Which investments help save the most tax in India right now

Under Section 80C, a tax payer’s investments qualify for deductions, but the option is available only under the old tax regime. The government increased the rebate limit in the new tax regime last year, making more income tax-free.

Now, those following the new regime can enjoy up to ₹12.75 lakh tax-free income, but amount above that value is fully taxable.

For those opting for the old regime, Section 80C rewards financial discipline by giving taxpayers deductions on eligible investments, savings, insurance premiums, and certain expenses. These deductions come with a cap of up to ₹1.5 lakh per financial year.

Investments That Qualify Under Section 80C:

1. The government offers many schemes under Section 80C, which can be opted for by the taxpayers. One such popular scheme is Equity Linked Savings Schemes (ELSS). These schemes, generally with a three-year-lock-in period, invest in mutual funds. While considered high-risk assets, ELSS gives around 10% returns in favourable market conditions. Hence, taxpayers can reduce their tax liability while enjoying wealth creation.
2. Public Provident Fund (PPF) is a 15-year government-backed savings scheme offering tax-free returns of around 7.1%. It is popular for retirement savings and also allows loans and partial withdrawals. In PPF, interest and maturity are tax-free, making it an ideal long-term investment tool.
3. National Savings Certificate (NSC), currently offering 7.7% interest per annum, is a government backed scheme that comes with a five-year lock-in period. Taxpayers can avail this scheme at their nearest post offices.
4. Sukanya Samriddhi Yojana is a savings scheme for girl children in India. Parents can deposit between ₹250 and ₹1.5 lakh yearly. This account can be opened before the child turns 10 and matures after 21 years. It offers Section 80C tax benefits along with tax-free interest and maturity amount.

To be clear, even if taxpayers invest in multiple Section 80C options, the total deduction allowed is limited to ₹ 1.5 lakh per financial year. Investments above this limit do not qualify for additional tax benefits under Section 80C.