5 Game-Changing Financial Freedom Tips for The Future

  May 9, 2019

5 Effective Tax-Saving Investment Solutions

The famous saying, “Nothing is certain but death and taxes” by Benjamin Franklin is quite true. No matter how much you earn, or how you do it, you’re bound to pay taxes. Especially in India, where the taxes are high, Indians are always on the lookout of tax-saving schemes to investment. Luckily, there are many smart ways to save your hard-earned money for the future.

For most of us, tax-saving is something we put off till the last moment. Usually, during the end of the financial year, most people start thinking of investing. However, this doesn’t help with prudent investment planning. As we’re now in the early quarters of the FY19-20, starting early will help you get maximum benefits from tax saving options. Plus, being proactive minimizes the risks and errors of making wrong investments in a hurry.

A common mistake most investors make is choosing a plan only to save tax. However, your investment should be based on 4 factors:

      1. Maximum tax saving in the future
      2. Low cost of investment in the present
      3. Minimum risks on your investment
      4. Substantial returns based on the investment amount

Section 80C of the Income Tax Act

Most tax-saving investments fall under the parameters of Section 80C. In this case, the deductions you make towards investments are tax deductible. Common investments in this category include ELSS (Equity Linked Saving Scheme), Life Insurance, National Saving Schemes and Bonds, Public Provident Fund, Fixed Deposits, etc. The upper limit of the deduction is Rs. 1 lakh. So irrespective of whether you invest in one or more of these plans, the deduction stops when it reaches the limit of Rs. 1 lakh.

The Top 5 Investment Options to Save Tax and Get Returns

1. Life Insurance

Though this isn’t a pure tax saving scheme, it offers double benefits. It gives you a life cover for a financial cushion in an unfortunate situation. Plus, the premium you pay for the policy is deductible from your income under Section 80C. This helps in lowering your taxable fraction. If you have a Unit Linked Insurance Plan (ULIP), the premium paid for it is exempted from Income Tax. You can also opt for term plans, endowment plans or money back plans, based on your needs.


ELSS Mutual Funds are ideal for tax-saving and therefore, they are one of the most sought after tax-saving investment solutions in India. Though they are a high-risk product (since they are linked to the market), they also offer higher returns. Compared to the other investments in its class, ELSS also boasts of the shortest lock-in period (3 years), making it an ideal investment option. You can invest in ELSS through SIP (Systematic Investment Plans), too.

3. NPS

The National Pension Scheme is one of the few investment options that lets the investor surpass the Rs. 1 lakh deduction under Section 80C. Under this scheme, the percentage of your basic salary that your employer contributes (lower than 10%) towards NPS is deductible. But the contribution you make towards NPS is governed under Section 80C and thus, abides by the Rs. 1 lakh limit.

4. Health Insurance

Though this isn’t a direct tax saving investment, it’s something you must include in your portfolio. Under Section 80D, you get a tax deduction on the premium you pay for your health insurance. This isn’t applicable for group health insurance; in case your employer is buying your policy. But if you’re buying for your family and your parents, you can get up to Rs. 35,000 deductions on your taxable income.

5. PPF

This is a long-term saving scheme issued by the Central Government wherein the contribution for PPF is tax deductible. The upper limit is Rs. 70,000. However, the interest you earn and receive at maturity will be tax-free. This provides an 8% return to investors and offers assurance as it is a Government scheme.

Talk to our financial experts at Finnovators to help you decide which tax-saving investment is ideal for your individual needs. Remember, starting with your investments early on during the financial year can give you a lot more returns in the long run.

Visit our website http://www.finnovators.in/ for more information or call us at 91 8055593593 today!