If you’re looking to grow your money and save on taxes at the same time, you’re not alone. For many Indians, tax season is a reminder to explore smart investment options that offer dual benefits, wealth creation and tax deductions.
The good news? With the right monthly investment plan, you can enjoy the best of both worlds. Not only can you build a healthy financial future, but you can also reduce your taxable income under Section 80C of the Income Tax Act.
Let’s explore how monthly investing can help you meet your long-term goals and bring down your tax liability, one small step at a time.
Why Section 80C Matters
Section 80C allows individuals to claim deductions of up to ₹1.5 lakh per financial year on specific investments and expenses. That means if you invest smartly, you can reduce your taxable income and save up to ₹46,800 annually (assuming you’re in the 30% tax bracket).
But here’s the catch: to truly benefit, you need to choose instruments that suit your income, risk appetite, and life goals, not just what looks good during tax season.
Enter the Monthly Investment Plan
A monthly investment plan is simply a way to invest small amounts regularly, typically in mutual funds, ULIPs, PPF, or life insurance plans. It’s an accessible and stress-free method to build wealth over time, especially for salaried individuals.
Why it works:
- You don’t need a large amount to begin, just ₹500 or ₹1,000 a month is enough
- It spreads your investment across the year, making it budget-friendly
- It builds financial discipline and long-term habits
- And yes, many of these plans qualify for Section 80C deductions
To explore options suited to your needs, you can check out this monthly investment plan guide.
Top Tax-Saving Monthly Investment Plans
Here are some of the most popular and effective monthly investment options that come with tax benefits under Section 80C:
1. Equity-Linked Savings Scheme (ELSS)
- Lock-in period: 3 years (shortest among all 80C options)
- Returns: Market-linked, with high growth potential
- Risk: Moderate to high
Why it works: ELSS is perfect if you’re looking for wealth creation and are comfortable with some market risk. You can set up a monthly SIP and watch your investments grow over time.
2. Public Provident Fund (PPF)
- Lock-in period: 15 years
- Returns: Fixed and government-backed
- Risk: Very low
Why it works: Though not market-linked, PPF is one of the most trusted long-term options for conservative investors. You can invest monthly and even increase contributions as your income grows.
3. ULIPs (Unit Linked Insurance Plans)
- Lock-in period: 5 years
- Returns: Market-linked (with life cover)
- Risk: Moderate
Why it works: ULIPs combine insurance and investment. Part of your premium is used for market investments, and part provides life cover. Over time, it helps you build wealth while protecting your loved ones.
4. Tax-Saving Fixed Deposits (5-Year FDs)
- Lock-in period: 5 years
- Returns: Fixed (varies by bank)
- Risk: Low
Why it works: Ideal for those who prefer guaranteed returns. You can choose to invest in a lump sum or divide it over monthly instalments, depending on the bank’s terms.
5. Life Insurance Premiums
- Premiums paid for term insurance or traditional savings plans qualify under Section 80C.
- Offers peace of mind, especially for those with dependents.
Bonus tip: Choose a policy that aligns with your long-term financial goals, not just one that offers a tax deduction.
Tax Planning Through the Year
One of the biggest mistakes people make is waiting till the last quarter to invest in tax saving schemes. This often leads to rushed decisions or locking money into unsuitable plans.
Instead, set up your investments in a monthly, bite-sized way. It reduces financial pressure and allows your money to grow more efficiently. If you’re not sure where to begin, this list of tax saving schemes can help you evaluate all your options in one place.
Real-Life Scenario
Let’s say you want to invest ₹1.5 lakh a year under Section 80C. Instead of scrambling for it in March, you can:
- Start a ₹5,000 monthly SIP in ELSS (₹60,000 annually)
- Contribute ₹4,000 monthly to your PPF (₹48,000 annually)
- Pay ₹3,500 monthly as premium towards a ULIP or term insurance (₹42,000 annually)
This approach spreads the investment across the year, aligns with your income flow, and ensures you hit the ₹1.5 lakh target without financial strain.
Final Thoughts
Tax-saving doesn’t have to feel like a chore. With a smart monthly investment plan, you can reduce your tax outgo while building a secure financial future.
When you invest regularly in eligible tax saving schemes, you create a win-win situation: lower taxes today and greater financial freedom tomorrow.
And the best part? You don’t need to make big sacrifices. Just small, consistent steps, starting now.
