Tax-saving investments are an essential part of financial planning, allowing individuals to grow their wealth while minimizing tax liabilities. In recent years, women’s participation in financial investments has increased significantly. There are several investment options in India that offer tax benefits, some of which are specifically designed for long-term security and retirement planning.
Here are ten investment options that women can consider to save taxes while securing their financial future:
1. Sukanya Samriddhi Yojana (SSY)
The Sukanya Samriddhi Yojana (SSY) is an excellent tax-saving option for women, particularly mothers looking to invest in their daughters’ future education and marriage. This government-backed scheme falls under the EEE (exempt-exempt-exempt) tax category, meaning:
- The investment amount, interest earned, and maturity proceeds are completely tax-free.
- Investments in SSY are eligible for deduction under Section 80C of the Income Tax Act, with a maximum limit of ₹1.5 lakh per year.
- Parents or guardians of a girl child under 10 years can open an SSY account.
2. National Savings Certificate (NSC)
The National Savings Certificate (NSC) is a secure investment option that provides tax-saving benefits under Section 80C.
- The maximum deduction limit is ₹1.5 lakh per year.
- Available at post offices, NSC currently offers a fixed return of 7.7%.
- The minimum deposit amount is ₹1,000, and interest rates are reviewed periodically.
3. Public Provident Fund (PPF)
The Public Provident Fund (PPF) is a great option for women seeking long-term tax-free returns.
- The minimum investment is ₹500 per year, while the maximum limit is ₹1.5 lakh per financial year.
- Interest earned is tax-free, and withdrawals are exempt from tax.
- The current interest rate on PPF is 7.10% per annum.
- The maturity period is 15 years, extendable in 5-year blocks.
4. Life & Health Insurance
Insurance policies serve a dual purpose of financial protection and tax-saving benefits.
- Premiums paid for life insurance policies (including those for a spouse and children) qualify for tax deduction under Section 80C.
- The deduction is capped at 10% of the sum assured (15% for individuals with specific disabilities under Section 80U).
- Health insurance premiums are deductible under Section 80D, including policies for self, spouse, children, and parents.
5. Equity-Linked Savings Scheme (ELSS)
For women looking for higher returns with tax benefits, ELSS (Equity-Linked Savings Scheme) is a viable option.
- ELSS investments qualify for Section 80C deductions (up to ₹1.5 lakh per year).
- Since ELSS is market-linked, it carries a higher risk but has the potential for better returns.
- It has a lock-in period of three years, making it the shortest lock-in period among tax-saving investment options.
6. Employee Provident Fund (EPF)
Women working in salaried jobs can benefit from EPF (Employee Provident Fund), which allows tax-free investments.
- Contributions of up to ₹1.5 lakh per year are eligible for deduction under Section 80C.
- Interest earned is tax-free, provided withdrawals are made after five years of continuous service.
7. National Pension System (NPS)
For women planning long-term retirement savings, the National Pension System (NPS) is a great option.
- NPS investments qualify for tax benefits under Section 80C (up to ₹1.5 lakh).
- An additional deduction of ₹50,000 is available under Section 80CCD (1B), increasing the total tax-free investment limit to ₹2 lakh per year.
- NPS offers market-linked returns and allows for systematic retirement savings.
8. Tax-Saving Fixed Deposits (FDs)
Women can opt for tax-saving fixed deposits, which are available in banks and post offices.
- These deposits have a mandatory lock-in period of five years.
- Investments qualify for deductions under Section 80C, with a limit of ₹1.5 lakh per year.
- However, the interest earned is taxable.
9. Home Loan Tax Benefits
Women who have taken a home loan can claim tax benefits under different sections of the Income Tax Act:
- Section 80C: Deduction of up to ₹1.5 lakh per year on repayment of the principal amount.
- Section 24(b): Deduction of up to ₹2 lakh per year on home loan interest payments.
- Additional tax benefits may be available for first-time homebuyers under Section 80EEA.
10. Senior Citizen Savings Scheme (SCSS)
Women above 60 years can invest in the Senior Citizen Savings Scheme (SCSS) for tax-saving benefits and guaranteed income.
- Investments in SCSS qualify for tax deduction under Section 80C.
- SCSS provides higher interest rates compared to traditional fixed deposits.
Conclusion
Women have multiple investment options that not only provide financial security but also offer significant tax benefits. While risk-averse investors may prefer PPF, NSC, SSY, and fixed deposits, those with a higher risk tolerance can opt for ELSS or NPS. Choosing the right investment depends on individual financial goals, risk appetite, and investment horizon.
