Close
Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term

Protect Your family’s financial future with Kotak e-Term. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

9 Unusual Investments you Didn't Know for Saving Taxes in India

Life insurance policies, public provident funds, and equity-linked saving schemes are popularly known income tax saving options. There are alternative investment instruments, too, that allow you to make and conserve money.

  • Feb 15, 2022
  • 1,689 Views

How to save tax, or more specifically, how to opt for the best investment plan, is a question that each of us has. Tax planning is important, but so are tax-saving strategies. With the finest schemes in India, you can invest your money in the most reliable tax saving options.

    Key Takeaways

    Lesser known tax saving options are listed below

  • National Pension Scheme
  • Investing through parents
  • Donations to social causes
  • Hindu Undivided Family
  • Donations to political parties
  • National Saving Certificate
  • Sukanya Samridhi Yojna
  • Senior Citizen Savings Scheme
  • Rajiv Gandhi Equity Saving Scheme

The beginning of the fiscal year is the best time to plan for such investments. This will ensure that you are able to reduce your expenses and avail year-long profits. While each individual wants to save money on taxes in India, only a few of us are successful. This could be a lack of information or difficulty incorporating the best-suited plan into your investing strategy.

When it comes to tax saving investment options, life insurance policies, public provident funds, ULIPs, or even equity-linked saving schemes are some of the instruments that pop into your head immediately. However, there are some other means through which you can save taxes.

So, we’ve compiled a list of the nine unusual investment avenues that can serve as the best tax saving options in India. Read on to learn more about these options and draw a comparison to make an informed investment decision.

Investing in National Pension Scheme (NPS)

When people inquire about income tax saving schemes, one of the most common solutions is the National Pension Scheme. It enables people to save money for their retirement plans in the future. You can pay the schemes on a regular basis whenever it is convenient for you. This plan is open to all Indian nationals between the ages of 18 and 60. You can avail deductions for your NPS investment under Section 80C and Section 80CCD (1B).

Investing through Parents

If your parents are senior citizens, they may be eligible for higher tax advantages and income limits. You can invest on their behalf and count it as a gift if their post-retirement income is in a lower tax bracket than yours.

There will be no tax on the present you give them, and any future earnings from the investment will be theirs to claim. Senior citizens’ fixed deposit plans, post office schemes, and even equity mutual funds are all tax saving ideas you can consider.

Donating to Social Causes

Section 80G of the Income Tax Act permits you to fulfill your social responsibilities by donating to designated charities or religious organizations. You can get a 50-100% tax exemption if you donate to such a charity. In addition, the government has set up funds such as the PM National Relief Fund, National Defense Fund, PM CARES Fund (established specifically for COVID-19 initiatives), etc., that can assist you in achieving a 100% exemption.

Reducing Tax as a HUF

The Hindu society’s traditional joint family structure resulted in a distinct tax personality in the Indian Income Tax Act, the Hindu Undivided Family. If you have many sources of income in addition to your pay, declaring them as HUF profits will significantly lower your tax liability. For Hindus, Sikhs, Jains, and Buddhists, the HUF is considered a separate financial organization that can act on behalf of all family members. Family members can donate their extra personal income to the HUF and avoid paying tax on any later revenue from investments made with those funds.

Making Donations to Political Parties

Individuals can claim tax deductions of 50-100 per cent when they donate to certain political parties certified by the Election Commission of India. These contributions can be made directly to a registered political party (under section 29A of the Representation of the People Act, 1951) or indirectly to a registered electoral trust.

In addition, if payments are made by check, net banking, or UPI, deductions are available under section 80GGC. Donations made in cash or in-kind, on the other hand, do not qualify for tax deductions.

Investing in National Saving Certificate (NSC)

It is a fixed-income investment instrument that can be obtained from a post office. It motivates small and middle-income persons to invest by offering tax deductions under section 80C of the Income tax act. If you are an Indian individual looking for a safe avenue to park your funds, NSC is a great option. You will get guaranteed interest at an annual rate of 6.8% and tax benefits up to ₹1,50,000 per annum.

Participating in Sukanya Samridhi Yojana (SSY)

Launched with the aim of empowering the girl child, it is one of the best tax saving schemes. It can be opened at a post office or bank. You will be able to earn 7.6% p.a. interest. The principal amount will mature when the girl turns 21 or gets married after turning 18. The invested amount, interest received as well as maturity amount are eligible for tax benefits. Maximum two accounts can be opened in one family.

Enrolling in Senior Citizen Savings Scheme (SCSS)

If you are a citizen above the age of 60 looking for the best investment to save tax, do not look further. You can deposit an amount between ₹1,000 and ₹15,00,000 under this scheme. The amount invested to the maximum limit of ₹1,50,000 will be allowed as a tax deduction. SCSS can provide you with a consistent income source after retirement. It offers a high-interest rate of 7.4% p.a. and a maturity period of 5 years.

Partaking in Rajiv Gandhi Equity Saving Scheme (RGESS)

To promote the savings culture and develop domestic capital markets, the government offers tax incentives under Section 80CCG. First-time investors with gross total income not exceeding ₹12,00,000 per annum are covered under this provision. They can reduce their taxable income by claiming a 50% deduction on the investment amount. It is, however, subject to a maximum limit of ₹50,000. This is in addition to the Section 80C limit.

Did you Know?

The government introduced an alternative tax regime in FY 2020-21. If you choose to forgo exemptions, it offers you the choice of lower tax slabs. It is an optional scheme. You should assess your tax liability under the old as well as the new regime before taking a decision.

Income Tax Saving Tips

The government derives a sizable portion of its revenue through income tax. However, it gives citizens many opportunities to reduce their tax burden through sections 80C-80U of the Income tax act. This is done to promote certain expenditures and boost tax compliance. Apart from the above investment options, there are other ways to save tax. Some of them are listed below.

Obtaining a Medical Insurance

Assessee can use section 80D to claim a deduction of ₹25,000 for mediclaim taken for spouse and dependent children. An additional ₹25,000 is available for a policy taken for parents, and ₹50,000 can be claimed to cover parents who are senior citizens.

Taking a Home Loan

Sections 24, 80C, and 80EE of the Income tax act provide tax benefits on the principal and interest amounts of a home loan. As a result, you can fulfill your dream of owning a house while minimizing your tax burden.

Getting an Education Loan

If you take a loan to obtain higher education for yourself, your spouse, or your children, Section 80E makes you eligible for tax savings. The total interest paid can be claimed without any maximum limit. However, exemption is not available for the principal amount. The loan can be used to finance education in domestic or foreign institutions.

Filing of Income tax returns

Income tax returns are used to report taxable income, tax liability, and deductions claimed. Luckily, online mode has made the filing process hassle-free. Timely submission of returns will protect you from penalties and interest expenses. It is one of the most fundamental tax saving tips.

Conclusion

To maximize your financial efficiency, consider India’s tax saving options and make a well-thought-of strategy. Tax planning is the most effective financial strategy, and anybody who pays income tax can benefit from it. Making sound tax-saving investments and participating in reputable financial instruments are the best ways to save money on taxes. Assessing the various tax saving schemes to enjoy many tax benefits can simplify one’s financial path.

Download Brochure

Features

  • Increasing Life Cover*
  • Guaranteed^ Maturity Benefits
  • Enhanced Protection Through Riders
  • Tax Benefits
  • Dual Benefits: Guaranteed^Maturity + Death benefits

Ref. No. KLI/22-23/E-BB/999

T&C

Download Brochure

Features

  • Enhanced Protection Through Riders
  • Life Cover
  • Tax Savings
  • Multiple Premium Payment Terms
  • Guaranteed @ Loyalty Addion
  • Accrued Guaranteed @ Additions

Ref. No. KLI/22-23/E-BB/490

T&C

- A Consumer Education Initiative series by Kotak Life

Similar Articles

How to create a savings plan and make good investment choices

Section 10 (10d) of Income Tax Act, 1961 on Payouts of Life Insurance Policy

Why PAN Card is Essential for Income Tax Filing?

What is capital gains tax, and how it works?

धारा 80सी आयकर अधिनियम, 1961

How to Check Income Tax Returns Status Onine?

How To Save Tax Better with 80C

How to File Income Tax Return - Everything You Need to Know

How Should I Allocate A Monthly Savings Plan For Long-Term Benefits?

Easy ways to make personal savings plans

How Much Money This Budget 2019 Can Help You Save

Income Tax Deductions & Exemptions under Sections 80C, 80D & 80DDB for FY 2021-22 & 2022-23

Income Tax Exemption for Disabled

Difference between Section 80C, 80CCC, 80CCD & 80D

Tax Benefits of ULIP Plans Available for NRIs

8 Things to Help You Select a Savings Investment plan

Tax Benefit of Investing in Term Plan

Complete Savings Plan for Low Income Earners

Tax Saving Guide for 2019-20

12 Tax Changes in Budget 2022 that May Impact Your Personal Financial Planning

What is the Difference between Assessment Year (AY) and Financial Year (FY)?

What is Section 80C Deduction Limit?

How to e-Verify your Income Tax Return

How to File Form 10E for Tax Relief on Salary Arrears?

How to Claim a Tax Refund?

What is Section 10D of the Income Tax Act?

What is Rule 132 of Income Tax? How Does it Affect You?

Income Tax Filing Using Multiple Form 16

Highlights of the Union Budget 2023-24

Understand ITR4 Form: How to Fill, Structure & Determine Your Eligibility

Tax Saving Options for Salaried Employees

What is Form 16B?

Types of Riders in Insurance Policy

भारत में महिलाओं के लिए सरकारी योजना

What Is Advance Tax and How Is It Calculated?

Basics of Guaranteed Savings Plan

How much gold can you keep at home? Limits and income tax rules explained

All You Need To Know About Assured Savings Plan

What is a savings plan?

What is the Maximum Maturity Benefit in Assured Savings Plans?

Tax-Savings Investments and Options in India

Post Office Savings Scheme - All You Need to Know

When Should TDS be Deducted and Who is Liable to Deduct it?

Section 80G of the Income Tax Act

What is Tax Evasion and What Are The Penalties For Tax Evasion In India?

Personal Finance - Meaning, Importance, and Tips for Personal Finance

Section 44AD of Income Tax Act for AY 2021-22

What To Do If Your TDS Is Not Deposited With The Government?

How to Save Tax on Salary Arrears?

Received an Income Tax Notice? Your Guide to Understanding Intimations under Section 143 (1)

Have You Considered Term Insurance a Part of Your Tax Planning?

How can I get Form 16B from traces?

Plan your Daughter's Wedding With Best Monthly Savings Plan

How to File ITR Online

3 Tips to Buy Guaranteed Savings Plan

Types of Income Tax Return (ITR) Forms

आयकर रिटर्न (आईटीआर) फॉर्म के प्रकार

How Inflation Affects Savings and Investment?

All You Need to Know About Section 80C

What is the Last ITR Filing Date and Penalty for Late Filing of ITR?

What is HRA (House Rent Allowance) and How is HRA Exemption Calculated?

What is TDS Slab?

Section 80D - Medical and Health Insurance Tax Benefits Under Section 80D

ITR-6: Guide to filing ITR-6 Form online

Tax Season is Coming- Know How to Save Tax

A Guide to Life Insurance Policy’s Tax Benefits and Taxability

How to File Income Tax Return without Form 16

Why is Form 16 Important?

How can NRIs prevent double taxation in India?

What is Section 80CCC of the Income Tax Act 1961

E-Filing of Income Tax Returns in India

Difference Between Guaranteed and Assured Returns

What is the Difference between Form 16 and Form 16A?

Understanding Tax Exemptions in ULIP (Old and New)

What is Form 16A?

Challan 280 - How to Use Challan 280 to Pay Income Tax

How to Check Income Tax Refund Status Online in India

Everything You Need to Know About Tax Benefits of National Pension Scheme (NPS)

5 Popular Tax-Saving Schemes in India

How to create wealth through a savings plan?

52 Weeks Savings Plan: Daily Savings Plans for a Better Tomorrow

Income Tax Slabs and Rates in India for FY 2021-22/AY 2022-23

What is Salary Protection Insurance and Why You Need It

Impact of GST on Life Insurance in India

Section 80C Deductions as per Income Tax Act, 1961

Who Should Invest In Savings Plan

Tax-Free Income in India

ITR 2 Form – Complete Guide

What is Tax Deduction at Source (TDS)?

How to View 26AS and Download Form 26AS Online?

Penalty For Late Filing TDS Return

How to Pay Advance Tax Online in India

Tips to plan your savings in 2022

सुकन्या समृद्धि योजना (SSY) के कर लाभ क्या हैं?

Financial Benefits and Government Schemes Every Woman in India Should Know

Should you prefer a Guaranteed Savings plan over monthly income schemes?

How to save tax for salaried person?

How to file Form 16 online?

What is TDS Exemption Limit?

Tax Deductions You MUST Know

Importance of Savings Plan You Need to Know

Budget 2019: Impact on the Common Man in India

Income Tax Benefits for Doctors

Tax Planning Tips for a Newly Married Couple

How to File Form 16 for Salaried Employees?

Home Investment Plan to Buy Dream Home

ITR 1: Sahaj Form

What is the TDS Rate on Salary?

Income Tax Deductions for Disabled Persons Under Section 80U

Tax Saving for Self Employed in India

How to e file ITR on Income Tax Government Portal

Income-Tax Liability- The Difference Between Gross Income & Total Income in Calculating Income Tax

What Investment Options Come with Tax Incentives?

What is TDS Refund Process?

How to File Income Tax Return for First Time Tax Payers

A Complete Guide for Filing ITR 3 Form

How to Download Form 16?

Income Tax Calculator: How Life Insurance Policies are Taxed? Explained

Invest in Tax-Free Bonds: Understanding the Benefits and Who can Invest?

Tax Rate Chart for FY 2022-2023: What is TDS Slab?

How to Save Income Tax with Insurance

TDS rules on the sale of jointly owned property

Best Savings plan for the middle class in India

9 Income Tax Myths That Could Cost You Money while Filing returns

Investing Lump Sum Amount

Tax Benefits for Startups in India

How to File TDS Return?

धारा 80डी आयकर अधिनियम, 1961

Why January Is an Important Month for Saving Tax?

What is EEE in income tax? 5 tax-free investment options to become crorepat

Guide for Tax Calculation on your Salary

आयकर स्लैब 2021-2022

Financial Planning and Best investment options for Housewives

What is ITR 5 Form and How to File ITR 5?

Saving Plans to Give Children a Debt-free College Education

Top 8 Tax-Saving Methods in India- Budget Planning

How to Boost Your Savings with Guaranteed Results

All about TDS Payment Online & Due Dates

What is indirect tax and its types?

How Do Assured Savings Plans Work and Why You Should Consider One?

Do Beneficiaries Pay Taxes on Life Insurance?

Form 16, Form 16A, and Form 16B?

Difference Between Guaranteed Savings Plan and Guaranteed Income Plan

How to Get Form 16?

Is PF Withdrawal Taxable for NRI?

What is the Difference Direct Tax and Indirect Tax

What are the Different Types of Taxes in India?

Things to Do After Filing Income Tax Returns

Section 16 of the Income Tax Act (ITA), 1961

How to Calculate returns on an assured savings plan?

Pradhan Mantri Suraksha Bima Yojana

What is the difference between TDS and TCS?

Save Income Tax by 31st March: Here Is a Checklist

Tax Exemption and Scope of Coverage

LTC Cash Voucher Scheme October 2020 – Everything You Need to Know

Money Saving Tips for Single Women

Saving Income tax in 2017 - 18

Union Budget 2023: Impact on Life Insurance

TDS Due Dates of FY 2022-23 For Return Filing

Tax Structure in India

Why Tax Planning Should Be an All-year Round Activity

What are Direct Taxes? How to Avoid being Overtaxed?

Insurance and Endowment: Everything You Need to Know!

Income Tax Exemption for Physically Handicapped Dependent

Investment Proofs You Need Submit To Lower TDS Cut From Your Salary

Can You Get Term Insurance Without Income Proof?

All about TDS on Salary under Section 192 – Kotak Life

Sub-sections Under Section 80C of the Income Tax Act, 1961

प्रत्यक्ष कर और अप्रत्यक्ष कर में क्या अंतर है?

What is Section 195 of the Income Tax Act? TDS on Non-Residents of India

All you need to know About Tax on Inheritance

Income Tax Deductions Under Section 80C

How to View 26AS and Download Form 26AS Online

इनकम टैक्स रिटर्न कैसे फाइल करें?

What are Deferred Savings Plans?

Should one prefer a guaranteed savings plan over monthly income schemes?

How to Check Income Tax Refund Status Online in India

Are Financial Planning and Tax Planning the Same Thing?

List of Important Income Tax FAQs

Maximize Your Savings: Tax Tips for Salaries Above ₹20 Lakhs

Interest Imposed Under Sections 234A, 234B and 234C

Section 80E: Tax Exemption on Interest on Education Loan

Income Tax Deduction Under Section 80CCC In India

Tax Saving Options other than Section 80C

What is Section 80C - Explained in Detail

Presumptive Taxation for Business and Profession

Tax Saving Tips: Best Ways to Save Income Tax for 2021

Tax Planning and Tax Benefits of Life Insurance

Union Budget 2023 and Tax Exemptions on Life Insurance Premium Over ₹5 Lakhs

What is Section 80C Deduction?

How To Invest In Guaranteed Return Plans For Higher Returns And Financial Security?

How To Save Tax Using Life Insurance?

What is Form 26AS - All You Need To Know

Income Tax Filing For NRI in India

Problems People Face with Tax Returns after a Job Change

What is the Percentage of Tax Deducted at Source (TDS)?

What is ITR & How to File Income Tax Return?

A Comprehensive Guide to Understand the ITR 7 Form

Guaranteed Return Plans-Why is it a must for you?