Investment Options To Help You Save Taxes Under Income Tax Act

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Investment Options To Help You Save Taxes Under
Income Tax Act
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Recommended ways of saving taxes under Section
80C of the Income Tax Act

• Are you Salaried or Self-employed? Are you
  finding legitimate ways of saving taxes?
• The interest amount from tax-saving financial
  products like the National Saving Scheme (NSC),
  National Pension System, Fixed bank and post
  office deposits of 5 years etc. gets added to
  your income and becomes entirely taxable.
• The Interest Income from the above investments is
  liable for tax each year until their maturity.
• Before you make any investment for tax saving and
  good returns, it is important to know about the
  key section of the Income Tax Act, and which
  investment option helps you save tax.

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Investment Options under Section 80C to get
relief from Tax
Investments Returns Lock-in Period
Fixed Deposit (FD) 6 to 7 5 years
Public Provident Fund (PPF) 7 to 8 15 years
National Savings Certificate (NSC) 7 to 8 5 years
National Pension System (NPS) 12 to 14 Till Retirement
Equity Linked Savings Scheme (ELSS) Funds 15 to 18 3 years
Sukanya Samriddhi Yojana (SSY) 8.5 NA
Unit Linked Insurance Plan (ULIP) Vary by plan 5 years
Insurance Vary by plan 3 years
Senior Citizen Saving Scheme (SCSS) 8.7 5 years
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11 Investment Options To Help You Save Taxes
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1. Tax Saver Fixed Deposits (FD)

• Duration 5 year.
• Tax Deduction Up to ? 1,50,000.
• Rate of Interest 6 to 7 (Fixed).
• Interest Amount taxable Yes.

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2. Equity Linked Savings Scheme (ELSS) Funds

• These are mutual funds investing a minimum of 80
  of their assets in equity.
• Duration 3 years.
• The returns are subject to Long Term Capital
  Gains Tax (LTCG) at 10 over and above an
  exemption limit of ? 1,00,000.
• Save Tax Up to ? 1,50,000.

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3. Public Provident Fund (PPF)

• Duration 15 years.
• Rate of Interest 8 p.a. at current (subject to
  change on a timely basis).
• Tax Exemption Up to ? 1,50,000.

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4. National Saving Certificate (NSC)

• Duration 5 years.
• Rate of Interest Currently at fixed rate of 8
  p.a.
• Tax Deduction Up to ? 1,50,000 (if no other
  investments are using the limit under Section
  80C).

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5. National Pension System (NPS)

• Duration From the day of investment to the day
  of retirement.
• Rate of Interest 12 to 14.
• Tax Deduction Up to ? 1,50,000.

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6. Life Insurance Premium

• Contribution to different types of insurance
  policies including ULIPs, term insurance, and
  endowment policies.
• Tax Deduction Up to ? 1,50,000.
• Insurance policy must provide a coverage of 10
  times the annual premium.

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7. Home Loan Repayment

• Tax Deduction Up to ? 1,50,000.

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8. Payment of Tuition Fee

• Payment for tuition fees of your children is
  tax-deductible under Section 80C of Income Tax
  Act.
• Tax Deduction No Limit.

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9. Employee Provident Fund (EPF)

• Under the EPF Act, 12 of the payment goes
  towards EPF in the organized sector.
• Tax Deduction Up to ? 1,50,000.

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10. Senior Citizen Saving Scheme (SCSS)

• Duration 5 years.
• Available for Senior Citizens above 60 years.
• Rate of Interest Higher than current FD rates
  and is taxable.
• Tax Deductible under Section 80CCD(1B).

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11. Sukanya Samriddhi Yojana (SSY)

• Investor Parents of a girl child below 10 years.
• Investment A minimum deposit of ? 1,000.
• Rate of Interest 8.5 return and comes with the
  Exempt-Exempt-Exempt (EEE) status.
• Qualifies for tax deduction under Section 80C
  along with non-taxable maturity benefits.

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