Top 5 income tax-saving investments to boost your financial health in 2025

With the financial year nearing its end, Indian taxpayers are seeking good investments that not only give returns but also enjoy reasonable tax exemptions. Here are five primary income tax-saving investment plans that can get you fit financially and enable you to maximise tax returns.

Public Provident Fund

Public Provident Fund (PPF) is a long-term saving scheme guaranteed by the government and best suited for conservative investors. It has a 15-year lock-in period and also offers a maximum annual limit of ₹1.5 lakh under Section 80C of the Income Tax Act.

The rate of interest for this scheme is around 7.1% per annum, compounded annually, and the interest received and maturity amount are exempted from tax, making it a sure investment for wealth creation over a long-term period.

Equity Linked Savings Scheme

Equity Linked Savings Schemes (ELSS) are mutual funds that are heavily invested in equities. They have a lock-in period of three years. ELSS also enjoys tax deduction under Section 80C up to ₹1.5 lakh. As they have the potential to provide higher returns based on exposure to equities, they are appropriate for those with high risk-bearing capacity and who want to increase their wealth without any interest in saving tax.

National Pension Scheme

National Pension Scheme (NPS) is the government and private sector employee retirement savings. NPS savings are tax exempted under Section 80C to ₹1.5 lakh along with tax deduction of ₹50,000 under Section 80CCD(1B). NPS is a very popular retirement planning scheme with the added advantage of tax exemption.

Senior Citizens Savings Scheme

Senior Citizen Savings Scheme (SCSS) is designed for old citizens over 60 years of age. This is one of the highest returning saving schemes providing approximately 8.2% annually. SCSS also carries a five year lock-in period and investors can invest a maximum ₹30 lakhs under tax deduction section 80C. The scheme provides safety along with reasonable and fair returns, hence highly suitable for old citizens.

National Savings Certificate

National Savings Certificate or NSC is a scheme providing guaranteed return of around 7.7% rate of interest. NSC is of lock-in period of five years and can be used under Section 80C for deductions of up to ₹1.5 lakh. NSC is of greatest appeal to risk-free investors who look for safe growth coupled with the benefit of tax concession.

To conclude, all these types of investments minimise not just tax liability over income but also contribute immensely towards achieving long-term economic objectives.

Time is valuable, and one must take advantage of these instruments of improvement of one's financial well-being under the guise of tax regulations.

Disclaimer: This article is for informational purposes only and not financial or tax advice. Interest rates and tax benefits are subject to change. Consult a financial advisor or tax professional before making any investment decisions.