“A penny saved is a penny earned”
Wouldn’t be like a dream to spend as well as earn from your spendings too? Who wouldn’t like making investments and saving tax too from it? Tax saving investments are the type of investment desired by every investor!
Well, Income Tax Department has sorted this for all of us. Under various sections, there are certain deductions and exemptions, that make our investments a tax-saving one! Out of which, in today’s blog we’ll be focusing on Tax saving investments under 80c.
What do you mean by tax saving investment?
Tax saving investments in India have become an integral part of one’s life as you get deductions & exemptions under various sections of the Income Tax Department. Investment in tax saving schemes plays a central to financial planning and growth under Section 80C and 80CCC of the Income Tax Act of India.
Not only this, tax-saving investments reduce your income tax burden. Thus, it is crucial to plan your investments considering tax saving too! Well, without any further ado, let’s learn about the best tax saving investment under 80c:
Also read link: Tax Planning for Beginners: Top Key Principles Explained
Tax Saving Investments Under Section 80C
1. Public Provident Fund (PPF):
PPF or Public Provident Fund is also referred to as the savings cum tax saving investment. Under this, you can enjoy a deduction on the amount invested in this scheme. The best part of PPF is that you can save taxes, build a retirement corpus along earn guaranteed returns. It is perfect for investors who have a low-risk appetite!
Along with this the interest you received on maturity is also exempt from tax. They have a maturity period of 15 years that could apparently extend to 5 years more. Under this section, one could easily claim a tax exemption of a maximum of Rs. 1.5 lakh.
2. Equity Linked Savings Schemes (ELSS):
ELSS is known to be a dual beneficial investment. It is a combination of tax deductions and wealth accumulation over time. The best thing about this scheme is that it is eligible for tax exemption up to a maximum of Rs. 1.5 lakh under the conditions of Section 80C of the Income Tax Act, 1961. The lock-in period of ELSS is up to 3 years!
Below mentioned are a few characteristics of ELSS:
- There is no upper capping in investment in any amount in ELSS, while the minimum investable amount varies across fund houses
- ELSS funds are the only tax-saving investment with the possibility to deliver inflation-beating returns
- ELSS fund largely consists of equities, while they have some exposure towards fixed-income securities as well
3. NSC: National Savings Scheme
It is a government-backed tax-saving scheme and a low-risk fixed income product too! Here you can claim up to Rs 1.5 lakh under the provisions of Section 80C of the Income Tax Act, 1961. This scheme has set no limits on the maximum purchase of NSCs but you could only earn tax up to 1.5 lakhs on investment. The best thing about NSC is that you can easily get it open from any nearby Post office.
4. ULIP: Unit Linked Insurance Plan
This is a product that provides both investment & insurance facilities. It gives an investor the feast of both different cuisines together! Here what happens is the insurance companies invest some part of the premium in shares/bonds & the rest towards the insurance of the policyholder!
ULIP provides enormous tax facilities for instance: * Tax Benefits on Premiums * Tax Benefits for Maturity * Tax-free withdrawals in case of Death * Tax-Free Partial Withdrawal
Also read link: Long Term Investment – What is it and How Does it Work?
