Six popular tax-saving investments in India: A comprehensive guide

A good tax-saving investment must be an investment first and a tax-saver later. There are a number of schemes available to reduce your tax liability. Here is a closer look at six popular options. 1. Equity-linked savings scheme (ELSS) funds ELSS funds are pure equity funds and have a three-year lock-in. The amount invested (up to Rs 1.5 lakh per annum) is eligible for tax deduction under Section 80C. The realised gains are treated as long-term capital gains and are taxed at 10 per cent. However, gains up to Rs 1 lakh in a financial year are tax exempt. 2. National Savings Certificate (NSC) NSC is a popular and safe small savings instrument that combines tax savings with guaranteed returns. Backed by the government, this is one of the safest investment options available at post-offices. Investments Minimum: 1000 per annum Maximum: No limit Interest: 7.7 per cent compounded yearly Tenure: 5 years 3. Public Provident Fund (PPF) Public Provident Fund is a long-term savings instrument established by the Central Government, which offers tax benefit on savings and withdrawal after the lock-in period. Investments Minimum: Rs 500 per annum Maximum: Rs 1.5 lakh per annum Interest: 7.1 per cent compounded annually Tenure: 15 years. One can extend the account in blocks of five years on completion of 15 years. 4. Unit-linked insurance plan (ULIP) ULIPs are hybrid products that mix life insurance and investments. Like any other life insurance product, these offer life cover along with investment. In terms

This article was originally published on October 28, 2021, and last updated on February 14, 2023.