7 Best legal ways to save your tax in India under Section 80C of the Income Tax Act allows you to reduce your taxable income by up to ₹1.5 lakh annually. There are various avenues you can leverage to minimize your tax liabilities and maximize savings.
1. Invest in Equity-Linked Savings Schemes (ELSS)
ELSS are mutual funds that offer both tax benefits and the potential for high returns. With a lock-in period of three years, this makes them a popular choice for those seeking tax savings. Remember that with market-linked investments, returns are not guaranteed, but ELSS are often seen to outperform other 80C options in the long term.
Key Benefits:
Potential for high returns based on market performance.
Short lock-in period compared to other options.
Eligible for tax deduction up to ₹1.5 lakh.
2. Investment In Employees' Provident Fund (EPF)
EPF automatically qualify for tax deductions under Section 80C. This is a safe and long-term savings option that can also help you build a retirement corpus
3. Invest in Public Provident Fund (PPF)
PPF is one of the most secure tax-saving options under 80C. It offers a guaranteed return with an attractive interest rate (currently around 7.1% per annum) and has a 15-year lock-in period. The interest earned on PPF is tax-free, making it a good option.
4. National Savings Certificate (NSC)
The NSC is another government-backed investment that qualifies for deductions under Section 80C. With a five-year maturity period and a fixed interest rate, NSC can be a safe and low-risk option and is ideal for individuals looking for stable returns.
5. Life Insurance Premiums
Life insurance not only ensures the financial security for your loved ones, it also helps you save on taxes. The premiums paid toward life insurance policies are eligible for deduction under Section 80C.
6. Home Loan Principal Repayment
If you are repaying a home loan, the principal portion of your EMI qualifies for deduction under Section 80C. This can significantly reduce your taxable income, while also helping you build a valuable asset over time.
7. Sukanya Samriddhi Yojana (SSY)
This scheme is designed to benefit the girl child, offering high interest rates and tax benefits. Investments made under SSY qualify for deductions under Section 80C. The account has a lock-in period until the girl reaches 21 years of age or on her marriage after she turns 18.
Key Benefits:
High interest rates and tax-free returns.
Secure and long-term investment for your daughter’s future.
Contribution qualifies for tax deduction under 80C.
Smart Tax Planning for Salaried Employees
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