With the financial year winding down, taxpayers are searching for legitimate options to reduce their net taxable income. Section 80C of the Income Tax Act remains the most popular channel for individual taxpayers to save tax. It allows deductions up to ₹1.5 Lakhs per annum from your gross total income.
1. Equity Linked Savings Scheme (ELSS)
ELSS mutual funds have the shortest lock-in period of only 3 years compared to other options. Since they invest in equity assets, they offer higher wealth-growth potential over the long term. Under section 80C, your investment in ELSS is fully deductible.
2. Public Provident Fund (PPF)
PPF is a government-backed savings scheme that offers risk-free, guaranteed returns. The current interest rate is compounding annually, and the maturity amount along with interest earned is completely exempt from income tax (EEE status). It has a lock-in period of 15 years.
3. National Pension System (NPS)
While you can claim NPS contributions under Section 80C, Section 80CCD(1B) provides an additional deduction of up to ₹50,000 over and above the ₹1.5 Lakhs limit. This makes NPS an excellent option for retirement planning and extra tax saving.
4. National Savings Certificates (NSC) & FD
Five-year tax-saving Fixed Deposits in banks and 5-year NSCs in post offices provide fixed, secure returns. The interest earned is taxable, but the initial principal investment qualifies for deduction under 80C.
5. Life Insurance Premiums
Premiums paid for life insurance policies for yourself, your spouse, or your children are deductible under Section 80C. Ensure that the annual premium does not exceed 10% of the actual sum assured to remain tax-exempt.
Contact Tax Element's investment planning desk on WhatsApp or call our office lines to structure a customized plan.