With less than two months left for the financial year 2024-25 to end, this is the last chance to plan your investments and save on taxes. Many people are looking for options that not only reduce their tax liability but also secure their financial future. Proper tax planning can help you avoid last-minute stress.
Here are seven tax-saving schemes that offer great returns while providing tax exemptions.
1. Equity Linked Savings Scheme (ELSS)
ELSS is one of the best tax-saving investment options, offering tax exemption of up to ₹1.5 lakh under Section 80C of the Income Tax Act. You can start investing with as little as ₹500. The lock-in period is just three years, which is the shortest among all tax-saving instruments.
2. National Pension Scheme (NPS)
NPS is a great option for retirement planning. It provides an additional tax deduction of ₹50,000 under Section 80CCD (1B), along with a ₹1.5 lakh exemption under Section 80C. This not only helps you save on taxes but also ensures financial security post-retirement.
3. Public Provident Fund (PPF)
PPF is a safe and tax-free long-term investment. Contributions qualify for tax exemption under Section 80C, and both the interest earned and the maturity amount are tax-free. It is ideal for those looking for risk-free and stable returns over the long run.
4. Unit Linked Insurance Plan (ULIP)
ULIP offers the dual benefit of investment and life insurance. It has a lock-in period of five years, and both the premium paid and the maturity amount are tax-free. It is a good option for those who want market-linked returns along with insurance coverage.
5. Tax Saver Fixed Deposit (FD)
For those looking for low-risk investments, Tax Saver FD is a solid option. It comes with a five-year lock-in period and offers tax exemption of up to ₹1.5 lakh under Section 80C. However, keep in mind that premature withdrawals are not allowed.
6. Senior Citizen Savings Scheme (SCSS)
This scheme is specially designed for senior citizens and provides 8.2% annual interest, one of the highest among tax-saving options. Tax exemption is available on investments up to ₹30 lakh, making it a great choice for retirees looking for stable income.
7. Sukanya Samriddhi Yojana (SSY)
SSY is a government-backed scheme for daughters below 10 years of age. It provides a ₹1.5 lakh tax exemption under Section 80C, and the returns earned are completely tax-free. It’s an excellent option for parents planning for their daughter’s future.
Final Thoughts
Investing in these tax-saving schemes can help you reduce your tax burden while ensuring financial security for the future. Choose the right option based on your goals, risk appetite, and investment horizon before the financial year ends!
