Best Tax saving investment

• Fixed deposits: Investing in fixed deposits for five years offers you tax deduction under 80c of the Income Tax Act. Maximum of Rs. 1.5 lakh can be claimed as deduction. The interest offered usually ranges from 5% to 7.5%.
• Public provident fund: This is another popular investment scheme for long term savings. PPF accounts can be opened with a bank or at a nearest post office. You also earn a guaranteed interest amount and can claim deductions up to Rs. 1.5 lakh under section 80C.
• Unit linked insurance: Unit linked insurance plans are a type of life insurance plan that offers you the benefit of investment and protection. This investment option offers you different fund choices you can choose to invest in and helps you save tax under section 80C and 10(10D) of the ITR Act.
• National savings certificate: this is a savings bond scheme for small to mid income investors to help them save as well as save tax. NSC investment can be done with a bank or at a nearest post office. Investment under this scheme can be done for self or for a minor with another adult as a joint account holder.
• Senior citizen savings scheme: This is a government sponsored savings scheme for individuals above the age of 60. This scheme is suitable for retired individuals and offers substantial returns. The principal amount under this scheme is eligible for tax deduction up to Rs. 1.5 lakh. However, it is important to note that the exemption is available only under the old tax regime.
• Life insurance: Life insurance is an important investment avenue that not only helps you create a strong financial future, but also helps you get tax benefits. Under life insurance, one can choose to invest in various policies such as term plan, endowment plan, ULIP, money back, etc. One can avail tax benefit up to Rs. 1.5 lakh under section 80C of the Income Tax Act.
• NPS: National Pension scheme is another popular tax saving instrument that offers tax benefit up to Rs. 1.5 lakh under section 80C of the IT Act. Additional deduction up to Rs. 50,000 can be availed under section 80CCD(1). NPS is managed by fund managers who invest the money in three separate accounts i.e. corporate bonds, government securities and equity.
  Tax saving mutual funds: Investing in equity linked savings schemes offers you tax benefits. This type of investment option is best suited for investors having medium to high appetite. Under this option, the lock in period is 3 years.

One can save up to Rs. 2 lakh under section 80D by:

• Buying mediclaim health insurance for parents or for self
• Investing in child plans
• Investing in housing property and save tax up to Rs. 4 lakh under section 24(B) of the Income Tax Act

Additional sources you can save tax from

• Parents can claim tax exemption on school fees paid
• Save up to Rs. 2 lakh under section 80D
• Buying mediclaim cover for self, spouse and children
• Invest in property and avail savings on home loan interest up to Rs. 4 lakh