features, the kind of account holder, and the reason for opening the account. Many risk-averse people use tax-saving FD accounts with a five-year minimum lock-in term to save money on taxes. Section 80C of the Income Tax Act of 1961 allows for a tax deduction on such deposits. The interest rate on FDs is substantially greater than the interest rate on a standard savings account. Investors can withdraw their funds after the deposit's term.

Senior Citizens Saving Scheme (SCSS)

An SCSS account is a Government of India-backed account that provides retirement benefits. Senior persons in India can take advantage of the account's benefits by making a lump-sum investment in the plan, either individually or collectively. After retirement, the account will give monthly income as well as income tax benefits. The plan pays a high rate of interest on the deposit. Section 80C of the Indian Tax Act, 1961 allows you to deduct up to Rs. 1.5 lakh in income tax. The account's 5-year term can be extended for additional three years.

Equity-linked Savings Scheme (ELSS)

The ELSS is a type of mutual fund that invests largely in the stock market. Under Section 80C of the Income Tax Act of 1961, an equity-linked savings system, or ELSS, is a tax-saving investment. You may receive a tax credit of up to Rs 1,50,000 per year and save up to Rs 46,800 per year by investing in ELSS. The only type of mutual fund eligible for tax advantages under Section 80C is an ELSS. The advantage of ELSS over other tax-saving devices is that it has a three-year lock-in period.