Top Tax Saving Investment Options Under 80C

Whether you are a salaried individual or a businessman, you are liable to pay a certain amount of tax to the Indian government based on your income. Thus, any Indian citizen who has an income of more than 2.5 lakhs and is below 60 years of age, must pay a fixed amount of tax which is then used by the government. Sometimes, the tax amount may be quite high and so in order to reduce the tax liability, there are certain tax saving options such as investing under Section 80C. So, in this blog, we will discuss the top tax-saving investment options under 80C. 

Top tax-saving investment options under 80C

As per the Income Tax Act of 1961, Section 80C allows tax deductions based on different investment schemes. Under section 80C, you can find a number of tax-saving options that may allow tax exemptions of up to Rs. 1.5 lakhs.

There are a number of smart ways in which you can easily reduce tax liability. However, with so many investment options available, it often becomes difficult to choose the best one based on the requirements. So, listed below are the popular tax saving scheme options under section 80C:

1. ELSS

ELSS or Equity-linked Saving Scheme is a type of tax saving mutual fund scheme. Any investment made towards ELSS is free from tax exemption of up to Rs. 1.5 lakhs. The ELSS scheme has a lock-in period of three years which is in fact the least of all the tax-saving investment options as specified under Section 80C. 

2. Fixed Deposit

You can also enjoy tax savings by putting a part of your income in fixed deposits. As a part of a fixed deposit scheme, individuals can invest a part of their savings in bank fixed deposits. The risk appetite involved in fixed deposits is quite low and thus it is highly recommended for those who want to enjoy both tax savings and a scheme that is less affected by market fluctuations. However, please note that fixed deposit interest rates vary from one bank to another and thus you can check the interest rates before investing. 

3. National Pension Scheme

The National Pension Scheme or NPS is yet another tax saving scheme. This is a government-sponsored scheme that is used for creating retirement corpus as well as for tax savings. Under this scheme, individuals can contribute a certain amount of their money to NPS and use the accumulated amount after their retirement. Also, note that it is not possible to withdraw the NPS amount before you retire unless any medical or unexpected situation arises.

4. ULIP

Unit Linked Insurance Plan or ULIP is a popular tax-saving option. It is a long-term investment option that offers great returns as well as flexibility. A ULIP plan offers dual benefits of savings to help you meet your long-term goals as well as offer life insurance coverage so that you can get protection against any unforeseen situation. 

5. PPF

PPF or Public Provident Fund is also a type of long-term investment scheme. Similar to NPS, the contributions made towards PPF are used for post-retirement days and are also free from tax liability. You can open a PPF account at your nearest post office or bank. Both the contribution and the maturity amount earned out of PPF contributions are exempted from tax as per section 80 C. 

6. National Savings Certificate

The National Savings Certificate is also a government-initiated scheme that is highly useful for salaried employees to enjoy tax-saving benefits as well as create investment opportunities. It is a low-risk investment option that can easily be opened with any post office in your region. 

7. Sukanya Samriddhi Yojana

The Sukanya Samriddhi Yojana is yet another tax-saving investment option under section 80 C that you can consider investing in. As the name suggests, this investment option is meant for a girl child and was launched as a part of the ‘beti bachao beti padhao’ programme. It is a long-term investment option that can be opened as soon as the girl child is born. Offering high returns, the Sukanya Samriddhi Yojana is not just great for tax saving but also ideal for securing the future of a girl child. 

8. Senior Citizen Saving Scheme

The Senior Citizen Saving Scheme or SCSS is also a government-sponsored investment scheme. This is specially designed to meet the needs of senior citizens or those who are above the age of 60 years. This scheme provides income to senior citizens even after their retirement along with tax savings. The interest rates on the SCSS are in fact one of the highest as compared to other tax-saving investment schemes. Some of the banks that offer SCSS accounts include Allahabad Bank, Dena Bank, Central Bank of India, Corporation Bank, and more. 

9. Life Insurance

Last but not least, investing in life insurance plans is also a great tax-saving investment option. Such insurance plans not only offer life coverage but also tax exemption of up to Rs. 1.5 lakhs. Any type of life insurance plan such as money-back, term plans, endowment plans, etc, reduces tax liability by offering tax exemptions. 

Take Away

Apart from section 80C, you can also enjoy tax savings as specified under section 80D, section 80 DD of the Income Tax Act. Moreover, you can pick from any of the above-mentioned investment schemes and enjoy tax exemptions. You can also purchase a health insurance plan for enjoying tax savings.

Also read: What Are Guaranteed Returns and How Do They Work?