Paying tax is an obligation that each and every one of us has to fulfill. Taxes account for a huge chunk from our income; they are often considered as an excessive burden. And while you cannot obliterate this burden, there are some exemptions provided by the government that can help you reduce it.

The Income Tax Act, 1961 offers various provisions which allow tax deductions on certain investments. In this guide, we will talk about these tax-saving investments.

  1. Term Insurance

When you buy a term insurance policy, you not only provide your family with a protective cover from future untoward events but also get tax exemptions. The premium amount paid towards this life insurance plan is eligible for tax exemption under Section 80C up to 1.5 lakh.

Therefore, if you do not own a term plan, buying it is a good idea. However, make sure that you purchase your policy only from leading insurers who are renowned for their claim settlement ratio. One such insurer is Max Life Insurance, which currently has the highest claim settlement ratio of 98.36 percent.

Put simply, before buying a policy, check all the options available in the market. You can easily compare online term plans of leading insurance companies and find a policy that best suits your needs.

  1. Health Insurance

The premium amount paid towards your health insurance plan is eligible for tax deductions under Section 80D. You can claim an exemption of Rs. 25,000 on your taxes for the premiums paid for yourself, child and spouse. Moreover, if you are also paying premiums for your parents, then you can claim an exemption of Rs. 50,000.

Thus, a health plan not only helps you reduce taxes on your income but also protects you from the burden of high treatment expenses.

  1. ULIPs

Unit linked investment plans are hybrid insurance policies that provide the investor with both life cover and wealth creation option. The sum paid towards ULIPs is divided into two parts; one part is invested in funds of your choice, and the other goes towards providing you with a life cover.

This investment option is perfect for those who wish to secure their family’s future while creating wealth. The premium amount paid also allows you to claim tax deductions (U/s 80C) and the maturity benefits provided are tax-free under Section 10(10D)

  1. ELSS Plans

Equity-linked Saving Schemes are a type of mutual fund schemes where your money is invested in high-performance market-linked funds. However, you should always keep in mind that while ELSS investments can provide you with high returns, the risks factor is also higher.

ELSS funds fall under a special category of mutual funds, wherein an investor can also claim tax benefits u/s 80C. An exemption of Rs. 1.5 lakh can be claimed for the investment made in ELSS.

  1. Public Provident Fund

PPF or Public provident fund is one of the safest investments in the market today. It offers complete security to your investments as the investment plan is operated by the government.

Investment in PPF allows you to create a good corpus for your post-retirement needs. And under this investment option, you can claim tax exemptions on the amount invested (U/S 80C).

  1. Real Estate Investments (Sections 80C, 24 and 80EE)

Purchasing a home is a dream majority of us have. But, we seldom know that our dream house can also provide us with tax-saving benefits.

When you pay your home loans, you can claim tax exemptions up to Rs 1.5 lakhs on the principal amount. Moreover, the interest paid is also eligible for tax exemptions up to Rs 2 lakh under Section 80EE (Only applicable for loans taken after 1st April 2013) and Section 24.

‘Summing Up’

Well there you have it, if you invest in these options, you can cut out the majority of your tax payments. Now you just need to understand how to file income tax return online, upload the receipts of these investments and claim tax benefits.