Maximizing Your Savings: Expert Tips on Reducing Income Tax for the Current and Upcoming Financial Year

Looking to reduce your income tax for the current and upcoming financial year? Check out these expert tips on tax-saving investments that can help you optimize your tax planning and save more money.

By Mystic Vivan
New Update
Tax Saving Investments

Tax Saving Investments

Tax planning is a crucial aspect for entrepreneurs, organizations, and individuals who rely on their income for sustenance. It is essential to focus on tax-saving schemes that offer easy returns and fruitful investment plans. By exploring the right options, you can save more on taxes while enjoying year-long returns on your investments.


However, many people struggle to save on taxes due to a lack of information and knowledge. To address this concern, we have compiled a list of tax-saving options based on expert advice. These options will help you make informed decisions and maximize your savings.

1. Unit Linked Insurance Plan or ULIP - The Crucial Investment Plan

A Unit Linked Insurance Plan (ULIP) is an excellent way to ensure your family's financial security in case of unforeseen circumstances. By choosing the right life insurance policy, you can avail benefits under Section 80C of the Income Tax Act. Additionally, the maturity of the policy is tax-free according to Section 10 (10D). You can also claim a 20% tax deduction on the premium paid.


2. Equity Linked Saving Schemes - Mutual Funds Schemes

Equity Linked Saving Schemes (ELSS) are mutual fund investment schemes that invest a significant portion of the portfolio in equity. These schemes have a mandatory lock-in period of three years, which is the shortest among all investment products. Deductions for ELSS investments are qualified under Section 80C of the Income Tax Act. Systematic Investment Plans (SIP) and other investments are also eligible for the deduction.

3. Public Provident Fund or PPF


The Public Provident Fund (PPF) is a perennial favorite among tax-saving schemes. It falls under the category of exempt-exempt-exempt tax status. You can open a PPF account with a bank or post office and claim a deduction under Section 80C of the Income Tax Act for the amount invested during the financial year. The maximum deduction allowed is 1.5 Lakhs.

4. Sukanya Samriddhi Yojna or SSY

The Sukanya Samriddhi Yojna (SSY) is a crucial tax-saving scheme launched in 2015 as part of the Beti Bachao Beti Padhao Campaign. This scheme enables fixed income investment, allowing you to earn interest on regular deposits. It qualifies as an eligible deduction under Section 80C of the Income Tax Act, but there are certain terms and conditions that must be followed.


5. National Saving Certificate

The National Saving Certificate (NSC) is a government initiative aimed at providing fixed income investment options for small and mid-size income investors. It is a low-risk investment, similar to the Provident Fund (PF). Investments in NSC qualify for deduction under Section 80C of the IT Act, up to Rs 1.50 Lakhs. The scheme offers complete capital protection and guaranteed interest, with an annual interest rate of 6.8%.

6. FD or Fixed Deposit with Tax Saving Options


Fixed Deposits (FD) with tax-saving options are one of the safest tax-saving schemes, offering lower risk compared to equity investments. These deposits have a minimum lock-in period of five years and qualify for deduction under Section 80C when calculating taxable income. Senior citizens can enjoy higher interest rates on their investments.

7. Senior Citizen Savings Schemes

Senior Citizen Savings Schemes are income tax-saving schemes specifically designed for senior citizens in India. These schemes allow investments through post offices, banks, and other financial institutions, providing higher interest rates along with tax-saving benefits.


8. School Tuition Fees

Under the old tax regime and the Income Tax Act 1961, you can claim a deduction under Section 80C for payment of school fees for your children. The tuition fee paid to a registered university, college, school, or educational institution qualifies for a deduction of up to Rs 1.5 Lakhs. However, donations and development fees are not eligible for this deduction.

9. NPS or National Pension Scheme


The National Pension Scheme (NPS) has gained popularity as an option to save on taxes. It is available to both government and private employees, allowing depositors to build a retirement corpus and receive a regular monthly income.

10. Health Insurance under Section 80D

Under Section 80D, you can claim a tax benefit of up to Rs 25,000 for the premium paid to keep health insurance in force, covering yourself, your spouse, dependent children, and any contribution to the central government health scheme. You can also save on taxes through schemes notified by the central government as eligible for deduction.

Apart from the aforementioned tax-saving options under the old and new regimes, there are other ways to save more on income tax. Let's explore some additional options:

  • Repayment of Education Loan: Deduction under Section 80E of the Act
  • Rent Paid and No HRA Received: Tax Benefit under Section 80GG
  • Savings Bank Account Interest: Deduction under Section 80TTA
  • Interest Paid on Home Loan
  • Medical Expenses towards Disabled Dependent: As per the provisions of Section 80DD
  • Treatment of Specified Diseases: Deduction under Section 80DDB
  • Donations Made to Charitable Institutions

It is advisable to consult with a tax advisor or consultant to guide you in saving more on taxes in the current financial year. With their expertise, you can explore the right options and enjoy a worry-free tax-saving journey.

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