20 Tax Saving Investments Options in India for 2025

Financial goals cannot be achieved without proper tax planning. Some investment options enable you to save taxes. With a smart combination of tax saving schemes, you can grow your wealth for a better and secure future.

Pension schemes like NPS, health insurance, and some life insurance plans allow you to save taxes under various tax sections. In this blog, we will talk about the 20 best tax saving investments and focus on their benefits and features in detail!

Top 20 Tax Saving Investment Options In India

A comprehensive financial planning requires smart management of taxes. Therefore, tax saving becomes an integral part of your financial strategies. Here are the top 20 income tax saving plans that you can opt to save taxes and attain your financial goals:

1. Fixed Deposits

   Tax-saving fixed deposits allow you to claim deductions up to Rs. 1,50,000 per year. By investing in this tax saving scheme, you can avail a tax deduction under section 80c of the Income Tax Act.
   The lock-in period of tax-saving FDs is 5 years and you cannot withdraw your FD before the completion of this tenure. There is also an option to extend the tenure by another 3 years after completion of 5 years.
   However, a TDS of 10% applies on the interest income if your annual interest income exceeds Rs. 40,000 (Rs. 50,000 for senior citizens). Fixed deposits also offer higher interest rates than regular fixed deposit schemes.

2. PPF

   Public Provider Fund i.e. PPF is one of the best tax saving investments for employees. You can open a PPF account in any post office or branch of a public or private sector bank. The rate of interest changes every quarter and remains fixed throughout that period.
   Like tax-saving FDs, PPF account holders can also claim a deduction of up to Rs. 1,50,000 for every financial year.

3. NSC

   National Savings Certificate i.e. NSC also qualifies for tax savings up to Rs. 1,50,000 per financial year as per the Section 80c of the Income Tax Act. It is a fixed income investment scheme that is available with any post office.
   The maturity period of this tax saving investment option is 10 years and the investment can be started with as less as Rs. 100. There is no upper limit for this scheme.

4. SCSS

   SCSS or Senior Citizen Savings Scheme is a tax saving option that is only applicable for senior citizens. Apart from a higher return rate, this scheme allows senior citizens to earn a steady income after retirement.
   Up to Rs. 1,50,000 of deductions can be claimed on the principal amount that is deposited in an SCSS account. However, the interest earnings are taxable according to the tax slab to which an investor belongs to.

5. Mediclaim/Health Insurance

   Mediclaim or health insurance is one of the most renowned tax saving investments in the country. It is a type of health insurance plan that covers the expenses incurred due to hospitalisation or accident. The expenses incurred before and after the hospitalisation are also covered under this scheme.
   Tax benefits are applicable on the insurance premium of up to Rs. 15,000 (Rs. 20,000 for senior citizens) as per Section 80d of the Income Tax Act.
   A policyholder can avail a tax benefit of up to Rs. 35,000 if he pays Rs. 20,000 premium for his parents and Rs. 15,000 premium for himself. The maturity amount availed as per critical illness policies are also tax-free.

6. NPS

   NPS or National Pension System is one of the best tax saving options in India. The NPS contributions are covered under Section 80CCD of the Income Tax Act. So, those who invest in it are eligible for deductions up to Rs. 1,50,000.
   Citizens of India who belong to the age bracket of 18 to 60 can invest in it. The money invested in NPS gets further invested in equities, corporate bonds, and government securities.

7. Tax-Saving Mutual Funds

   Tax-saving mutual funds also known as ELSS (Equity Linked Savings Scheme) also offer tax benefits to the investor. The invested amount is covered under Section 80C of the Income Tax Act.
   A maximum of Rs. 1,50,000 tax deductions can be availed by investing in these mutual funds. Upon the death of the investor, the invested amount along with interest gains are paid to the nominee. These proceeds are also tax-free since they are covered under Section 10 (D). So, tax-saving mutual funds can be one of the best income tax saving schemes for you.

8. Sukanya Samriddhi Yojana

   SSY i.e. Sukanya Samriddhi Yojana is a government sponsored scheme designed for the benefit of the girl child. If you have invested in this scheme, you can claim deductions up to Rs. 1,50,000 as per the Section 80c of the Income Tax Act.
   Moreover, interest earnings of this scheme are also tax-free. So, it proves to be one of the best tax saving investments in the country.

9. Education Loan

   Tax benefits apply on the interest paid towards the education loan. No tax benefits are applicable on the principal. So, if you have taken an education loan for self, spouse, or children, you can avail this tax benefit.
   Also, there is no upper cap or limit on the interest amount that can be availed as a tax deduction after investing in an education loan. So, availing an education loan can prove to be the best income tax investment option.

10. Home Loan

    Like education loans, the interest part of the home loan also qualifies for the deduction as per Section 24b. However, the taken loan should be utilised for purchasing, repairing, constructing, or renewing a residential structure.
    The deduction limits extend up to Rs. 2,00,000 on self-occupied homes. On rental homes, there is no upper cap on the interest deduction.
    The interest applicable during the construction period can be claimed in 5 installments (equal) from the year in which the construction completes. The overall limit for this is also Rs. 2,00,000.
    Also, if you are buying your first home, you can avail more tax benefits as per Section 80EE of the Income Tax Act. It makes you eligible for a deduction of up to Rs. 50,000 per year on the interest paid towards the home loan repayment.
    This deduction is above the limit of Rs. 2,00,000 for self-occupied homes. However, the loan amount must not exceed Rs. 35,00,000 and the value of the residential property must not be over Rs. 50,00,000. Considering these tax saving options, it is a great idea to invest in a home loan.

11. Endowment Plans

    The plans that allow you to raise a corpus while availing insurance protection are known as endowment plans. If you have invested in one of these plans, you can claim a deduction of up to Rs. 1,50,000 every year.
    The maturity proceeds are also tax-free as per the Section 10 (10D). However, the maturity proceeds are tax-free only if the premium is less than or equal to the premium's 10%. In case of the investor’s death, the proceeds are completely tax-free and paid to the nominee.

12. Life Insurance

    Life Insurance plans qualify for multiple tax benefits. So, they are a popular tax saving option for you. You can avail deductions for the premiums paid for these plans. The deductions can also be paid for the life insurance plans that you buy for yourself, spouse, or children.
    A deduction up to Rs. 1,50,000 can be availed for each financial year but your premiums must not be over 10% of the sum assured of the life insurance plan or policy. Therefore, choosing a life insurance plan can prove to be a viable tax benefit investment option for you.

13. Unit Linked Insurance Plan

    If you have invested in a Unit Linked Insurance Plan or ULIP, the premiums paid qualify for tax deductions as per Section 80C of the Income Tax Act. You can avail these deductions for the policy purchased for self, spouse, or your kids.
    The premium must not be over 10% of the sum assured. If this condition meets, you can avail a deduction of up to Rs. 1,50,000 per financial year. If you have purchased the policy before April 2012, the premium should not exceed 20%. This makes ULIP one of the better tax saving schemes in India.

14. Tuition Fees

    Paying the tuition fees of your children is certainly not an investment. However, it is an investment for your child’s future. Recognising this, the Government Of India has allowed parents to avail deductions for children’s tuition fees. Also, the deductions can be claimed for the tuition fees of up to 2 children.

15. EPF

    EPF is a retirement saving scheme meant for the salaried employees in India. It is managed by EPFO i.e. Employees Provident Fund Organisation.
    The contributions made for EPF (Employees Provident Fund) also prove to be a tax saving instrument. The interest applicable on this scheme qualifies for a deduction under Section 80c.

16. Interest Of Savings Account

    Savings account is one of the basic investment options. Many people don’t know that the interest earned through a savings account is eligible for a deduction of up to Rs. 10,000 under Section 80TTA. The limit for this is Rs. 50,000 for senior citizens as per Section 80 TTB.

17. Infrastructure Bonds

    Government backed infrastructure bonds can be a good tax saving option as they offer tax benefits under Section 80CCF. The maximum deductions allowed for investors is Rs. 20,000 per financial year.
    These types of investments usually come with a lock-in period of 5 years. Also, the interest earned through them is subject to a 10% TDS as well.

18. Pension Funds By Insurance Companies

    The pension funds offered by insurance companies are known as Notified Pension Funds. According to the Section 80CCC, the maximum deduction of Rs. 1,50,000 can be availed every year if you invest in one of these funds.
    This limit is also shared with PPF, ELSS, EPF, and other investments that are covered under Section 80c. It means that the contributions in all these investments combined should not be over Rs. 1,50,000 per year.

19. Donation to Electoral Trusts or Political Parties

    The donation made to political parties or electoral trusts also qualify for 100% deductions as per Section 80GGC of the Income Tax Act. So, you can donate to these parties or groups to save taxes.

20. Agricultural Income

    The income gained from agriculture is also 100% exempt from taxes. However, your agricultural income must not exceed Rs. 5,00,000 in a year. Also, only farming of fruits, vegetables, and crops is considered for these tax benefits. So, if your agricultural income is not that much, you can think of it as a viable income tax investment option.

Conclusion

These were some of the top income tax saving options in India. Most of them are covered under Section 80c. So, you must only choose the tax saving options that suit your risk appetite and investment goals. Also, you must be careful while evaluating the conditions that are required to fulfill to avail the tax benefits. While choosing investments smartly is a must for a secure future, you must also protect your financial future by choosing the right family insurance plans. Buy family protection plans to ensure a secure future for your loved ones today!

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