Income Tax FY23-24: How To Get Tax-Free Returns Through Strategic Investments?

In the realm of tax-saving investments, where returns often incur taxes, there exist avenues providing tax-free gains. Here is a list of investments that provide tax-free returns.
Income Tax FY23-24

Income Tax FY23-24 (Image Source: iStockphoto)

In the realm of tax-saving investments, where returns often incur taxes, there exist avenues providing tax-free gains. Here is a list of investments that provide tax-free returns.
One prime option is the Public Provident Fund (PPF), allowing a tax-saving benefit of up to Rs 1.5 lakh under Section 80C of the Income-tax Act, 1961. The returns from the PPF are tax-exempt, albeit with a 15-year lock-in period. Presently offering a 7.1 per cent interest rate for the January to March quarter, the PPF is further fortified by a sovereign guarantee, backed by the central government.
Another tax-efficient avenue is the Sukanya Samriddhi Yojana (SSY), exclusively applicable to girl children below the age of 10. This savings scheme, boasting an 8.2 per cent interest rate for the January-March quarter and a 21-year lock-in period, not only provides tax-free returns but also qualifies for a tax deduction of up to Rs 1.5 lakh under Section 80C.
Salaried individuals find solace in the Employees Provident Fund (EPF), where a mandatory 12 per cent salary contribution enjoys a deduction of up to Rs 1.5 lakh under Section 80C. Although subject to a lock-in period until retirement, the EPF scheme holds an Exempt-Exempt-Exempt tax status, contingent on specific conditions. As of the 2021-22 fiscal year, any interest earned on employee contributions exceeding Rs 2.5 lakh in a financial year becomes taxable.
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