Best Investments That Save You Tax Under 80C

Every year, each salaried and self-employed individual has to pay income tax to the government. Income tax is mandatory for earning persons in India. However, the taxpaying citizens of India can avail themselves of the indirect benefits given in exchange for tax payments in the form of improved infrastructure, services, and other public amenities.

As per the Income Tax Act of 1961, several provisions help taxpayers get back tax through tax refunds/ returns. However, the income tax 80C section is one of the most popular 80C tax-saving options taxpayers use. You can save tax under 80C by investing in any of the following tax-saving investments under 80C.

1. Equity-linked savings scheme (ELSS)

Equity-Linked Savings Schemes are diversified mutual funds savings schemes that help investors avail themselves of the twin benefits of investment and tax saving. The returns under the ELSS are not fixed but range from 12%-15% every year.

Under an ELSS scheme, you can save up to ₹1.5 lakhs as tax returns/ refunds. Moreover, you don’t have to wait very long to get returns under this instrument, as the lock-in period is only 3 years.

2. National Pension Scheme (NPS)

The National Pension Scheme is a government-funded scheme that allows working professionals, especially those from the unorganised working sector, to save tax. Individuals can save up to ₹1.5 lakhs as tax rebates under the 80C investment benefit.

Additionally, you can get ₹50,000 as an extra tax benefit for NPS tier-1 account subscribers. However, being a pension plan, the lock-in period for NPS is until the subscriber turns 60 years of age.

3. Public Provident Fund (PPF)

The Public Provident Fund is yet another government scheme that salaried, self-employed, and resident Indian citizens can opt for. It is one of the safest tax-saving instruments in the market that give stable and guaranteed returns to investors. Individuals can save up to ₹1.5 lakhs annually with a PPF under the 80C tax-saving options.

Even the returns and maturity you receive at the end of the scheme’s tenure are tax-free. A PPF has a long tenure of 15 years, but you can make partial withdrawals from the seventh year.

4. Unit-Linked Insurance Plan (ULIP)

A Unit-Linked Insurance Plan is among the most profitable tax-saving investments under 80C. In a ULIP, taxpayers benefit from wealth creation and tax saving. Investors get to earn high, non-guaranteed, market-linked returns. They get back up to ₹1.5 lakhs as tax returns every year. Moreover, the maturity amount investors receive at the end of the ULIP tenure is also exempt from tax deductions under section 10(10D) of the Income Tax Act, 1961.

5. National Savings Certificate (NSC)

The National Savings Certificate is another government savings scheme for any self-employed or salaried resident Indian individual that investors can open at any post office. The NSC offers guaranteed returns to investors between the return rate of 7% to 8% per annum and has a lock-in period of only 5 years.

You can save up to ₹1.5 lakhs in tax returns every year with this 80C investment option. Overall, it is one of the most low-risk 80C investment options.

6. Sukanya Samriddhi Yojana (SSY)

The Sukanya Samriddhi Yojana is a government scheme launched by the current government to benefit the girl child. It encourages families to invest in their girl child’s future, higher education, and other life milestones. Under the SSY, you can earn triple tax benefits. You can save up to ₹1.5 lakhs in tax returns every year. Plus, the returns you get from the years of investment and the maturity amount received at the end of the plan are also tax-exempt.

7. Bank fixed deposits (FDs)

Bank FDs are among the safest investments and surest tax-saving investments under 80C. However, they have a lock-in period of 5 years before you can withdraw. You can save up to ₹1.5 lakhs in tax returns annually with tax-saving FDs. The income earned under the FDs is tax-free up to the exemption limit.

Conclusion

The tax paid by Indian citizens is a way for the government to collect due revenue and boost the economy. But despite the tax duties levied on citizens, one can save tax and grow their income simultaneously through various tax-saving instruments. Making 80C investments are a wise way to multiply your income and save tax under 80C simultaneously.