income tax


Life insurance plans and 5-year term deposits are some of the most common investments that people consider while looking for tax-saving plans under sec 80C. Keep reading to explore the other lesser-known investment options under section 80C that can help you lower your taxable income.

As per Income Tax laws, every Indian is bound to pay tax for income over and above Rs. 2.5 lakhs according to their income tax slab rates. However, taxpayers can reduce this taxable income up to Rs. 1.5 lakh by declaring specific investments/expenses while filing the ITR. These eligible deductions for tax saving are listed under different sections and subsections (80C, 80CCC, 80D, etc.) of the Income Tax Act.

Common Tax-Saving Options Under Section 80C:

  • Term Life Insurance premium paid for self and spouse.
  • Public Provident Fund (PPF) and EPF (Employee Provident Fund)- schemes by the Central Government of India that comes with a lock-in period of 15 years.
  • Employee Provident Fund (EPF), a retirement savings scheme for all salaried employees, backed by the Government of India.
  • 5-year Tax-Saving Fixed Deposit that comes with a lock-in period of 5 years.

Other Lesser-Known Tax-Saving Options Under Section 80C:

  1. ULIP (Unit Linked Insurance Plans): ULIP is a financial instrument where a portion of the corpus is kept for the life insurance component, whereas the rest is invested in equities, debentures, etc. It helps you to meet your long-term financial targets while insuring your life as well.
  2. Endowment Plans: These are life insurance plus saving plans that offer a fixed maturity benefit on completing the policy term apart from providing life insurance. It is a great option to begin your investment journey to generate a corpus for future financial goals.
  3. Pension Plans: These are retirement plans that ensure steady income post-retirement. Subsection 80CCC of 80C allows a deduction for payment towards annuity pension plans. Also, for NPS (National Pension Schemes) subscribers, the tax benefits can be claimed under subsection 80 CCD(1).
  4. National Savings Certificate (NSC): It is a financial instrument backed by the Central Government and available at all post offices. It offers guaranteed returns similar to a PPF scheme and comes with a lock-in period of 5 years.
  5. ELSS (Equity Linked Savings Scheme): These are tax-saving equity mutual funds that invest a significant corpus (nearly 65%) of their assets in the equities and related instruments. Apart from helping you save tax under section 80C, it has the potential to generate high yields too.
  1. Sukanya Samriddhi Yojana: It is yet another savings scheme introduced by the Central Government as an initiative to support the development of a girl child. Starting from as low as Rs 250, a maximum investment of Rs. 1.5 lakh in a year can be made under this scheme.

Apart from the above insurance and investment plans, there are some expenditures against which a deduction claim can be made under section 80C, as below:

  • Tuition Fee of up to 2 children.
  • Repayment of a housing loan(principal component).
  • Stamp duty/registration fee/other expenditure for purchase or construction of a residential house.

Save Tax With Smart Investments

With a substantial coverage of schemes eligible for a tax deduction, it is much convenient now to invest in a plan of your choice and save tax as an additional benefit. Whether you just want term insurance or an endowment plan or wish to invest in an ELSS, NSC, or other schemes discussed above, you can easily lower your taxable income.

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