Best Tax Saving Investment option under Sec 80C

Savings are a must for anyone to have a healthy financial life. However, you need to know that saving money in a bank savings account is not a smart way, as it earns a lower interest.

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That’s when people invest their savings into many investment vehicles to earn higher interest profit and also help with tax deduction under section 80C. Hence, putting your money in a mix of savings cum investment plans could be an ideal situation to help with tax deductions as well as multiply it.  

In the same context, let’s provide a quick list of 4 plans with tax deduction under Section 80C.

Employee Provident Fund (EPF)

Employee Provident Fund is a perfect investment plan for salaried employees as the can save taxes with an EPF. Any salaried individual taking home a basic salary of Rs.15,000 is eligible to open this account. Also, if you quit a job and re-join in a company after a gap of 2 months, you can also withdraw the amount for your needs. The interest that you earn on EPF is 8.55% and the earned interest is eligible for tax exemption if you withdraw after 5 years of consistent employment.

Fixed deposit (FD)

The investment that you make in a fixed deposit scheme can help you earn a sure-shot return. Since the return on investment for a fixed deposit amount is not affected by market conditions as in mutual funds, you get to enjoy guaranteed ROI. What’s more, you can also claim investments under 80C benefits on fixed deposit tax exemption as per the Section 80C of the Income Tax Act. Do you want to grab more interest benefits on a fixed deposit plan? Leave aside the bank fixed deposit plan and rather opt for an FD plan from a non-banking finance company (NBFC). It is because they offer a fixed deposit plan at an interest benefit that can go as high as up to 6.75% as per your age.

Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a Government-sponsored long-term plan which runs for 15 years. Here’s guide for how to open ppf account. The PPF investments are not only for long-term and sure-shot return on investments (ROI) but also offer you lead to tax saving. You can make some withdrawals after 7 years of investment in a total tenor of 15 years. The interest 7.6% that you lap up on the PPF is tax-free. Like this, you can save tax and begin investing only with Rs.500 and a maximum of Rs.1.5 lakh.

National Payment System (NPS)

The National Payment System (NPS) was initiated by the Central Government of India for people under the age bracket of 18-60 years so as to plan retirement finance. In special circumstances, you can always make a withdrawal after 15 years lock-in period. You are eligible to enjoy an interest return of up to 12-14%. You can make a contribution as per your needs and budget and even your employers’ contribution is tax-free. What’s more, you can also lap up tax deductions under section 80C up to an amount of Rs.1.5 lakh as per the Income Tax Act.

The Bottom Line

The investments that you make in the discussed investments under Section 80C not only help you save some money for the future but also help you save tax.

The wiser thing in this regard is choosing an investment plan that can serve your needs and goals.
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