80C Investment Options - Savings Under 80C

It always pinches us when our hard-earned money is deducted as taxes. Our taxable income gets reduced quite a bit because of the various taxes imposed on us. Hence, it makes sense for us to make investments that we can claim as tax deductions.

Most of you are aware of Section 80C and the investments you can make under the section. mymoneykarma now gives you eight tax-saving investments above 80C. This will free up your hard earned money for fulfilling your wishes.
What is Section 80C?

Section 80C is the most renowned section of the Indian Income Tax Act. There are numerous tax saving options under 80C, such as ELSS and PPF. While investing under 80C is very popular, we bring you tax-hacks other than Section 80C.
NPS

The National Pension System was launched by the Indian government in 2009. The NPS offers a tax deduction for investments made up to Rs. 50,000, in addition to the deduction of 1.5 lakh rupees available under Section 80C. Your returns, however, depend on the asset class you have chosen. Usually, it is advisable to select a high-risk instrument like government debt.

Rajiv Gandhi Equity Savings Scheme (Section 80CG)

This is another scheme available for tax-saving. Under this, you can invest up to Rs 50,000 in approved stocks.  But this scheme is available for you only if you are a first-time investor. This scheme was introduced under the UPA regime and has not been promoted aggressively. A supposed overhaul of the project hasn't come through yet.

Interest on Education Loan (Section 80E)

You can claim the interests you pay on the active education loans you possess, if you have any. The deduction can be only on the interest repayment part, not on the principal of the education loan. That means only the interest repayment is available for a tax deduction while filing an income tax return.

This deduction is available for saving above Rs. 1,50,000, and there is no maximum limit on claiming deduction under 80E. Parents can take up this tax-saving option on behalf of their children, as children are not taxed. It is not a popular scheme, and not many are aware of it.

House Rent Allowance (Section 80GG)

If you are staying in a rented apartment or house and paying rent, you can claim the amount as a tax deduction under Sec 80GG of the Income Tax Act. The amount of the deduction is based on the city that you are residing in. In case you have queries, it is best to talk to the HR department on the exact tax benefits that you would get. This is a significant tax hack that you should take note of.
Home Loans (Section 80EEE)

An additional deduction of Rs 50,000 on home loan interest can be claimed under Sec 80EE of the Income Tax Act. This option is however not a very popular one.

Health Insurance (Section 80D)

You should take a health insurance policy, which would not only take care of your medical expenses but also enable you to save tax. The current IT norms allow a deduction of up to Rs 25,000 in the case of ordinary citizens and Rs 30,000 in case of senior citizens. So, you can go ahead and take a good health insurance policy.

This is a tax hack that you can utilize apart from the usual 80C benefits. The Sec 80D benefits also include the gains on expenses incurred towards preventive health check-ups.

Donations (Section 80G)

Section 80G of the income tax law provides tax benefits on the amount donated to NGOs. So, you can be generous to the causes you believe in, to your heart's content. However, the deductions can be made if you are donating by cash or draft only. The limit of the deduction can be either 50% or 100%.

You have to claim this deduction when you file your tax returns and quote your PAN to the institution you donated. If you are unsure about the cause you want to support, there is an exhaustive list of institutions and establishments that you can donate to.

Medical Treatment (Section 80DDB)

For certain specific diseases, Income Tax Act offers tax benefits to you under section 80DDB from expenses incurred by you for the treatment of said diseases or ailments. This tax-saving option is not only for the people filing tax returns but also for dependents of such people. However, this tax benefit is not available for Non-Resident Indians.

6 Fixed Income Investments Under Section 80C to Save Tax in 2020 - Section 80C

Fixed income investments are specialized for risk-averse investors who want the safety of their money with assured returns. Along with these two aspects, schemes such as Public Provident Fund (PPF), National Savings Certificate (NSC), and Sukanya Samriddhi Yojana (SSY), also offer tax-saving benefits under section 80C of the Income Tax Act since the returns from these schemes are entirely tax-exempt. Fixed-income instruments should be an integral part of every investor's portfolio to ensure security, mainly during times of economic volatility. So, let's take a look at some of the best fixed-income investments under the ambit of section 80C, where you can safely park your money.

Public Provident Fund (PPF)

PPF is a favorite mode of investment among the Indian middle-class. It’s considered to be a safe investment that offers an interest rate of 8%.

You may choose to invest a lump sum or make periodic contributions to your PPF account. You can claim a tax deduction for investments of up to Rs 1.5 lakh in a fiscal year under section 80C of the Income Tax Act. PPF is a safe investment avenue as the government reviews it. Currently, the investment, interest and maturity proceeds in PPF are entirely tax-free. New investors can buy this scheme either at a post office or any designated branch of a public sector bank that provides this facility. Also, there are a few private banks that offer the facility to invest in PPF.

Sukanya Samriddhi Yojana (SSY)

The current interest rate offered in SSY is 8.5 percent. You can make a contribution of up to Rs 1.5 lakh per account in a financial year under section 80C. However, there’s a catch. Sukanya Samriddhi Yojana is applicable only to the parents of a girl child. This scheme can be availed for a maximum of two daughters who are not more than ten years of age during the time of opening the account. In this scheme, you can claim a deduction for investments up to Rs 1.5 lakh only in a fiscal year according to section 80C of the Income Tax Act. There are no restrictions on the number of deposits that you can make either in a month or a financial year. The interest rate of SSY is linked with government bond yield and is subject to change every quarter as per the discretion of the government. You can utilize the maturity proceeds of this program for the education and wedding expenses of your daughter.

Voluntary Provident Fund (VPF)

The current interest rate offered by VPF schemes is 8.65%. You can contribute your entire basic salary and DA (dearness allowance) to this fund. However, you can only claim a standard tax deduction for investments up to Rs 1.5 lakh in a fiscal year under section 80C of the Income Tax Act. Hence, if you have already crossed your 80C limit through other investments or expenditures, such as EPF, PPF, ELSS, FDs, etc., then you won't be able to use the additional VPF contribution to save more tax amount.

If you’re wondering how VPF and EPF are different, then let’s help you understand. Unlike EPF, VPF facilitates the employees to voluntarily deposit beyond a fixed contribution limit in their PF accounts. However, in VPF, it is not necessary for the employer to make a matching contribution as it is mandatory in EPF. VPF also has lock-in conditions until retirement or resignation, whichever is earlier.

VPF is an excellent investment tool for saving tax under section 80C as it gives a tax-free return. Further, the gains are risk-free since the government guarantees them. VPF offers you the dual benefit of a tax saving scheme and a retirement planning scheme, and salaried employees should allocate a higher proportion of their salary to VPF for substantial tax-saving.

Senior Citizens' Saving Scheme (SCSS)

The current interest rate offered by SCSS is 8.7%. A maximum contribution of Rs 15 lakh is allowed in this scheme. As a senior citizen, you can claim a deduction for investments up to Rs 1.5 lakh in a fiscal year under section 80C. SCSS is a tax-saving instrument for people who are above the age of 60. However, if you have opted for voluntary retirement, you can start investing in SCSS even at the age of 58. On October 3, 2017, the Ministry of Finance announced that the minimum age limit for retired defense personnel is reduced to 50 years for investing in SCSS. This scheme has a lock-in period of five years. And, if you want to extend the tenure further, you can continue it for another three years. No partial withdrawal is allowed before the expiry of the lock-in period. However, in case of an emergency, you can prematurely close the account with a penalty levied on the withdrawal.

Tax-Saving Bank Fixed Deposits

The current interest rate offered in tax-saving bank Fixed Deposits (FD) is around 7-8.25%. The maximum amount that you can invest in this scheme is Rs 1.5 lakh, for which you can claim a deduction in a fiscal year under section 80C. The tax saving bank fixed deposits have a lock-in period of 5 years. This scheme is highly preferred for investments due to the assurance of capital preservation and returns as compared to equity investments in terms of tax-saving. It is convenient for the last minute tax savers, and the interest rates on this scheme are reviewed and changed periodically by the banks.

National Saving Certificate (NSC)

The current interest rate offered in NSC is 8%. There is no cap on the amount of investment that you can make in NSCs. However, you can only claim a deduction of Rs 1.5 lakh during investment declaration. Currently, National Savings Certificate is available for five-year subscriptions only. The interest rate is reviewed every quarter by the government and modified accordingly. Although interest earned from National Saving Certificate is taxable, the interest amount is considered re-invested (except in the last year of tenure) as it is not paid back to the investor until the maturity of the instrument. Hence, the re-invested interest component also qualifies for deduction under Section 80C of the income tax act. The interest earned in the final year of the tenure is not considered re-invested and is paid back to the investor for that year along with the principal and accrued interest in the previous years.

80C Investment Options - What More?

Most of you are aware of Section 80C and the investments you can make under the section. mymoneykarma now gives you eight tax-saving investments above 80C. This will free up your hard earned money for fulfilling your wishes.

What is Section 80C?

Section 80C is the most renowned section of the Indian Income Tax Act. There are numerous tax saving options under 80C, such as ELSS and PPF. While investing under 80C is very popular, we bring you tax-hacks other than Section 80C.

NPS

The National Pension System was launched by the Indian government in 2009. The NPS offers a tax deduction for investments made up to Rs. 50,000, in addition to the deduction of 1.5 lakh rupees available under Section 80C. Your returns, however, depend on the asset class you have chosen. Usually, it is advisable to select a high-risk instrument like government debt.

Rajiv Gandhi Equity Savings Scheme (Section 80CG)

This is another scheme available for tax-saving. Under this, you can invest up to Rs 50,000 in approved stocks. But this scheme is available for you only if you are a first-time investor. This scheme was introduced under the UPA regime and has not been promoted aggressively. A supposed overhaul of the project hasn't come through yet.

Interest on Education Loan (Section 80E)

You can claim the interests you pay on the active education loans you possess, if you have any. The deduction can be only on the interest repayment part, not on the principal of the education loan. That means only the interest repayment is available for a tax deduction while filing an income tax return.

This deduction is available for saving above Rs. 1,50,000, and there is no maximum limit on claiming deduction under 80E. Parents can take up this tax-saving option on behalf of their children, as children are not taxed. It is not a popular scheme, and not many are aware of it.

House Rent Allowance (Section 80GG)

If you are staying in a rented apartment or house and paying rent, you can claim the amount as a tax deduction under Sec 80GG of the Income Tax Act. The amount of the deduction is based on the city that you are residing in. In case you have queries, it is best to talk to the HR department on the exact tax benefits that you would get. This is a significant tax hack that you should take note of.

Home Loans (Section 80EEE)

An additional deduction of Rs 50,000 on home loan interest can be claimed under Sec 80EE of the Income Tax Act. This option is however not a very popular one.

Health Insurance (Section 80D)

You should take a health insurance policy, which would not only take care of your medical expenses but also enable you to save tax. The current IT norms allow a deduction of up to Rs 25,000 in the case of ordinary citizens and Rs 30,000 in case of senior citizens. So, you can go ahead and take a good health insurance policy.

This is a tax hack that you can utilize apart from the usual 80C benefits. The Sec 80D benefits also include the gains on expenses incurred towards preventive health check-ups.

Donations (Section 80G)

Section 80G of the income tax law provides tax benefits on the amount donated to NGOs. So, you can be generous to the causes you believe in, to your heart's content. However, the deductions can be made if you are donating by cash or draft only. The limit of the deduction can be either 50% or 100%.

You have to claim this deduction when you file your tax returns and quote your PAN to the institution you donated. If you are unsure about the cause you want to support, there is an exhaustive list of institutions and establishments that you can donate to.

Medical Treatment (Section 80DDB)

For certain specific diseases, Income Tax Act offers tax benefits to you under section 80DDB from expenses incurred by you for the treatment of said diseases or ailments. This tax-saving option is not only for the people filing tax returns but also for dependents of such people. However, this tax benefit is not available for Non-Resident Indians.

Section 80C - 6 Fixed Income Investments Under Section 80C to Save Tax in 2020

 Public Provident Fund (PPF)

PPF is a favorite mode of investment among the Indian middle-class. It’s considered to be a safe investment that offers an interest rate of 8%.

You may choose to invest a lump sum or make periodic contributions to your PPF account. You can claim a tax deduction for investments of up to Rs 1.5 lakh in a fiscal year under section 80C of the Income Tax Act. PPF is a safe investment avenue as the government reviews it. Currently, the investment, interest and maturity proceeds in PPF are entirely tax-free. New investors can buy this scheme either at a post office or any designated branch of a public sector bank that provides this facility. Also, there are a few private banks that offer the facility to invest in PPF.
Sukanya Samriddhi Yojana (SSY)

The current interest rate offered in SSY is 8.5 percent. You can make a contribution of up to Rs 1.5 lakh per account in a financial year under section 80C. However, there’s a catch. Sukanya Samriddhi Yojana is applicable only to the parents of a girl child. This scheme can be availed for a maximum of two daughters who are not more than ten years of age during the time of opening the account. In this scheme, you can claim a deduction for investments up to Rs 1.5 lakh only in a fiscal year according to section 80C of the Income Tax Act. There are no restrictions on the number of deposits that you can make either in a month or a financial year. The interest rate of SSY is linked with government bond yield and is subject to change every quarter as per the discretion of the government. You can utilize the maturity proceeds of this program for the education and wedding expenses of your daughter.

Voluntary Provident Fund (VPF)

The current interest rate offered by VPF schemes is 8.65%. You can contribute your entire basic salary and DA (dearness allowance) to this fund. However, you can only claim a standard tax deduction for investments up to Rs 1.5 lakh in a fiscal year under section 80C of the Income Tax Act. Hence, if you have already crossed your 80C limit through other investments or expenditures, such as EPF, PPF, ELSS, FDs, etc., then you won't be able to use the additional VPF contribution to save more tax amount.

If you’re wondering how VPF and EPF are different, then let’s help you understand. Unlike EPF, VPF facilitates the employees to voluntarily deposit beyond a fixed contribution limit in their PF accounts. However, in VPF, it is not necessary for the employer to make a matching contribution as it is mandatory in EPF. VPF also has lock-in conditions until retirement or resignation, whichever is earlier.

VPF is an excellent investment tool for saving tax under section 80C as it gives a tax-free return. Further, the gains are risk-free since the government guarantees them. VPF offers you the dual benefit of a tax saving scheme and a retirement planning scheme, and salaried employees should allocate a higher proportion of their salary to VPF for substantial tax-saving.
Senior Citizens' Saving Scheme (SCSS)

The current interest rate offered by SCSS is 8.7%. A maximum contribution of Rs 15 lakh is allowed in this scheme. As a  senior citizen, you can claim a deduction for investments up to Rs 1.5 lakh in a fiscal year under section 80C. SCSS is a tax-saving instrument for people who are above the age of 60. However, if you have opted for voluntary retirement, you can start investing in SCSS even at the age of 58. On October 3, 2017, the Ministry of Finance announced that the minimum age limit for retired defense personnel is reduced to 50 years for investing in SCSS. This scheme has a lock-in period of five years. And, if you want to extend the tenure further, you can continue it for another three years. No partial withdrawal is allowed before the expiry of the lock-in period. However, in case of an emergency, you can prematurely close the account with a penalty levied on the withdrawal.
Tax-Saving Bank Fixed Deposits

The current interest rate offered in tax-saving bank Fixed Deposits (FD) is around 7-8.25%. The maximum amount that you can invest in this scheme is Rs 1.5 lakh, for which you can claim a deduction in a fiscal year under section 80C. The tax saving bank fixed deposits have a lock-in period of 5 years. This scheme is highly preferred for investments due to the assurance of capital preservation and returns as compared to equity investments in terms of tax-saving. It is convenient for the last minute tax savers, and the interest rates on this scheme are reviewed and changed periodically by the banks.
National Saving Certificate (NSC)

The current interest rate offered in NSC is 8%. There is no cap on the amount of investment that you can make in NSCs. However, you can only claim a deduction of Rs 1.5 lakh during investment declaration. Currently, National Savings Certificate is available for five-year subscriptions only. The interest rate is reviewed every quarter by the government and modified accordingly. Although interest earned from National Saving Certificate is taxable, the interest amount is considered re-invested (except in the last year of tenure) as it is not paid back to the investor until the maturity of the instrument. Hence, the re-invested interest component also qualifies for deduction under Section 80C of the income tax act. The interest earned in the final year of the tenure is not considered re-invested and is paid back to the investor for that year along with the principal and accrued interest in the previous years.

80C Investment Options - What More?

 Most of you are aware of Section 80C and the investments you can make under the section. mymoneykarma now gives you eight tax-saving investments above 80C. This will free up your hard earned money for fulfilling your wishes.
What is Section 80C?

Section 80C is the most renowned section of the Indian Income Tax Act. There are numerous tax saving options under 80C, such as ELSS and PPF. While investing under 80C is very popular, we bring you tax-hacks other than Section 80C.
NPS

The National Pension System was launched by the Indian government in 2009. The NPS offers a tax deduction for investments made up to Rs. 50,000, in addition to the deduction of 1.5 lakh rupees available under Section 80C. Your returns, however, depend on the asset class you have chosen. Usually, it is advisable to select a high-risk instrument like government debt.
Rajiv Gandhi Equity Savings Scheme (Section 80CG)

This is another scheme available for tax-saving. Under this, you can invest up to Rs 50,000 in approved stocks.  But this scheme is available for you only if you are a first-time investor. This scheme was introduced under the UPA regime and has not been promoted aggressively. A supposed overhaul of the project hasn't come through yet.
Interest on Education Loan (Section 80E)

You can claim the interests you pay on the active education loans you possess, if you have any. The deduction can be only on the interest repayment part, not on the principal of the education loan. That means only the interest repayment is available for a tax deduction while filing an income tax return.

This deduction is available for saving above Rs. 1,50,000, and there is no maximum limit on claiming deduction under 80E. Parents can take up this tax-saving option on behalf of their children, as children are not taxed. It is not a popular scheme, and not many are aware of it.

House Rent Allowance (Section 80GG)

If you are staying in a rented apartment or house and paying rent, you can claim the amount as a tax deduction under Sec 80GG of the Income Tax Act. The amount of the deduction is based on the city that you are residing in. In case you have queries, it is best to talk to the HR department on the exact tax benefits that you would get. This is a significant tax hack that you should take note of.
Home Loans (Section 80EEE)

An additional deduction of Rs 50,000 on home loan interest can be claimed under
Sec 80EE of the Income Tax Act. This option is however not a very popular one.

Health Insurance (Section 80D)

You should take a health insurance policy, which would not only take care of your medical expenses but also enable you to save tax. The current IT norms allow a deduction of up to Rs 25,000 in the case of ordinary citizens and Rs 30,000 in case of senior citizens. So, you can go ahead and take a good health insurance policy.

This is a tax hack that you can utilize apart from the usual 80C benefits. The Sec 80D benefits also include the gains on expenses incurred towards preventive health check-ups.

Donations (Section 80G)

Section 80G of the income tax law provides tax benefits on the amount donated to NGOs. So, you can be generous to the causes you believe in, to your heart's content. However, the deductions can be made if you are donating by cash or draft only. The limit of the deduction can be either 50% or 100%.

You have to claim this deduction when you file your tax returns and quote your PAN to the institution you donated. If you are unsure about the cause you want to support, there is an exhaustive list of institutions and establishments that you can donate to.

Medical Treatment (Section 80DDB)
For certain specific diseases, Income Tax Act offers tax benefits to you under section 80DDB from expenses incurred by you for the treatment of said diseases or ailments. This tax-saving option is not only for the people filing tax returns but also for dependents of such people. However, this tax benefit is not available for Non-Resident Indians.