ITR filing: 5 smart tax-saving hacks that don’t lock in your money

As the deadline for filing Income Tax Returns (ITR) approaches, many taxpayers are looking for ways to reduce their taxable income without locking their money for a long time. While popular options like the Public Provident Fund (PPF) and Equity Linked Savings Schemes (ELSS) offer tax benefits, they usually require a long-term commitment. But there are other options too that offer tax deductions under Section 80C and related sections — while keeping your money more accessible.

Here are five simple tax-saving methods that provide flexibility and help you save smartly:

1. Employee Provident Fund (EPF)
If you are a salaried employee, you already contribute to the EPF from your monthly salary. This contribution qualifies for deduction under Section 80C. Even though EPF is meant for retirement, it allows partial withdrawal in certain cases like medical needs, education, home purchase, or marriage. This means your money is not completely locked in and can be used when required for specific needs.

2. Tax-saving fixed deposits (FDs)
Several banks offer special 5-year tax-saving FDs that also qualify under Section 80C. Even though they have a five-year lock-in, you can get liquidity in an emergency through overdraft or personal loans against these FDs. Unlike PPF or ELSS, you can still access your funds indirectly. These FDs are a safer option for those who prefer fixed returns and lower risks while saving taxes.

3. Home loan deductions
If you are repaying a home loan, you can claim tax deductions under two sections. The principal amount paid qualifies under Section 80C, and interest payments up to Rs 2 lakh per year can be claimed under Section 24(b). The best part is that there is no lock-in period, and you can claim deductions every year as you continue repaying the loan.

4. Health insurance premiums (Section 80D)
Health insurance not only protects you and your family but also helps you save tax. Premiums paid for self, spouse, and children are eligible for a deduction up to Rs 25,000 under Section 80D. If you're paying for your parents' health insurance, and they are senior citizens, the limit increases to Rs 50,000. This tax-saving method is completely liquid as you’re not locking any amount — it's just a regular expense with tax benefits.

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5. National Pension System (NPS)
The National Pension System offers two types of tax benefits. Under Section 80CCD(1B), you get an additional Rs 50,000 deduction on top of the Rs 1.5 lakh allowed under Section 80C. Tier I accounts are for long-term retirement savings with restrictions on withdrawals. But if you open a Tier II NPS account, you can enjoy much more flexibility — withdraw anytime without restrictions. This makes it useful for people who want both tax-saving and freedom to access funds.

These five tax-saving ideas help you reduce your tax burden smartly without locking your funds for years. While some options like EPF and tax-saving FDs may seem rigid at first, they do offer partial withdrawal or loan options. Others like health insurance and home loan repayments offer full flexibility. NPS also balances long-term and short-term needs well if you use both Tier I and Tier II accounts.

As the ITR filing deadline nears, review your finances and make the most of these flexible deductions. Always keep proof of investments and payments ready in case it’s needed during verification. And remember — smart tax planning not only saves money but also helps you build financial security without compromising your liquidity.