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Tax Saving Investment options for 2023: There is double benefit of investing smartly, as it not only helps in accumulating wealth for future but also be save some amount of salary from tax deduction. There are ample of options to make investments that will help in saving from taxes as well. These options include PPF, NPS, ELSS funds, etc.

Many people even start saving as soon as they receive their first salary. Tax saving investment options also help in utilising the power of compounding in long term investment, which helps in accentuating small amount of investment at the time of maturity. Know about some of the top tax saving investment options you can begin your investments with.

Tax saving investment options for 2023

Public Provident Fund (PPF)

PPF is one of the most secured investment options which can be opted by even those who are just beginning their journey of investment. It is an ideal option for long term investment with secure and high returns. The PPF scheme is mandated by the government, hence backed with guaranteed returns. Apart from being a good option for initial investors, it is also a good way to diversify investment

Also Read: How new tax regime may impact ELSS fund investors?

People can begin by investing as less as 500 in a month. However, there is an annual limit of 1.5 lakh for maximum investment. PPF investment has a lock-in-period of 15 years. Investors can't withdraw their funds  before the tenure and also choose to extend the duration for 5 more years. 

Also Read: Tax saving guide: The optimal tax saving instruments under old tax regime

However, there is option of pre-mature withdrawal with certain limits. Investors can also take loan against PPF investment after the three years and before six years of opening the account. The interest paid on PPF is identified by the Indian government. The maturity amount of the PPF and the overall investment earned during the period is tax free.

National Pension System 

National Pension System is another voluntary and defined contribution retirement savings scheme, which is designed to provide cover during retirement. NPS provides tax benefits under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.5 lac under Sec 80 CCE. An additional deduction for investment up to 50,000 in NPS (Tier 1 account) is provided exclusively to NPS subscribers under subsection 80CCD (1B).There are also tax benefits on corporate sector, partial withdrawal, annuity purchase, and lump sum withdrawal.

Also Read: How financial composure can assist you in accumulating wealth?

ELSS funds

For those who are willing to progress a little and explore some more tax investment options, they can try investing in equity by using ELSS funds.  They are called tax saving funds as they offer tax exemption of maximum 1,50,000 from annual taxable income under Section 80C of the Income Tax Act. ELSS fund is an equity-oriented scheme. It has a lock-in period of 3 years. The amount earned after investing for a tenure of 3 years will be taxed by the government at 10% rate as it will come under the category of Long Term Capital Gain.

Also Read: Can my current investments help build a good corpus?

Tax saving fixed deposits

Tax saving fixed deposits is a special category of fixed deposit that allows investors to claim deduction under Section 80C of the Income Tax Act. Investors can claim a tax deduction of a maximum of 1.5 lakh by saving in this option. The tax-saving FDs have a minimum lock-in period of five years. The account can be opened online or by visiting a bank branch. Interest on tax saving FDs differ from bank to bank. Senior citizens and bank staff members are offered higher interest rates.

Senior Citizens' Saving Scheme

Senior Citizens' Saving Scheme provide is another lucrative option of investment that can also help in saving from taxes. The minimum deposit amount in SCSS scheme is 1,000. The maximum saving amount is 15 lakh.  However, the option to open account is available only for senior citizens. Only retired persons and senior citizens can take the benefit of the scheme. There is age exemption for retired defence personnel as well. 

Health insurance policy

Just like several saving schemes, there are ample of tax benefits on health insurance policieis as well. Under Section 80D, people can claim their tax deduction against healthcare related expenses and also on payment of health insurance premiums. The amount of tax saved under the section against life insurance cover is determined by the number and age of the people covered under health insurance.

Sukanya Samridhi Yojana Benefits

Sukanya Samridhi Yojana was launched by the government under its flagship program of ‘Beti Bachao, Beti Padhao’. People can open a SSY account of their girl child in their nearby banks. The account can be opened any time after her birth till the time she attains the age of 10. The guardians can handle the account and attain it till their daughter turns 18. The minimum deposit amount of the account is 250 and the maximum deposit amount is 1,50,000. Investments under the SSY account are eligible for tax deductions under Section 80 C. THe maximum cap of investment is 1.5 lakh. There is also no tax on the interest earned.

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Updated: 17 Feb 2023, 02:44 PM IST
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