With the financial year biddingfarewell, it’s time to stock-up your tax-saving investments if you haven’t done them so far. If you have opted for the old tax regime, you can claim up to Rs 1.5 u/s 80C of the Income Tax Act, 1961. As an investor you can save up to Rs 46,800 provided that you belong to the highest tax slab. This article aims to offer a list of investments that offer deduction section 80C. Let’s understand the popular tax-saving investments available to an investor:
Equity Linked Savings Scheme (ELSS)
ELSS funds are a type of mutual funds that invest a majority of their corpus, a minimum of 80% of their assets in equity and equity-linked investments. As they help to save on tax, they are rightly termed as ELSS tax saving mutual funds. These mutual fund investmentshave a three-year lock-in period. ELSS mutual funds provide an investor with the dual benefit of capital appreciation and tax saving opportunities. What’s more, these tax saving mutual funds have historically provided double-digit annualized returns when invested for a long duration.
Public Provident Fund (PPF)
PPF schemes are long-term tax-saving schemes offered by the Indian government. These savings schemes help to produce a financial cushion to investor post their retirement. The interest rate on PPF are set and revised by the government of India every quarter. PPF scheme enjoy the benefits of EEE status.
National Pension Scheme (NPS)
NPS is a retirement-focused investment scheme that matures at the age of sixty. NPS schemes are mandated to invest not more than 50% of their assets in equity and equity-related instruments.Apart from the Rs 1.5 lac tax deduction, an investor can also avail of additional tax benefits of up to Rs 50,000 under sub-Section 80CCD (1B).
Senior Citizen Savings Scheme (SCSS)
SCSS is a savings scheme available to senior citizens and super-senior citizens, i.e. aged 60 and above. These schemes tend to expire in 5 years. However, one can extend it by further three years. The interest rate on SCSS is acknowledged by the government of India during the time of investment. These schemesprovide one of the highest interest rates in contrast to other savings schemes available in India.
Unit Linked Investment Plan (ULIP)
As the name suggests, ULIPsare an investment plus insurance product where in a portion of the corpus is allottedto investments in chosen financial products and the remaining part is used to secure the life of an investor. An investor can switch between funds aroundthree to four times in any financial year.
Irrespective of the type of investment you decide to go forward with, do not invest intax-saving investmentsfor the sole purpose of saving tax. Make sure that your investments are in line with your risk profile, financial goals, and investment horizon. Happy investing!