Saving on taxes doesn’t always have to be complicated. There are several avenues where your earnings or investments can remain completely tax-free, helping you grow wealth without worrying about paying extra.
From government-backed savings schemes to gifts and agricultural income, let’s look at the five tax-free incomes in the country.
PUBLIC PROVIDENT FUND (PPF)
The Public Provident Fund (PPF) remains one of the most popular long-term savings options. The interest earned, and the maturity amount are completely tax-free.
Contributions up to 1.5 lakh per year qualify for a deduction under Section 80C, making it a safe and tax-efficient choice. Currently, the interest rate on PPF for this quarter stands at 7.1%, offering steady returns for long-term investors.
SUKANYA SAMRIDDHI YOJANA (SSY)
Parents can benefit from the Sukanya Samriddhi Yojana, designed to help build a long-term corpus for their daughter.
Investments in this scheme qualify for tax deduction under Section 80C, up to Rs 1.5 lakh per year. Both the interest earned and the maturity proceeds are tax-free, making it one of the most tax-efficient savings schemes in the country.
AGRICULTURAL INCOME
Income earned from agricultural activities like cultivation, selling crops, or renting agricultural land is fully exempt from tax.
However, if agricultural income exceeds Rs 5,000 and total income crosses the basic exemption limit, it may be considered while calculating the tax rate for other income.
EMPLOYEES’ PROVIDENT FUND (EPF)
The Employees’ Provident Fund is another avenue where your money can grow tax-free, provided certain conditions are met. Withdrawals are tax-free if you have worked continuously for five years or more.
This includes the employee’s contributions, employer contributions, and interest earned over time. Both the interest and maturity proceeds are tax-free under both the old and new tax regimes, making EPF a reliable option for long-term savings.
GIFTS
Gifts received from specified relatives, including parents, spouse, and siblings, or inheritances, are fully exempt from tax without any upper limit. Gifts from non-relatives are exempt up to Rs 50,000 per financial year. Any amount beyond this becomes taxable.
What this means for savers
By choosing the right avenues, you can grow your money while staying tax-efficient. Whether it’s PPF, SSY, EPF, agricultural income, or gifts, understanding these options can help you make smarter financial decisions and save more effectively without extra tax burden.
