Top 6 Tax Saving Investments That Provide Tax-Exempt Returns

Every year, more and more professionals are being inducted into the country’s tax system. Some of them are first-time tax payers who have recently started their careers and do not have incomes large enough to worry about being taxed. However, that is not how it will be forever. 

When you are in your career’s early stages, it is easy to not worry about taxes and tax savings. But as your career grows, so will your income. Therefore, tax saving will become an important part of your income and financial planning. By educating yourself about various tax saving investments, you will be able to build a solid financial portfolio and grow your wealth over the years. 

Top 6 Tax Saving Investments That Provide Tax-Exempt Returns

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Did you know that most tax-saving instruments offer so much more than just the tax benefits? They are essential investment plans that can help you build a corpus of funds that you can use to fulfil your short-term and long-term goals. Many of these investments are safe and legitimate as they are backed by the government. 

If you are also looking for tax-free income with the wealth creation benefit, then this article is the right place to start. Here are some of the investments that will help you achieve that goal. 

Life insurance

Life insurance is the first and the most crucial tax saving instrument you can add to your portfolio. There are many life insurance plans that offer you not only tax rebates but also tax-free maturity benefit. Under section 80C of the Income Tax Act, you are eligible to claim up to Rs. 1.5L in tax deductions towards the premium amount. 

If you are a first-time investor, term insurance tax benefits is an excellent place to start.  Term insurance is a pure life insurance product that offers comprehensive life coverage to the policyholder and the associated tax benefits. 


You can also add ULIP plans to your tax saving investments to mix up your portfolio with life insurance products and wealth-creation market-linked investments. You are eligible to avail tax benefits under section 80C and section 10D of the income tax act. However, these products are more suitable for investors who have medium to high-risk profile. 

Public Provident Fund (PPF)

Public Provident Fund is a government-backed tax saving instrument that is perfect for people who want to secure their retirement with a safe investment option. It is suitable for investors who do not have a pension plan. The interest rate offered on PPF is linked to debt market funds. 

The money you invest will be locked in for 15 years. You are allowed to make partial withdrawals to pay for emergencies, but only after staying invested for at least six years. You can avail tax benefits under section 80C of up to Rs. 1.5L. The interest that you earn every year is tax-exempted, and so is the maturity benefit under section 10(D). 

Top 6 Tax Saving Investments That Provide Tax-Exempt Returns

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Employees Provident Fund (EPF)

Another popular tax saving investment is EPF that helps salaried individuals save tax and earn tax-free corpus at the end of their tenure. An employee makes a contribution of 12% of their basic salary every month towards their EPF account, and the equal share is contributed by the employer, of which only 3.67% goes to the EPF account. 

The contribution you make towards your EPF is eligible for tax benefit u/s 80C up to Rs. 1.5L per year. The interest earned on these savings is also tax-free as long as the employee stays with the organization for at least five years. 

Sukanya Samridhi Yojana (SSY)

This is one of the most useful tax saving investments in your portfolio because it offers you the highest tax-free return. Additionally, it is also a great instrument to create a corpus of funds for your daughter. 

You can open a Sukanya Samriddhi Account for girls less than 10 years and deposit a minimum of Rs. 1,000 in their account. This account remains operative till she turns 21 or gets married. 

The contributions towards SSY is eligible for tax deductions u/s 80C. You are also allowed to claim deductions for the amount you deposited in the account for up to Rs. 1.5L. Additionally, with such tax saving investments, the funds you receive upon maturity will be tax-free. 

Health Insurance

The premium paid towards a health insurance plan is eligible for tax exemption u/s 80D of the Income Tax Act. You can avail tax deductions on premiums paid for self, parents, spouse, and dependent children. 

Health insurance not only pays for your medical treatment, but is also a tax saving tool that you must add to your portfolio. Salaried and self-employed people can avail tax benefits when they invest in a health policy. 

In addition to the abovementioned tax saving products, you can find several other instruments that can be added to your financial portfolio. You can check the websites of reliable insurance providers, such as Max Life Insurance, to learn more about these available products. Remember to use the online investment calculator and comparison tools to compare policies before investing.

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