Maximize your savings and lower your taxes with THESE 5 investment schemes in India

In India, there are several savings and investment schemes that not only help individuals meet their financial goals, but also offer tax benefits. These tax benefits can help individuals save money on their taxes and potentially increase their overall returns. In this article, we will discuss five such schemes which offer tax benefits in India.

Public Provident Fund (PPF): The PPF is a long-term savings scheme offered by the government of India. Contributions to a PPF account are made with after-tax dollars, but the interest earned on the account is tax-free. Additionally, contributions to a PPF account are eligible for a tax deduction under Section 80C of the Income Tax Act. The maximum annual contribution to a PPF account is Rs. 1.5 lakhs.

National Pension System (NPS): The NPS is a pension scheme offered by the government of India. Contributions to an NPS account are made with pre-tax dollars, reducing the individual's taxable income in the current year. Additionally, the contributions to an NPS account are eligible for a tax deduction under Section 80C of the Income Tax Act. The maximum annual contribution to an NPS account is Rs. 2 lakhs.

Also read: Fixed vs term deposits: Comparing interest rates, tenures and suitability for your savings goals

Equity-Linked Savings Scheme (ELSS): ELSS is a type of mutual fund that invests in equities. Contributions to an ELSS are made with after-tax dollars, but the investments are eligible for a tax deduction under Section 80C of the Income Tax Act. Additionally, the long-term capital gains from ELSS investments are taxed at a lower rate of 10% (compared to other long-term capital gains which are taxed at 20%).

Life Insurance: Life insurance premiums are eligible for a tax deduction under Section 80C of the Income Tax Act. Additionally, the death benefits received from a life insurance policy are tax-free.

Home Loan Interest: Interest paid on a home loan is eligible for a tax deduction under Section 24 of the Income Tax Act. The maximum annual deduction that can be claimed is Rs. 2 lakhs for self-occupied properties and Rs. 30,000 for rented properties.