Everything You Need to Know About Tax Saving Investment Schemes

For every taxpayer, some ways exist to help you save your taxes and enjoy the highest savings possible. However, for most people, tax-paying can be complex, so a clever approach is to start the investment process in the beginning months of a fiscal year. This way, you have the appropriate time to plan and get the maximum return on your investments from various tax saving investments.  

What are Tax Saving Schemes? 

Tax saving schemes can help reduce your tax burden by investing in the several tax saving schemes available, which both private organisations and the government offer. By investing in these schemes, you can become qualified for exemptions from taxes and deductions under several Sections of the Income Tax Act. In addition, investing in tax saving schemes reduces income tax measurement. 

Due to this, a range of opportunities can assist in reducing an individual’s tax burden by using the appropriate available schemes. These schemes come under the Income Tax Act 1961, which deals with exemptions and tax deductions such as Section 80D, 80C, and 80CCF.  

Tax saving Investment Schemes Under Section 80C 

  • Equity-Linked Savings Scheme (ELSS) Mutual Fund

The ELSS is a varied Mutual Fund scheme with two distinct features. The first feature is that this scheme’s investment is qualified for an exemption until the maximum cap of Rs. 1,50,000 under the Income Tax Act, Section 80C. The second feature is that the investment of ELSS has a three year lock-in period. In addition, the ELSS funds provide an interest rate between 5% to 18%. But, in an equity-linked saving scheme, the return rate is not stable, and they vary depending on the fund’s market performance. 

  • National Pension Scheme (NPS)

NPS helps in providing tax exemptions under different schemes. Under Section 80C, you can claim contributions to the limit of Rs. 1,50,000 for exemption. And, under Section 80CCD (1B), you can also get more deductions to Rs. 50,000. In the National Pension Scheme, if you contribute 10% of your basic salary, this amount will not get taxed. As a result, among many investors, there is a high popularity of NPS due to its several benefits. But, at maturity, only 40% of the fund is exempted from tax. In NPS, investing 40% of the corpus (total invested amount) in the pension plan is compulsory if the investor wants to receive a monthly income. 

  • Unit Linked Insurance Plan (ULIP)

ULIPs provide the advantage of tax exemption to the investors, which also helps gain higher returns on the investment for an extended period. In addition, the ULIPs, launched now by insurance companies, come with zero premium allocation and administration charges, bringing you better investment returns. Also, with the combination of the benefits of both investment and insurance, under Section 80C, you can get the advantage of income taxability on the payment of premiums. 

  • Public Provident Fund (PPF)

In the investments scheme, PPF is a popular long-term tax saving investment that infuses many features of the asset to assist you in creating a solid financial cushion after retirement. PPF comes with a 15 years maturity period, which is further extendable to five more years. According to Section 80C, you can only claim a maximum of Rs. 1,50,000 as a non-taxable amount. PPF is a safe and ideal financial instrument compared to other schemes because it is backed by the government and brings forth many benefits of return on investment. 


Apart from Section 80C, other tax saving investments schemes have certain limitations and advantages that will help you get the appropriate tax deductions. For example, section 80C of tax exemption states that your investments are qualified for exemptions from Income Tax until you reach a certain limit. Once your investments exceed the limit, they are not eligible for any more tax exemptions. And this limit is kept within all of the investment schemes.