ITR Filing 2025: 5 Government Schemes That Help You Save Big on Taxes & Grow Your Money Smartly

As the new financial year progresses, many taxpayers are once again facing the challenge of how to lower their tax liability without compromising their long-term financial goals. The good news? The Indian government offers several savings schemes that not only help you reduce your taxable income but also ensure that your hard-earned money is growing in safe and high-return investments.

If you’re opting for the old tax regime, which allows you to claim deductions under Section 80C of the Income Tax Act, there are some excellent government-backed options you should seriously consider. These aren’t just tax-saving tools—they’re smart strategies for building a secure financial future.

Let’s dive into five such powerful schemes that can help you save up to ₹1.5–2 lakh in taxes while giving your money a meaningful purpose.

1. Public Provident Fund (PPF) – The Long-Term Stability Choice

PPF remains one of the most trusted savings schemes in India. It not only gives you tax benefits under Section 80C (up to ₹1.5 lakh annually) but also offers long-term wealth creation with complete capital safety. You can start with as little as ₹500 a year and go up to ₹1.5 lakh. The lock-in period is 15 years, and you earn an interest rate of 7.1%—which is tax-free.

If you’re looking for a disciplined, risk-free, long-term savings plan with guaranteed returns, PPF is a classic winner.

2. National Pension System (NPS) – Secure Your Retirement and Save More Tax

The NPS is a government-approved retirement-focused investment plan. Under Section 80C, you can claim deductions up to ₹1.5 lakh, and an additional ₹50,000 is available under Section 80CCD(1B)—a total of ₹2 lakh in tax savings. You can start investing with just ₹1,000 a month.

Whether you’re salaried or self-employed, anyone between 18 and 65 years of age can open an NPS account through any registered bank. It’s a smart way to build a retirement fund while benefiting from one of the most generous tax benefits available.

3. Sukanya Samriddhi Yojana (SSY) – A Gift of Financial Security for Your Daughter

For parents of girl children, the Sukanya Samriddhi Yojana offers both emotional and financial value. Started under the ‘Beti Bachao, Beti Padhao’ initiative, this scheme allows you to invest for your daughter’s future education and marriage. The annual investment ranges from ₹250 to ₹1.5 lakh.

What sets SSY apart is the attractive 8% interest rate and the fact that both the investment and the returns are tax-free under Section 80C. If you miss making a deposit in a financial year, the account becomes inactive—but it can be reactivated with a small penalty.

This plan not only empowers your daughter’s future but also brings peace of mind and tax savings.

4. Senior Citizens Saving Scheme (SCSS) – Designed for Golden Years

If you or your parents are over 60, the Senior Citizens Saving Scheme is worth looking into. It’s a low-risk, high-interest option for retirees and offers tax benefits under Section 80C. You can invest up to ₹1.5 lakh annually by opening an SCSS account at any bank or post office.

The current interest rate is a solid 8.2%—higher than most fixed deposits—and the scheme ensures a steady income stream during retirement. For senior citizens seeking both safety and returns, SCSS is a well-balanced solution.

5. Unit Linked Insurance Plan (ULIP) & ELSS – Dual Benefit of Insurance and Investment

ULIPs give you the combined benefit of life insurance coverage and market-linked investment. With a lock-in period of 5 years, ULIPs qualify for tax deductions under Section 80C, and the maturity amount is also tax-free, subject to conditions. They’re a great fit for individuals looking for long-term goals with moderate to high risk tolerance.

In the same category, Equity Linked Savings Schemes (ELSS) are mutual fund-based tax-saving investments that allow you to start investing with as little as ₹500. These also qualify for deductions up to ₹1.5 lakh under Section 80C. ELSS typically offer higher returns compared to traditional savings options, though they do come with market risk.