Tax Saving Investments: Save your taxes beyond Mutual Fund

Tax Saving Investments: You can reduce your tax burden by putting your money in the tax saving investments that are mostly offered by the government as well as the private finance organisations.

When you invest your money in such schemes, you can automatically avail the tax deductions and exemptions. These exemptions have been listed under the different sections of the ITA (Income Tax Act of 1961) like Section 80C, 80D, 80CCF and others as well. There are many opportunities available for investing your money in the various tax saving schemes that are being offered currently. Some of the tax saving investments are listed below:

All you need to know about various tax saving investments available in India

• Tax saving investment - Public Provident Fund

Also commonly called PPF. In this scheme, you can not withdraw the money before the term of 15 years ends. However, a penalty will be charged if money is withdrawn before the end of the term. The maximum amount that you can put in the PPF is Rs. 1.5 lakhs per year. The maturity period for the same can be extended in blocks of five years each time.

• Tax saving investment - Unit Linked Insurance Plans

It is also called the ULIPs. The maturity earnings under this scheme are exempted from taxes. In this tax saving investment, allow for a maximum exemption of Rs.1 lakh per year.

• Tax saving investment - Fixed Deposit

These have a fixed term of 5 years. The maximum amount that can be invested so as to avail the tax benefits of the scheme is Rs. 1 lakh. The top banks that offer tax saving fixed deposits include the ICICI Bank, HDFC Bank, Axis Bank, IDBI Bank and the SBI.

• Tax saving investment - Employee Provident Fund

This is commonly called the EPF. This scheme also offers the tax benefits of about 1 lakh rupees per year.

• Tax saving investment - National Saving Certificate 

Also commonly called NSC. Using this scheme, one can easily earn tax saving interest of about Rs.1 lakh every year.

• Tax saving investment - Infrastructure Bonds

The maximum exemption that can be allowed under this scheme is of Rs. 20,000 per year. The interest earned under this is chargeable. However, the investors will be allowed to claim tax exemptions for about Rs.15,000

• Tax Saving Investment - Mutual Funds

The tax saving mutual funds are popularly known as ELSS (Equity Linked Savings Scheme). Under this, the total tax benefits of up to Rs.1 lakh per year is allowed. The lock-in period for this fund is between 3 to 5 years. The long term capital gains earned through this scheme will be tax-free. Some of the Major fund houses that offer the tax saving mutual funds include the HDFC MF, IDBI MF, Birla Sun Life MF, ICICI Prudential MF and the SBI MF.

• Post Office Tax Saving Investment Schemes

Post office tax saving schemes also fall under the ambit of Section 80C. You can claim up to Rs.1 lakh in tax benefits every year through the various post office investment options. The tax saving schemes under the post office include Time deposit account, Recurring deposit account for 5 years, 15 years Public Provident Fund account, Senior Citizen Savings Scheme, and the National Savings Certificate (VIII Issue).

• Tax saving investment - National Pension System (NPS)

NPS is a retirement savings scheme. Tax benefits can be incurred when you invest in the NPS. Only an investment that is up to Rs. 1.5 lakh will be qualified for the tax deductions in NPS. Under the NPS, partial withdrawal can be availed up to 25 per cent of the contribution to cover the expenses such as children’s higher education or marriage, construction or purchase of the first house, and medical treatment. The money withdrawn will be tax-free.