Financial year end is the tax saving season for most of us in India. Be it a last minute or throughout the year plan, tax planning process holds a crucial place in your financial planning. Tax saving has to be goal based and well planned. It’s always advisable to plan your tax-saving investment right from the beginning of the year so that you can efficiently save on taxes. It’s important to understand the various tax saving investment instruments and their suitability before investing. Here are some most preferred tax saving investment plans that can boost your savings.

Top 5 Tax-saving Investment Instruments

  • Life Insurance: This is an essential investment as it offers you multifaceted benefits. It’s the best tax saving instrument that provides you life cover at the time of eventualities along with building corpus for your future. You can invest in life insurance product depending on your various needs. Also, there are term plans for pure insurance purposes. Endowment plans and money back plans can help you by serving your lifestyle needs. ULIPs (Unit linked Insurance plans) can get you potential return on investment and help you build corpus. Whatever be the choice, you will be offered tax benefits in each of your investment. Life insurance premiums are exempt from tax deduction under Section 80C up to maximum of Rs. 1.5 lac. Remember, premium up to 20% of sum assured is only allowed for deduction. Claim/Maturity proceeds are also tax free under Section 10 (10D) of IT act.
  • Equity Linked Savings Scheme (ELSS): It’s a variant of equity mutual fund, which offers you tax benefit under section 80C. A type of tax saving investment plan that gives you higher return (as per past record) if invested for longer duration. However, it has a lock-in period of 3 years. If you are young and an initial investor, you can also take a monthly investment route through SIP (Systematic Investment Plan). There are plenty of ELSS schemes available. You need to choose them wisely. Along with tax benefit under Section 80C for the invested amount, your dividend and redemption proceeds are also tax-free.
  • Health Insurance: Health insurance plays a major role in your financial portfolio. Along with securing you and your family’s health, it offers you great tax benefits. The premium that you pay for health insurance is exempted from your taxable income. For individuals the exempted is Rs. 25,000 and in case of senior citizens, maximum exemption allowed is Rs. 30,000. Maximum of Rs. 5000 can be claimed for preventive health checkups.
  • New Pension Scheme: It is one of the low cost tax saving investment plans that helps you enjoy the maximum tax benefit of Rs. 50,000, which is over and above Section 80C benefit.
  • Public Provident Fund: PPF is one of the most preferred and completely safe long term tax saving investment instrument that is backed by the Government of India. The tenure of PPF can be up to 15 years. Account can be opened in any branch of India Post and in some of the designated bank branches. PPF certificate can be pledged for availing credit. When it comes to taxation, contributions made towards PPF are allowed for exemption under Section 80C of the IT act to the maximum amount of Rs. 1.5 lac. PPF attracts No Wealth Tax along with tax free interest.

Apart from the saving investment plans listed above; there are many other investment plans such as National Savings Certificate, Tax saving bank deposits, Employee Provident Fund, Senior Citizen Savings Scheme, etc. in which one can invest.


To sum it up, with the various tax saving investment plans available, one needs to choose the right product based on their financial goal, tenure, return and safety along with considering the tax efficiency of the product. Consider above best bets and plan your taxes wisely!

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