With the financial year 2024-25 ending on March 31, taxpayers opting for the old tax regime are in the final stages of their tax planning. 5 lakh from their total taxable income through specified investments and expenditures. According to tax regulations, these investments must be completed within the financial year to qualify for the benefits, while as the deadline approaches, several digital and traditional investment avenues remain open for those looking to optimize their tax liabilities before the window closes.
The selection of investment instruments depends on individual financial goals, risk appetite, and liquidity requirements. While some options offer market-linked returns, others provide sovereign guarantees. The integration of digital platforms by financial institutions has made it possible for taxpayers to execute these transactions instantly, ensuring compliance with the March 31 deadline even during the final days of the month.
Equity Linked Savings Scheme (ELSS) Mutual Funds
Equity Linked Savings Scheme, popularly known as ELSS, is a prominent equity-oriented investment option under Section 80C. It features a mandatory lock-in period of 3 years, which is the shortest among all tax-saving instruments under this section. ELSS funds invest a significant portion of their corpus in equity and equity-related instruments. Taxpayers can initiate investments through mutual fund platforms or banking apps. 5 lakh per annum.
Public Provident Fund (PPF) and Sovereign Security
The Public Provident Fund (PPF) remains a preferred choice for risk-averse taxpayers seeking long-term capital preservation. Backed by the Government of India, PPF offers a 15-year maturity period with an interest rate reviewed quarterly by the government. It falls under the Exempt-Exempt-Exempt (EEE) category, meaning the principal invested, the interest earned, and the maturity proceeds are all exempt from income tax. 5 lakh per financial year for tax benefits.
Tax-Saving Fixed Deposits (FD)
Tax-saving Fixed Deposits offered by scheduled banks provide a predictable return with a fixed tenure. These deposits come with a mandatory lock-in period of 5 years, during which premature withdrawal isn't permitted. The investment qualifies for deduction under Section 80C. However, unlike PPF, the interest earned on these fixed deposits is taxable according to the individual's applicable income tax slab. Most banks allow customers to open these accounts instantly through net banking, making it a convenient last-minute tax-saving tool.
National Pension System (NPS) and Additional Deductions
The National Pension System (NPS) is a voluntary retirement savings scheme that offers dual tax benefits. 5 lakh are eligible for deduction under Section 80C. On top of that, an additional deduction of up to ₹50,000 is available under Section 80CCD(1B), allowing a total potential tax-saving investment of ₹2 lakh. NPS accounts can be managed and funded online through the e-NPS portal. The scheme offers various investment choices, including equity, corporate bonds, and government securities, tailored to the subscriber's preference.
Life Insurance Premium Payments
Premiums paid towards life insurance policies for self, spouse, or children are eligible for tax deductions under Section 80C. This includes term insurance plans, unit-linked insurance plans (ULIPs), and traditional endowment policies. To claim the benefit for the current financial year, the premium must be paid on or before March 31. Taxpayers can work with the online payment gateways of insurance providers to ensure immediate processing and receipt generation. This option provides the dual benefit of financial protection for the family and tax efficiency for the policyholder.