Want To Save Money On Taxed Income? Check THESE 5 Tax-Saving Instrument

These investments may help lower your taxed income. Check top tax-saving instruments here.

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New Delhi: Saving money on taxes doesn't have to be difficult. By making smart investments in tax-saving products, you can lower your tax bill and secure your financial future with a lot of savings. There are various ways for taxpayers to reduce their tax obligations under Section 80C and other sections.

These investments may help lower your taxed income. As a result, you have the opportunity to build wealth over time. ()

What Are Tax-Saving Methods?

Tax saving can be broadly categorized into two main avenues: expenses and investments. While deductions for expenses like tuition fees, rent, and medical expenses are common, strategic investments play a significant role in reducing tax liability. ()

Top Tax-Saving Instruments

Let's explore some of the most effective tax-saving investment plans that offer both financial benefits and portfolio diversification opportunities:

Equity Linked Savings Scheme

ELSS stands out as an attractive option, offering potential high returns by investing primarily in equity securities. With a mandatory lock-in period of three years, ELSS qualifies for tax exemptions under Section 80C of the Income Tax Act, providing investors with a maximum tax exemption of Rs. 1.5 lakh.

Public Provident Fund

Backed by the Central Government, PPF is a tax-efficient investment plan favored by many salaried individuals. Contributions to PPF accounts are eligible for tax deductions under Section 80C, with a deduction limit of Rs. 1.5 lakh. PPF accounts offer the added benefits of tax-free returns and no wealth tax.

National Pension Scheme

Similar to PPF, NPS operates as a systematic investment system with the EEE (Exempt-Exempt-Exempt) status. Contributions to NPS qualify for tax exemptions, and withdrawals are tax-free, making it an attractive long-term investment option.

Unit Linked Insurance Plan

ULIPs offer a dual benefit of insurance coverage and investment opportunities. Premiums paid towards ULIP policies are eligible for tax deductions under Section 80C, and returns on maturity are tax-exempt under Section 10(10D).

Senior Citizen Savings Scheme

Designed specifically for senior citizens, SCSS allows for tax deductions on investments up to Rs. 1.5 lakh. With a maximum investment limit of Rs. 15 lakh and returns backed by the Central Government, SCSS presents a low-risk investment avenue for retirees.

Sukanya Samriddhi Yojana

Targeted towards empowering girl children, SSY offers attractive interest rates and tax benefits. Parents can open SSY accounts for daughters below the age of ten, with tax benefits extending up to Rs. 1.5 lakh per annum.