Most of Income tax payees try to save tax by saving under Section 8C of Income Tax Act. However, it is important to know Section so that you can make best use of options on hand for exemption under income tax Act. Below find Tax tool listed under Section 80C are as follows.
List of Section 80 C tax saving tools
There are several tool in which person can invest and claim deduction under Section 80C. Section 80C is used for claiming Income Tax Deductions. This Section allows deduction of Rs. 1, 50,000 for all categories of Taxpayers from which they are earning their income. You can do maximum deduction which can be claimed under Section 80C is Rs. 1, 50,000.
Life Insurance and Unit Linked Insurance Plan
Any amount that you pay to life insurance premium for yourself, your spouse or children can also included in Section 80C deduction. Both these plans are offer from Insurance companies. ULIPs have lock-in period of 3 to 5 years. And premium paid to life insurance policy and amount invested in ULIP is eligible for deduction under Section 80C to maximum limit and certain conditions.
However, if your annual premiums go above 120 per cent of sum assured on your policy then only 10 per cent of sum assured will be deducted. In addition, amount received on maturity will be fully taxable in case premium paid go above 10% of sum assured in any of years will not get tax benefit. Read more Life Insurance Premium tax benefit on payment and Maturity.
Public Provident Fund or Employee Provident Fund
PPF is one of most tax efficient instruments in India where you can deposit money for fixed tenure and enjoy returns over their investments. However amount deducted from salary to Employees Provident Fund (EMP) and amount invested in Public Provident Fund (PPF) is eligible for deduction under Section 80C to maximum limit of Rs. 1.50 Lakh.
Apart from benefit of tax deduction, EPF and PPF provide returns of more than 8% per annum. You can invest up to Rs.1.5 lakh in PPF account. Now current return rate on EPF is 8.75 per cent and 8.7 per cent on PPF. PPF is one of Best long term investment options. Read more all about PPF and Income Tax benefit. Check Factor Deciding affect your Life Insurance Premiums rates
Equity Linked Savings Schemes (ELSS)
This is mutual fund scheme that gives your money equity exposure and returns are market linked. Keep in mind that this scheme comes with lock-in period of three year. The dividend that you earn in these schemes is tax free.
You are eligible for tax deduction if you made investment in these schemes to maximum of Rs.1.5 lakhs. Although, you can invest high amount in ELSS but deduction will be limited under Section 80C during financial year. Read more Investment in Equity Linked Saving Scheme under section 80C.
National Savings Certificates
NSC is tax saving tool with maturity period of five and ten years. These are tax saving instruments from Government of India that taxpayers can avail maximum limit of Rs.1.50 lakh. However, you can claim tax benefit under section 80C for principal amount invested. Also, interest amount that is automatically reinvested is eligible for this deduction.
Pension Plans and Superannuation Fund
On behalf of you, your employer will deduct investment amount from your salary to an approved superannuation fund also qualifies for deduction. Also see Modi working on simpler rules to lift direct tax revenue
Bank Fixed Deposits
Fixed deposits of banks provide Section 80C tax benefit come with lock-in period of five years. Apart from above investments, you can also get deduction on certain expenses that you earn. You can claim Income tax deduction under section 80 C of Income tax act for fee paid for education of your children.
This deduction is allowed to maximum 2 children. Home loans also provide you several tax benefits to save some of your money. And Principal amount that you pay for your home loan are eligible for deduction under Section 80 C.