Best Tax Saving Options under Sec- 80C

Given an option, most of the citizens wouldn’t wish to pay income tax. But, it’s all their moral duty, they have to. As a citizen of India, it’s our core responsibility to pay income tax to help our country. The income tax payment we pay to the government is used to build our nations’ infrastructure and other facilities.

As per the India tax law, taxpayers have access to save tax by using the provision under section 80C. Any citizen of India can avail a tax deduction up to Rs. 150,000 per financial year under this section. There is no minimum limit. This deduction is only available for citizens of India not for partnerships, companies and other corporate bodies. You can avail the best investment options to saves tax.

What do we need to invest?

An income tax meaning is- It is an annual charge levied by the government on the net income of an individual and businessman. But every individual of India wants to save his income tax because of the few compelling reasons that are mentioned below.

• Inflation: Due to the increase in the price of goods and services over a period, it is very essential for the common man of India to save tax. In India, the current inflation rate is 11%. This means anything we purchase of 100 rupees would be worth Rs. 110 next year. So, if our earning is not growing with respect to the inflation rate it is very difficult for us to survive without savings.

• Future Income: Right now we are earning a decent income. After 25 and 35 years we would have to retire. After that neither we would not want to compromise our lifestyle we used to or nor would we want to be dependent on children’s income. So, what is the only option left for us? That’s is saving, we must have to invest a small part of our income on saving schemes that we can use after our retirement.

• Financial Security: Financial security means living a life with peace of mind. With the help of financial security, you can easily cover your unexpected expenses and live a life hassle-free.

• Saving Income Tax: I purposely take this reason at the last. Because I am not encouraging you to invest just sake of saving tax. You must invest genuinely to secure your future.

In this article, I am going to cover save tax investment options that are available for you under section 80C. So, let’s get on the best investment options in India.

• Provident Fund: A provident fund is a retirement scheme levied by the government, available to all standard employees. It is a portion of our salary that our company deducts every month and it is used by the government. Once we retire, the PF that has deducted every month would be returned back to us. So, if you are someone who wants to save tax and at same time not ready for taking high investment risk then this option is the best for you.

Key features of this investment option:

• Safety of money is very high because it is levied by the government.

• Average return.

• Long term saving.

• From the day you join the company you will be a member of PF.

• Accumulation plus interest upon retirement.

• A small amount of money helps you in fulfilling financial goals.

• Reduce your tax burden and one of the best save tax investment options in India.

2 Public Provident Fund: PPF is a long term and of the favorite save tax investment options, which is backed by the government of India. Even after several decades, PFF continues to be the most popular avenue when it comes to saving. PFF is known as exempt because the money invested in the account is exempt under section 80C. The interest on the account is paid by the government of India and set every quarter. Any individual who is a citizen of India can open a PFF account. NRI cannot opens a PPF account. Joint and multiple accounts is not allowed. In order to maintain this account, individuals have to invest minimum Rs. 500 to a maximum limit of 1.5 Lakhs. As PFF falls under section 80C of income tax, interest earned is exempted and maturity proceeds are also exempted from tax. The facility to generate a request for a loan against PFF is available for 3 financial years up to a 6th financial year from the date of the opening account.

Key features of PFF:

• PFF account matures after 15 years from the end of financial year in which account was opened.

• Average return.

• You can save tax by investment.

• Extremely safe and no risk.

• Individuals need to deposit at least Rs. 500 to activate the account.

• Individuals cannot take out money before the maturity period.

• The earned interest won’t be added to the whole income.

3 National Saving Certificate: When it comes to save by investment there are many investment options in our mind. These options offer huge benefits like attractive interest rate, save taxes, helps in building financial goals and safety for the money invested. One such scheme that designed to give you these benefits is the national saving certificate scheme. This investment scheme offers you a better return and saves tax. This scheme is assured by the government. Since this scheme is designed only for the citizens of India so no NRI citizen would take the benefits of this scheme. Under issue VIII of NSC trust, HFU families are not allowed to invest in this scheme.

Key Features of NSC:

• Extremely safe.

• A good return you will get after the maturity period.

• The interest earned on NSC is taxable.

• A decent amount invested every year will create awesome wealth.

4 Equity Linked Savings Scheme: Everyone is looking for the option to save money and the equity-linked saving scheme is one of the best save tax investment options. ELSS is a diversified mutual fund investment option that helps you save and provide you an opportunity to grow money. Being one of the renowned investment options it offers you superior returns. Like all other investment options, the money invested in this scheme is tax-deductible under section 80C. You can invest in an ELSS with SIP which allows you to invest small money Rs. 500 at a regular interval of time.

Key Features of ELSS:

• ELSS provides you returns between 15%- 18% respectively.

• Extremely safe and offer you decent returns.

• A superior tax saving instrument.

• This scheme comes with a statutory lock-in period.

• No limit on maximum contribution.

Final say:

A crucial point that I saved for the last is “starting early”. Understand this statement in this way, there are two friend X and Y they choose the investment plan. Mr. X age 25 years, Invest 50,000/- every year for the next 20 years. Mr. Y age 35 years, invest 1 Lac every year for the next 20 years. Who do you think will receive better returns? I know your answer Mr. Y, no you are wrong. X would have more money because he started earlier.

I understand it is not easy to pay income tax payment if you are an only single source of earning in your family. That’s why in order to handle unforeseen expenses and save tax, it is worth to choose the best plan investment option that comes under section 80 C. Take any above-mentioned investment option which suits you and creates wealth score for future effortlessly.