This Is How You Plan Your Investment To Save Taxes

This Is How You Plan Your Investment To Save Taxes

You’re just starting out in the world of investing, and you’ve got some great ideas such as utilizing section 80GG. You want to get out of debt and get a bigger home (and a dog, if they let big dogs in your neighborhood). But you’re also committed to saving taxes on your salary slip — maybe even making sure that all your money is going towards retirement. Is it possible to save taxes and at the same time invest for financial security? Yes, it is! Let us show you how.

1. Equity Linked Saving Schemes (ELSS)

ELSS mutual funds are one of the most popular investment options for investors in India. They offer a wide range of products, from different types of equity funds to debt funds and gold-based ETFs.

What’s excellent about ELSS funds is that they allow you to invest in a variety of different asset classes without having to worry about their tax implications. The investment is made through a SIP (subscription) plan where you pay a fixed amount every month or quarter, making it easy to manage your investments.

Investing in an ELSS means saving taxes on your investments by using them as part of your annual earnings from the fund. This can help reduce your tax burden overall.

2. National Pension Scheme (NPS)

The National Pension Scheme (NPS) is a unique investment opportunity that can help you save money on taxes. The main reason why the NPS is so attractive is that its investments are tax-free. One of the most attractive features of NPS is that 60% of the corpus withdrawn at the time of retirement is tax-free.

Also, younger investors can now allocate up to 75% to equities, and older investors can remain invested in the scheme even after they retire till the age of 70. Not only this, but with an investment of up to Rs 1.5 lakh, one can claim a deduction under Sec 80C; there is an additional deduction of up to Rs 50,000 under Sec 80CCD(1b).

If the employer puts up to 10% of the basic salary in NPS, that amount is not taxable.

3. Unit Linked Insurance Plans

A unit-linked insurance plan (ULIP) is an insurance product that offers an investor the opportunity to cover their financial needs and save money on taxes at the same time.

It’s effective because it can simultaneously cater to many financial needs, including housing and education expenses, health care expenses, etc. The flexibility of the Ulips means that you can switch from equity to debt or vice versa, depending on your reading of the market.

And because income from Ulips is tax-exempt, there are no tax implications on gains made from such switching.

A very good example of a ULIP plan that provides such benefits is the INVEST 4G Plan by Canara HSBC Life Insurance.

One must know that Ulips are long-term investments, but if you continue with the policy for the entire term, you’ll be able to benefit from this investment without losing liquidity.

4. Public Provident Fund

If you’re looking for a way to save money on taxes in India, Public Provident Fund (PPF) could be an excellent option for you. PPF is a government-sponsored retirement savings plan that allows you to invest your hard-earned money and earn returns on your investments. You can also use it to save for your old age or even as an emergency fund.

It’s important to note that the interest rates on PPF are low—you can earn 7.1% per annum—but this is still better than what you’d be able to earn with a fixed deposit account. The best thing about PPF is its tax-free nature: if you put money into PPF while still working, it will benefit from tax reliefs and deductions.

You can also open an account with someone else, so you don’t have to worry about paying any fees when depositing funds into it. The tenure of this scheme is 15 years from the first investment, which on maturity can be extended in blocks of five years.

5. Senior Citizens’ Saving Scheme

If you are considering saving money on taxes in India, you should consider investing in a senior citizens’ saving scheme. Senior citizens’ saving schemes are an excellent investment option for those above 60 years of age.

Senior Citizens’ Savings Scheme (SCSS) is an additional tax exemption on interest income up to Rs 50,000 per annum. The scheme also beats PPF in terms of interest and beats it even if the loan term is five years. This makes it an attractive option over PPF and other regular FDs.

The eligibility criteria for SCSS are restricted to senior citizens only. You have to be above 60 years and also not be working full time.

There is no upper limit on the amount that can be invested under this scheme. You can invest as much as Rs 15 lakh per individual yearly without being hit by any other salary slip or wealth tax.

6. Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana is a small savings scheme that allows you to save money on taxes in India. The Sukanya Samriddhi Yojana is for taxpayers with a daughter aged below ten years. It is the most tax-friendly small savings scheme, and its interest rate is linked to the government bond yield and is subject to change every quarter.

This means that your investments can grow even if the interest rates are low or high. Accounts can be opened in any post office or designated banks, in the name of the child and with a minimum investment of Rs 1,000.


In the end, there are plenty of ways to save taxes on your investments. Which plan you choose will depend on multiple factors, from where you live to your investing style. Take a look at each one, and see which option is best for you. In the long run, that financial/tax savings could add up to a nice little boost for your investment portfolio. You may also be able to avail of tax exemption on house rent you pay based on Section 80GG of the ITA. 


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