Section 80C of the Income Tax Act of India is a clause that highlights various investments and expenditures that are exempted from Income Tax
Under Section 80 C, investors get a maximum deduction of up to Rs 1.5 lakh per year from their total taxable income
Investments in instruments like Equity Linked Savings Scheme (ELSS), Public Provident Fund (PPF), 5-year Fixed Deposit, Sukanya Samriddhi Yojana, National Savings Certificate, Senior Citizen Savings Scheme, Employee Provident Fund, Public Provident Fund, and payment made towards life insurance premiums – all are covered under Section 80 C
Any contribution towards the Public Provident Fund (PPF) can be filed for tax deduction under Section 80C
PPF falls under the exempt- exempt-exempt (EEE) category. This means, the principal amount, the interest earned and the maturity amount of PPF is completely tax-free
Tax saving FDs can be a type of fixed deposit in which the individual can claim a tax deduction under Section 80C
Different banks offer different FD rates on tax-saving schemes. State Bank of India (SBI) offers 6.50% on its 5-year FD. HDFC Bank offers 7% interest on its 5-year tax-saving FD. ICICI Bank is offering 7% for its tax-saving FD
To save income tax, taxpayers can invest in a 5-year post office term deposit and NSC. Both have a tenure of five years and offer an interest rate of 7%
Equity Linked Saving Schemes (ELSS) or tax-saving mutual funds have offered investors around 13.35% returns over a long period of 10 years. ELSS offers a dual advantage. You save on taxes and the equity exposure provides an opportunity for wealth creation