Smart Investing for Tax Savings & Where to Invest to Save Tax?

2025-06-05

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Tax is something that every person is reluctant to pay to the government. No doubt it is hard parting with your hard-earned money. Therefore it becomes very important that investment is made properly to save as much tax as possible.

Savings Plan Tax Benefits

Tax saving investments can deduct tax under section 80C or 80CCC, which proves helpful to most people. Many people are reluctant to invest due to the risks involved and low returns. However, incorporating the methods introduced further in the article will surely help people in what they want to achieve from the investments. A savings plan can help you save tax. We will explain this later in this article.

Earn Tax-Free Income

Planning and investing wisely will not only reduce your tax but also allow you to earn tax-free income. Gaining benefits from investments can be a little different for different people. It is, therefore, essential that they start planning now to assess their situation. Early investments in a financial year will help you earn tax-free income.

Choose what is correct for you

There are numerous investment plans when one starts thinking and planning for the same. But the question remains the same - How to choose the best for us? Different investment plans may benefit people in different ways, therefore choosing what is best for you through multiple factors is essential.

You have to think whether the amount of return in this type of investment is profitable or not or whether this type of investment will benefit you in the long run or not?

Know the rules and conditions

It is better to know the rules and regulations regarding investments and taxes (Section 80C of The Income Tax Act) if you are going on the same road. If you are investing to save tax, you should be aware that all the investment parameters come under this act or Section 80C.

The investor can avail the benefit of tax exemption of up to Rs. 1,50,000 maximum under this Section 80C. Investing in Life insurance, Fixed Deposits, ELSS (Equity Linked Saving Scheme), national saving Schemes, Public Provident Fund, and Bonds can lead to an exemption in tax up to this maximum limit mentioned above.

Know More - How to Save Income Tax?

Some of the best investment plans

Here are some saving plans under Section 80C, which can prove highly beneficial should you want to invest.

Investments	Returns	Fixed Period
Equity Linked Saving Scheme (ELSS) Fund	15% - 18%	3 years
Public Provident Fund (PPF)	7. 1%	15 years
Unit Linked Insurance Plan(ULIP)	Returns differ in respect of plans	5 years
National Pension Scheme(NPS)	9% - 12%	Till retirement
Bank FDs	2.5% - 9%	1 to 5 years
National Savings Certificate	7.7%	5 years
Sukanya Samriddhi Yojana	8.2%	N/A
Senior Citizen Saving Scheme	8.2%	5 years
Insurance	Returns differ in respect of plans	3 years

At Canara HSBC Life Insurance, we will assist our customers in any difficulty or doubt regarding the investment plans and which one will be more beneficial.

Equity Linked Savings Scheme (ELSS) Mutual Fund

This mutual fund scheme has some prominent features:

Investing in an Equity-Linked Saving Scheme can give investors the advantage of a tax exemption of up to Rs 1,50,000(maximum limit) under Section 80C of the Income Tax Act.
Investment in this mutual fund scheme has a fixed or lock-in period of three years.
The interest rate in ELSS ranges from 15% to 18%.
The returns in this mutual fund scheme vary according to the market performance.
Options such as dividend and growth options are presented to the investors, and they can opt according to their requirement and interest.
Choosing a growth option might prove more beneficial for the investors and provide better returns as the dividend option in ELSS has become 10% taxable from April 1st, 2018. As of the Budget 2025, it is also taxable as per long-term capital gains criteria.

ELSS offers great returns over a long period.

Public Provident Fund (PPF)

This contains the tax-saving feature by allowing the investors to make a financial pack post-retirement. PPF is given that status of EEE, that is, exempt, exempt, and exempt. This means that if you invest in a PPF account, then all the interest received and maturity funds will be exempt from taxes. This is why it is a very popular tax saving investment.

The lock-in period of this PPF is 15 years which can be extended by extra 5 years.
As said above, by investing in a PPF account, the investor can claim Rs1,50,000 for tax exemption under Section 80C of the IT Act.
It is safe, and small amounts are allowed to be taken out every year from a PPF account after seven years are completed from the starting date. A single transaction can be done in a single year after seven years of completion.
Investors can start investing from a small amount such as Rs.500 and contribute up to 12 instalments per year.

Unit Linked Insurance Plan(ULIP)

This investment plan offers high returns on long-term periods under the Income Tax Act.
New ULIPs come with zero premium allocation charges and zero administration charges, which work much better for investors.
The lock-in period for this investment is five years.
A plethora of options in the fund is available for the investors to choose from.
A free switch between the funds is allowed for utmost four times per year.
The returns vary with the market performance of the fund.

National Pension Scheme(NPS)

The Tax exemption in this scheme comes under three different sections:

Under Section 80 of the Income Tax Act, a maximum of Rs.1.5 lakh can be claimed for tax exemption.
Additional tax deduction of up to Rs. 50,000 is available under Section 80CCD 1b.
If the employer contributes 10% of the salary to NPS, then the amount is not taxed.

However, 60% of the fund is taxable at the time of maturity. The annuity received by the investors is treated as income and is therefore taxable.

Bank FDs

Fixed deposits done in banks are very safe, and returns are guaranteed. The interests vary from bank to bank. Here at Canara HSBC Life Insurance, you are sure to get good returns on security deposits.

This scheme offers tax-free income.
There is minimal risk in it, and the return on the investment is guaranteed.
Under Section 80 of the Income Tax Act, a maximum of Rs.1.5 lakh can be claimed for tax exemption.
The interest rate can be changed every quarter or year.
Withdrawal is not permitted until the fixed term of 5 years ends.

National Savings Certificate

This is a government-invested savings scheme, and so it offers the safety of the investment.

Investors can claim up to Rs. 1.5 lakh for tax exemption under Section 80C of the IT Act.
The interest earned is added to the initial amount annually, and therefore tax deduction can be for the present and previous year both.

Sukanya Samriddhi Yojana

This scheme has been put forward, especially for the girl child. This scheme is a product of ‘Beti Bachao Beti Padhao’.

With an interest rate of 8.1%, it offers tax exemption.
The investments in this scheme can claim Rs.1.5 lakh for tax exemption.
The investment in the scheme can be made once the child turns ten years old.
The minimum investment is Rs.250 up to Rs.1.5 lakh in a year.

Senior Citizen Saving Scheme

The Senior Citizen Saving Scheme is purposely designed for senior citizens to invest safely.

Citizens above 60 years are eligible to invest in this plan.
The minimum deposit is Rs.1000, and the maximum is Rs. 15 lakh(joint holding) and Rs.9 lakh(single holding). Thus investment in this scheme is very flexible.
The fixed period for this scheme is five years.
In this investment, the investor can claim up to Rs. 1.5 lakh for tax exemption under Section 80C of Income Tax Act.
This scheme of senior citizens offers a high-interest rate, that is, 8.7%.
The returns on the investment are guaranteed.

Here at Canara HSBC Life Insurance, we offer this SCSS account and assist investors in whatever form we can.

Insurance

Life insurance is very popular as well among most people and investors. However, life insurance investment should only be made for insurance, not for only tax saving purposes. The benefit of insurance coverage is provided to the investor, and they can also benefit from tax exemption up to Rs. 1.5 lakh under Section 80C and 10(10D) of the Income Tax Act.

The returns and the money back in insurance are also tax-free.

These are some ways to invest your money, and the investors can choose accordingly as to what best suits their requirements.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

How to Get Tax Exemption Under Section 10(10D) of the IT Act?

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We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.