Tax Saving Investments

Tax Saving Investments are an integral part of one’s life as they offer tax deduction under section 80C or 80CCC. Taking into account, the importance of these investments, people frequently wish to invest. However, they are not keen enough to invest due to low returns and different risks associated with various investments.

Best Tax-Saving Investments Under Section 80C

Although there are various tax-saving investment plans available in the market. People often get confused which plan best suits them. In order to make you choose the best investment plan for you depending on your risk appetite and preferences, we’ve come up with some of the best tax-saving investments u/s 80C of the Income Tax Act, 1961.

Investments Returns Lock-In Period
ELSS Fund 12%-14% 3 years
National Pension Scheme (NPS) 10%-12% Till Retirement
Unit Linked Insurance Plan (ULIP) Returns vary from plan to plan 5 years
Endowment Insurance Plan Returns vary from plan to plan Duration varies from Plan to Plan
Public Provident Fund (PPF) 7.10% 15 years
Sukanya Samriddhi Yojana 7.60% N/A
National Savings Certificate 6.8% 5 years
Senior Citizen Saving Scheme 7.4% 5 years
Bank FD's 5.50%-7% 5 years
Term Insurance Returns vary from plan to plan Till Maturity of Plan

ELSS or Equity Linked Savings Schemes

ELSS Funds – Invest in Tax Saving Mutual Funds & Save Upto ₹46,800 in Taxes
Trusted By Over 40 lakh Indians

  • Save up to ₹46,800 a year in taxes
  • Potential to offer the highest returns among all 80C options
  • Lock-in period of 3 years, the shortest among all 80C options
  • Get your investment proof instantly
INVEST IN TAX SAVING FUNDS & SAVE TAX UP TO

₹46,800

Invest before 31st March to claim 80C benefit

National Pension System (NPS)

National Pension System (NPS) is a defined contribution based pension scheme wherein the subscriber contributes to his/her account regularly. Any Citizen of India with age between 18 to 65 years can join NPS. Under NPS, individual savings are pooled in to a pension fund which are invested by PFRDA regulated professional fund managers as per the approved investment guidelines in to the diversified portfolios comprising of Government Bonds, Bills, Corporate Debentures and Shares.

Features

Features

Choice of fund option

Tax Benefits & Pension Planning

Various Tax Benefits available u/s 80 CCD 2 upto 1,50,000/- + upto Rs 50,000/- u/s 80 CCD 1 (B) as well as plan for retirement income.

Ease of access

The NPS account can be managed online. Once NPS account is opened, online access credentials is provided by CRA (KARVY). Subscriber can login and view/manage his NPS account online.

Unit Linked Insurance Plans (ULIPs)

ULIP enables the best of both worlds by offering the twin benefits of life insurance and market-linked returns. Hence, you have the opportunity to invest your money to earn higher returns, while taking care of your protection needs.

  1. Flexibility to manage your money
  2. Transparency of your investments
  3. Security for your family’s future with comprehensive maturity and death benefits
  4. Long-term market-linked returns on your ULIP investment

Public Provident Fund – PPF

Public Provident Fund Scheme is a Central Government scheme, framed under the PPF Act of 1968. Thus we can say PPF is a government backed, long term Small Savings Scheme. The Scheme offers an investment avenue with decent returns coupled with income tax benefits.

PPF Product Features:

  • Attractive interest rate of 7.1% that is fully exempted from Income Tax under Section 80C
  • Good long term investments of 15 years
  • Minimum deposit Amount is Rs.500 and maximum Rs.1,50,000 in one financial year
  • Loan can be availed between 3rd to 6th financial year
  • Partial withdrawal facility can be availed after completion of 5 financial years
  • Account can be extended in a block period of 5 years after maturity

Sukanya Samriddhi Yojana (SSY)

Sukanya Samriddhi Yojana (SSY) is a savings scheme launched back in 2015 as part of the Government initiative Beti Bachao, Beti Padhao campaign. This scheme enables guardians to open a savings account for their girl child with an authorized commercial bank or India Post branch.

Double Tax Benefits:

  • Under Section 80C of Income Tax Act, deposits up to Rs.1,50,000 are eligible for a deduction
  • The interest earned on the deposit is tax free
  • Attractive rate of interest
  • Account holders can earn 7.6% interest (01.10.2020 to 31.12.2020) on their deposits
  • Yearly interest credited in the account at the end of Financial Year

National Saving Certificate (NSC)

National Saving Certificate (NSC), a part of the Indian Postal Service is a type of savings bond provided by the Indian Government used for small tax savings.

National Saving Certificate Benefits:

  • Except the interest earned in the last year, it can be totally tax-free
  • The denominations range between Rs 100 and Rs 1000 for investing in NSCs but can invest according to your status as there is no limit set on the amount
  • One can have the benefits of saving taxes as it comes under Income Tax Act, Section-80C which provides with the benefits as the Investor Tax
  • An applicant can apply for the certificate on minor’s behalf also
  • It is a possible way to secure loans

SCSS – Senior Citizen Savings Scheme

Senior Citizens Savings Schemes can be availed by any individual above the age of 60 years. They are effective savings options for the long term and offer attractive features and unmatched security.

Some of the main benefits of the scheme are:

  • Tax benefits are provided
  • Safe to invest in the scheme
  • Interest rate has been reduced from 8.6% to 7.4%
  • Premature withdrawal is allowed

Fixed Deposits: Tax Saving FD for Sec 80C

Senior Citizens Savings Schemes can be availed by any individual above the age of 60 years. They are effective savings options for the long term and offer attractive features and unmatched security.

Why to invest?

  • Dual benefits of attractive interest rates and tax saving
  • Invest as small as ₹10,000
  • Get tax deduction up to ₹1,50,000 under Section 80C
  • Flexible interest pay out – monthly, quarterly or reinvestment in principal
  • Know before you invest
  • 5-year lock-in period
  • Minimum investment of ₹10,000 and maximum of ₹150,000 for a duration of 5 years
  • Nomination – Nominate a single nominee to your account proceeds, whether held solely or jointly. No premature withdrawal and auto-renewal facility
  • Interest earned is taxable
  • FD allows only a one-time lump sum deposit

Insurance

Life Insurance

Reduce income tax on the amount of money you invest with a life insurance policy. Section 80C of the ITA permits tax deductions on premiums and payouts of life or term insurance plans. Premiums paid towards your life insurance will not be taxed if they are under a total of ₹1.5 lakhs. Section 10(10D) of the ITA allows any payouts received under a life insurance policy to be exempt from tax.

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