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| Tax Saving |
Investments and Payments eligible as tax-saving deductions under Section 80C
Equity Linked Savings Schemes (ELSS)
ELSS (Equity Linked Savings Scheme) is a diversified equity mutual fund where most of the corpus is invested in equity and equity related products. An investment in ELSS comes with a lock in period of three years. Investors can avail tax benefits under section 80C of Income Tax Act 1961 for an investments of up to Rs 1.5 lakh. ELSS funds offer a simple way to get tax benefits and at the same time get an opportunity to gain from the potential of equity markets. They offer the twin benefits of tax deduction and capital appreciation. Since it is an equity fund, returns from an ELSS fund reflect returns from the equity markets. Equity Linked savings Schemes (ELSS)
Public Provident Fund (PPF)
Public Provident Fund is a popular and one of the best long term investment scheme with salaried as well as self-employed class of individuals in India. The deposits made in PPF accounts can be claimed as tax deductions under Section 80C. A maximum of Rs 1.5 lakh can be claimed in one financial year. The PPF has a tenure of 15 years. It offers risk free returns with attractive interest rate and interest earned on deposits are exempted from Tax. This makes the PPF Scheme one of the most tax efficient instruments. Public Provident Fund (PPF)
National Savings Certificate (NSC)
National Savings Certificate is an Indian Government saving bond, popularly known as NSC. NSC is primarily used for small savings and income tax saving investments in India. NSCs are eligible for tax breaks for the financial year in which they are purchased. The holder gets the tax benefit up to Rs. 1.5 lakhs under Section 80C of Income Tax Act, 1961. NSCs can be purchased from Post Offices and come with a lock-in period of 5 years. National Saving Certificate
Employee Provident Fund (EPF)
Employee Provident Fund is one of the most popular investment scheme for the salaried persons in India. A part of your salary (12% of salary) is deducted every monthly as employees contribution towards EPF. This contribution to the EPF account also earns a tax break under Section 80C of up to Rs 1.5 lakh. This fund is being maintained solely by the Employee Provident Fund Organization, a statutory body under the Ministry of Labour and Employment, Government of India.
Sukanya Samriddhi Account
Sukanya Samriddhi Account is a Government of India backed saving scheme targeted at the parents of girl children. The scheme is aimed at betterment of girl child in the country. The minimum annual deposit is Rs 1000. Investment of up to Rs 1.5 lakh can be deposited to a Sukanya Samriddhi Yojana account for tax saving under Section 80C. This scheme has been launched as a part of “Beti Bachao Beti Padhao campaign" to offer a means of saving to the girl child in every family.The scheme encourages parents to build a fund for the higher education and marriage expenses for their female child. The scheme has picked up well in the country since this is a great step towards providing financial security and financial dependence to women. Sukanya Samriddhi AccountNational Pension System (NPS)
The NPS is a pension scheme started by the Indian Government for the unorganised sector and working professionals to have a pension after retirement. Any contribution made by an individual up to Rs 1.5 lakh can be used to avail tax benefits under Section 80C. However, an additional Rs 50,000 can also be contributed in NPS for tax benefits under Section 80CCD(1B). NPS savings are mainly done for retirement purpose. One can contribute a minimum amount of Rs.500 per month or Rs.6000 a year. The subscribers can choose from different NPS plans as per their risk profile. National Pension Syatem (NPS)
Bank Fixed Deposits (FD)
Bank fixed deposits are the safest option for investment, but comes with a lock-in period of 5 years. You will get a fixed return after the maturity. Currently, different banks offer different interest on these FDs. These FDs also qualifies for deduction up to a maximum amount of Rs.1.5 lakh under section 80C. The returns are guaranteed but the interest earned on it is taxable.
5 Year Post Office Time Deposit (POTD)
Post Office Time Deposits are similar to bank fixed deposits.POTDs are available for different time periods like one, two, three and five years.The investment under 5 Years TD qualifies for the benefit of Section 80C of the Income Tax Act, 1961.Interest payable annually but calculated quarterly. The interest earned on it is entirely taxable. Any number of accounts can be opened in any post office. Post Office Time Deposit
Life Insurance Premium
The annual premium paid for life insurance for yourself, your spouse and children is an eligible tax-saving payment under Section 80C. Premium paid by you for your parents or your in-laws is not eligible for deduction under Section 80C. If you are paying premium for more than one insurance policy, all the premiums can be included. The limit for claiming these benefits is Rs. 1.5 lakhs. Why do you need life insurance?Unit Linked Insurance Plans (ULIP)
Unit Linked Insurance Plans are a mix of life insurance and investment. They provide you with the dual benefit of equity investment and life insurance. A portion of the invested amount in ULIPs is used to provide life insurance and the rest of the amount is invested in the equity market. Investments of up to Rs 1.5 lakh in ULIPs are eligible for claiming tax benefits under Section 80C.
Senior Citizen Savings Scheme (SCSS) Account
This scheme is exclusively meant only for senior citizens. An individual of the Age of 60 years or more may open the account. An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits. Maturity period is 5 years. Investment of up to Rs 1.5 lakh under this scheme qualifies for the benefit of Section 80C of the Income Tax Act, 1961.
Also Read: Senior Citizen Savings Scheme Account
Payment of Children's Tuition Fees
Paying your children's school or college fees is a huge expenditure in the modern times. You can claim the deduction up to Rs.1.5 lakh under section 80C. You can claim this deduction only for two children and that too for the school, college, university or educational institute situated in India only. This deduction is available for Full Time courses only, no deduction is available for part time or distance learning courses.
Home Loan Repayment
One can avail tax benefits on the repayment of the principal amount of a home loan. The maximum tax deduction allowed is Rs.1.5 lakhs under Section 80C. This deduction is also applicable on stamp duty charges and registration fees.
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