The March 31 deadline for making tax-saving investments for Financial Year 2023-24 is knocking at our door, and if you haven’t exhausted the Section 80C deduction limit yet, then you need to hurry up. For, this is the last time to maximize your tax savings – failing which you won’t be able to reduce your taxable income, at least for the current fiscal year.

If you are still looking for some suitable tax-saving investment instruments, which can also give you good returns, then here are some options:

Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a tax-free investment avenue which is open to all resident individuals. PPF accounts can be opened at any nationalised bank, authorised bank or post office. Deposits under PPF fall under the EEE (Exempt, Exempt, Exempt) tax category, which means an investor is not liable to pay tax at all three levels – investment, earning and withdrawal. Investments made in the PPF Scheme are eligible for deduction under Section 80C of the Income Tax Act.

Equity Linked Saving Scheme (ELSS)

ELSS is a type of mutual fund that invests primarily in equity markets. The amount invested by an individual in the ELSS is eligible for deduction under Section 80C. However, the gains on the sale of such units are subject to long-term capital gains tax if gains exceed ₹1 lakh in a financial year.

Also Read: Fixed Deposits: Earn up to 8.10% interest on 1-2 year FDs – Check latest rates

National Pension System (NPS)

National Pension System (NPS) is a voluntary retirement savings scheme. In NPS, two types of accounts are available for investment: Tier-I and Tier-II accounts. Any contribution made to the Tier-I NPS account is eligible for deduction under Section 80CCD. However, Tier-II account contributions are eligible for deduction under Section 80C. The deduction for contribution to the NPS (Tier-II account) shall be available to the Central Government employee only.

“The total deduction under Section 80C, Section 80CCC and Section 80CCD(1) shall be limited to Rs 1,50,000. However, an additional deduction of Rs 50,000 is allowed for the contribution made by an individual to his NPS account under Section 80CCD(1B). The total deduction to be allowed to an individual with respect to contribution to NPS can go up to Rs 2,00,000,” informs CA Naveen Wadhwa, Vice President, Taxmann.

National Savings Certificate (NSC)

Investments made in NSC are eligible for deduction under Section 80C. Interests earned on deposit during the tenure of NSC are deemed to be reinvested in NSC. Such interest income is charged to tax as income from other sources. Such re-invested interest is also eligible for deduction under Section 80C.

Sukanya Samriddhi Account Scheme

Sukanya Samriddhi Account Scheme is a saving scheme for the girl child. The scheme, which is currently giving 8.2 per cent return, is aimed at providing money for the higher education of a girl child and for her wedding expenses. Sukanya Samriddhi Scheme falls under the EEE (Exempt, Exempt, Exempt) tax category, which means an investor is not liable to pay tax at all three levels – investment, earning and withdrawal. Investments made in the Sukanya Samriddhi Scheme are eligible for deduction under Section 80C of the Income-tax Act. Any amount withdrawn from the account is exempt from tax under Section 10(11A).

Tax Saving Fixed Deposit

Any amount invested in a term deposit with a fixed maturity of 5 years or more qualifies for deduction under Section 80C. “An individual can start a term deposit with a minimum deposit of Rs 100, and a maximum of Rs 150,000 can be deposited in the scheme. Interest earned from deposits made in the scheme is charged to tax as income from other sources. A deduction of up to Rs 50,000 can be claimed by a senior citizen under Section 80TTB in respect of such interest,” says Wadhwa.

Unit-Linked Insurance Plan (ULIP)

Unit-linked insurance plans (ULIPs) are investment options consisting of a mix of insurance and investment. The deduction is allowed under section 80C with respect to the premium paid on ULIP, provided the premium paid during the year does not exceed 10% of the actual capital sum assured. Further, any sum received from such ULIPs is exempt under section 10(10D) if certain conditions are fulfilled.

Senior Citizen Savings Scheme (SCSS)

The Senior Citizen Savings Scheme is a Central Government-sponsored program for senior citizens and retired persons. The amount deposited under the scheme – which is currently giving 8.2 per cent return — is considered for tax deduction under Section 80C of the Income Tax Act.

Further, interest income from SCSS is chargeable to tax as ‘Income from other sources’. However, a deduction of up to Rs 50,000 can be claimed by a senior citizen under Section 80TTB in respect of interest earned from the deposit made under the scheme.

“Remember that the total deduction allowed under Section 80C, Section 80CCC and Section 80CCD(1) shall be limited to Rs 1,50,000. So, it’s essential to consider the total amount of deductions already claimed in the financial year before making additional investments,” advises Wadhwa.