8 Attractive Tax Free Investment Schemes in India

Today every other individual is searching for tax-free investments but most of them end up choosing the wrong tax saving schemes. This happens because there’s a flurry of different tax saving financial investment schemes available in the market today. In order to choose the best of the lot, you need an efficient financial planning and a strategic approach. You can save a lot of your tax money if you have a smart financial investment plan under your sleeve.

Investing your money with proper financial planning and smart approach can fetch you great returns. Let me give you a list of 8 smart tax saving investments that you must opt to earn a maximum return without losing a lot of money on tax.

Tax Free Investment Ideas India1. Public Provident Fund (PPF)

On the top of the list is Public Provident Fund (PPF). Highly recommended by Government of India, the PPF scheme offers great interest rates and returns that qualify for 100% tax exemptions. The Public Provident Fund (PPF) is ideal for investors, self-employed professionals and other employees who are not covered under any Employees Provident Fund or other benefits. Deposits made to Public Provident Fund are tax deductible in India under Section 80C of Income Tax Act, 1961 which makes it an ideal investment to gain better returns with tax saving options and guarantee of a secured future.

2. Unit Linked Insurance Plan

ULIP (Unit Linked Insurance Plan) is a financial scheme that offers both benefits of insurance and investment in addition to tax saving options under Section 80C. Being said that, ULIPs can also be risky if you don’t read the terms and conditions such as your policy may be discontinued if you miss a premium. However, you can get a lot of options and features under ULIP scheme under which you could switch between various funds, reduce or increase the level of protection, options to surrender, additional riders to enhance coverage and returns as well as tax benefits during the tenure of the policy.

3. New Pension Scheme

More than a tax-free investment plan, New Pension Scheme is considered as an ideal option for retirement planning. An individual can invest in New Pension Scheme if he or she is ageing between 18 and 55 years but the tax deduction criteria are only fulfilled for contributions to a tier-I NPS account with a minimum annual investment of Rs. 6,000 a year under the condition of no premature withdrawals till the age of 60.

4. Pension Plan

Many Life Insurance companies and Banks are offering Pension Plans with tax deduction schemes under Section 80C of Income Tax Act since 2013. Such pension plans are not only beneficial to save tax but also secures your future. However, you must be wise to make choices while opting for these Pension Plans as the fund management charges are considered very high with the Pension Plans offered by Life Insurance Companies in comparison to the Government o6wned national pension scheme.

5. Rajiv Gandhi Equity Saving Scheme

Aimed at encouraging savings from small retail investors to enter domestic capital markets, Rajiv Gandhi Equity Savings Scheme (RGESS) was introduced by P. Chidambaram on 21st September 2012. Currently one of the best tax saving investment in India, RGESS was introduced to promote “equity culture” in India. Under this scheme, investments are allowed up to a maximum of Rs. 50,000 out of which 50% is tax deductible. Also, there is a tax benefit of up to Rs. 1.5 lakh permitted by Section 80C of Income Tax Act.

6. Life insurance policies

Insurance policies are considered to be the best for investment because of its tax saving benefits. For a life insurance policy covering the individual and his or her immediate family, the premium paid is deductible up to Rs. 1 lakh under Section 80C of the Income Tax Act. The deductions are applicable for both cash-back endowment plans and term insurance plans. The only condition is that you must regularly pay the premium for the rest of the term once you get the policy.

7. National Savings Certificates

Although it generates low returns in comparison to bank fixed deposits, Nation Savings Certificate is safer as it is a savings bond issued by the Government of India and the money remains with them. You can get tax benefit under section 80C for an investment up to Rs. 1 lakh in National Savings Certificate. In addition to this, there is also an extra tax benefit for NSC investment scheme where the amount earned as interest is reinvested and considered as a part of the tax deduction scheme.

8. Equity Linked Savings Scheme

Popularly known as ELSS, Equity Linked Savings Scheme is a type of mutual fund investment scheme with a lock-in period of 3 years which in fact is the shortest period among all tax saving instruments covered under Section 80C of Income Tax Act. Although mutual funds investment often carry a moderate amount of risk as the returns are dependent on the performance of stock markets, these investments are tax-free and equally rewarding. However, the returns are highly dependent on the financial sentiment of the markets, so invest in Equity Linked Savings Scheme at your own risk.

Opt for any of the above 8 smart investing plans and secure your future. All the above investment schemes are highly popular and safe with guaranteed results offering tax-free features.

Please share any other tax-free investment scheme that we missed on our list in the comments below. Also, don’t forget to share this article on Facebook and Twitter.


  1. A new scheme has been announced by Govt. to invest upto Rs. 7.5 lakhs @8% qtrly int. in LIC. Can you please inform me the plan number of this scheme in LIC

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