| No matter how much we earn, if our income is taxable we don’t want to pay tax on that income. A known fact is that we hold a soft corner for our income. In this manner, we actually avoid paying taxes. You should always remember that paying taxes on time signifies that you are a good citizen of your country. Free Financial Assistance Advisory Portal, MoneyMindz.com introduces you with the best tax saving options under section 80C.
Government of India knows that all the citizens of our nation work hard to earn their income. The Income tax Act 1961 section 80C allows a certain deduction to lower tax liability against taxable income in order to save more money from being taxed.
Under section 80C who can claim deductions?
HUF (Hindu undivided family) and an individual can certainly claim all deductions under section 80C.
Maximum people are concerned about taxes, specifically newly joined employees. Anyone would want to know about deductions under various sections so that they can easily invest their hard earned money and save tax.
Tax saving investments U/S 80C
Equity Linked Savings Scheme (ELSS)
ELSS can be considered as equity mutual fund schemes that invest in stocks. A mandatory lock-in period of three years can be seen. These are riskier than other options like Public Provident Fund, National Saving Certificate, etc. But they too have the potential to offer superior returns. ELSS category offers an average return of 18.45 percent in the last five years. Under Section 80C of the Income Tax Act investments in ELSSs qualify for tax deduction.
2 – 5 yr Tax Saving Fixed Deposits
Tax saving fixed deposit (FD) is a type of fixed deposit, which comes under section 80C of the Indian Income Tax Act, 1961. This kind of deposit is offered for a lock-in period of 5 years. The maximum deduction an investor can claim through it is Rs 1.5 lakh. FD gives us 100% security of capital + guaranteed return on invested amount.
The rate of interest offered by banks ranges from 7 to 9% (may vary from banks to banks). The deduction is available to individuals, members of the Hindu undivided family (HUF), senior citizens and NRIs. As it is a lock-in fund, premature withdrawal is not allowed. This deposit account can be opened as single or joint holding mode. However, in case of a joint account, the tax benefit will be availed by the first holder of the deposit.
Public Provident Fund (PPF)
It is a long-term investment option of 15 years by the Government of India with an attractive interest rate of 8 %( with returns fully exempted from Tax). You can invest minimum Rs. 500 to maximum Rs. 1, 50,000 in one financial year. Deposits can be made in maximum 12 transactions. You can even enjoy loans, withdrawals and extensions of the account. Against the Public Provident Fund loans can be taken between 3rd to the 6th financial year. You get a partial withdrawal facility that can be taken from the 7th financial year onwards. For a period of 5 years the account can be extended in a block-in mode.
Life Insurance Premium
This can be termed as a payment that is made to secure our life. Basically, it is paid in the name of the taxpayer or the taxpayer’s wife and children. Under Section 80C it is an eligible tax-saving payment. The deduction can be termed as valid only if the premium is less than 10% of the sum assured. You can get deductions up to 1.5 lakhs a year.
With the help of this article provided by MoneyMindz.com, Best On-Call Financial Advisory Portal you must have got an idea about the various options to save your hard earned money from getting taxed. You shouldn’t just stick to one option; rather it’s better to invest in a little-little few options in order to get good interest rates and lump sum amount after maturity.
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