Sec 80C of income tax act provides an individual to have a exemption of Rs 1.5 Lakh annually under various tax saving investments.
Let us discuss some the key tax saving investments option available under sec 80C.
Public Provident Fund
- Good option if you want to invest for long term
- Investment upto Rs 1.5 Lakh annually is tax exempted
- Lock in period for PPF is 15 years
- Interest received is tax free at maturity
- Min investment Rs 500, Max investment Rs 1.5 Lakh annually
- Annual Return, 8%
- PPF latest return rates could be find here
ELSS Tax Saving Mutual Funds
- Best tax saving investment instrument for risk avid investor
- No limit on investment but tax exemption uptoRs 1.5 Lakh annually
- 3 years lock in period(lowest in tax saving category)
- Can invest lumpsum or in SIP mode
- LTCG in excess of Rs 1 lakh is taxed at the rate of 10%
- Returns, 12-14% over 3-5 years’ time frame
- ELSS tax saving funds with their past performance could be find here
Sukanya Samriddhi Account Scheme
- Best investment option to build financial corpus for your girl child needs like marriage, education.
- Investment uptoRs 1.5 Lakh annually is tax exempted
- Minimum investment Rs 1000, maximum investment Rs 1.5 Lakh annually
- Account can be opened till girl child attain the age of 10 years
- One has to deposit for 14years in the scheme after opening of account
- Account matures after the completion of the tenure, which is 21 years.
- SukanyaSamriddhiyojana latest return could be find here
Employee Provident Fund
- EPF contribution are tax exempted uptoRs 1.5 Lakh annually under sec 80C
- Employer and employee have to contribute a minimum 12% of Basic Pay + D.A.
- Entire PF amount(including interest) is tax free if withdrawn after 5 years of contribution
- Annual Return, 8.55%
- Employee Provident Fund latest return could be find here
ULIP(Unit linked Plans)
- ULIP’s are scheme which gives you a mix of insurance & investment
- Part of amount invested goes to insurance & rest goes to investment in market-linked products.
- Investment of Upto Rs 1.5 Lakhs are tax exempted in ULIPs
- No upper cap on Maximum Contribution
- Maturity amounts are tax free
- Annual return varies as it is market linked (approx 10-14%)
Tax Saving FD’s
- These are regular FD’s but with lock in period of five years
- Investment of Upto Rs 1.5 Lakhs are tax exempted
- Interest earned is Taxable
- Annual return, 6% – 8.25%(varies from bank to bank)
- FD latest return rates could be find here
Also read:Type of Debt Saving Instruments in India
Listed above are some of the key tax saving investments available in India under sec 80C of income tax act.
Out of these ELSS mutual funds is the best one for those who have appetite to take risk, since it has the lowest lock in period of 3 years & can provide returns in the range of 12-14% over the period of 3-5 years.
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