Saving tax is a big challenge in front of the salaried calss. Most people get involved in manipulating tax saving in the last days of filing tax returns. But with a little planning, you can save a large part of tax if you want, the government itself has given many ways for this, through which income tax can be saved. We are going to tell you about those 11 ways that come under 80C, by which you can save tax of Rs 1.5 lakhs annually.
- Tax Saver Fixed Deposit (FD)
- Public Provident Fund (PPF)
- Equity Linked Savings Scheme (ELSS)
- National Saving Certificate (NSC)
- Life Insurance Policy
- National Pension System (NPS)
- Home Loan Repayment (Principal)
- Tuition fees
- Employees Provident Fund (EPF)
- Senior Citizen Savings Scheme
- Sukanya Samriddhi Yojana (SSA)
If you invest in a fixed deposit of 5 years duration, you can save up to Rs 1.5 lakh as tax. Currently, FDs of 7-8% are available on such FDs. But the interest received on it is taxable. Tax saving FDs are exempt only under section 80C.
Public Provident Fund is a government savings scheme. You can invest in all banks and post offices. There is a lock in period of 15 years. Its interest rates change every quarter. It used to get more than 8 percent interest, but now it gets 7.1 percent. Interest on PPF is tax free.
Equity linked Savings schemes ie ELSS is considered a better way of investment. Its lock-in period is 3 years old. Long-term capital gains tax of 10% is levied on its returns. LTCG is tax free on redemptions of up to Rs 1 lakh in a financial year, 10 percent tax is levied on it. As the name itself suggests, so 80% of it is invested in equity.
The interest rate is fixed on the 5-year National Savings Certificate. NSC gets 6.8% interest annually. This is a traditional and old savings scheme, people who choose this investment do not have to take much risk. There is no limit to the amount you can invest in the NSC. But in a financial year only up to Rs 1.5 lakh can claim tax exemption.
There are many types of life insurance policies. You can save up to Rs 1.5 lakh tax annually through term insurance, ULIPs and endowment plans. For this, the insurance cover should be 10 times the annual premium.
This is a voluntary retirement scheme. By investing in it, you can collect money for the retirement and take a monthly pension after retirement. In this, you can save up to 2 lakh rupees as tax. Under 80C you can save tax up to Rs 1.5 lakh, but you can save additional tax of Rs 50,000 under 80CCD (1B).
If you pay the EMI of a home loan, then you will know that it has two parts, the first principal amount and the second interest. On Principal Amount, you can save up to Rs 1.5 lakh annually under 80C. While there is a separate tax benefit on interest.
If you pay tuition fees for children’s education, then you can claim Rs 1.5 lakh under 80C.
Employees working in the organized sector invest 12% of their earnings in EPF every month. Under the 80C it gets a rebate of up to 1.5 lakhs per annum.
The Senior Citizen Savings Scheme is 5 years old. This scheme is for those who have crossed the age of 60. It usually has higher interest rates than FD. Its interest rate for the April-June quarter is 7.4%.
Modi government’s plan is very good for parents who have girls. Under this scheme you can open Sukanya Samriddhi Yojana account for a girl below 10 years of age. The duration of this plan is for 21 years or after 18 years until she gets married. It comes under the category of EEE, i.e. investment, interest and maturity are not taxed on anyone. As in PPF. You can start this scheme with an investment of Rs 250 to Rs 1.5 lakh annually. At present, it is getting interest of 7.6%.
