Tuesday, January 19, 2016

11 Tax Saving Options via Section 80C IT Act

Are you looking for Tax saving options? Here is some unique tax saving options under IT act 80C by which you can save tax in current financial year. As we know only 3 months is left before you file your IT Return, you need to act before March ending. After march, your tax declaration will be counted on next financial year, so here is some tax saving options by which you can save tax in current financial year.

11 Tax Saving Options via Section 80C IT Act

Tax Saving Options
As per Income Tax Act 80C,you can save up to Rs.1,50,000 in current financial year. Since the time is limited and people also want good investment option with tax saving, here we are providing you investment schemes which falls in IT Act 80C and gives you tax benefit too.

1. Sukanya Sunidhi Yojana 

The latest saving scheme launched by Government of india is Sukanya Sunidhi Yojana under which you can save money on your girl child's name and get good return. You need to start investment on your girl child's Sukanya Sunidhi Yojana account up to 10 years, withdrawal facility is only available after 18 year (of child's age).

Annual Return :- 9.2%
Tax Benefit :- Sukanya Sunidhi Yojana will provide Tax benefit of Interest earned and maturity amount.
Maximum and Minimum Investment limit :-  You need to deposit Rs.1000 minimum in SSY account and maximum Rs.1.5 lakh.

2. PPF Accounts 

One of the most popular way and old way to save tax is PPF account. You need to open PPF Account in Government Banks which also gives good return, better than fixed deposit. Your money saved in PPF account will be only withdraw after 5 years of account opening.

Annual Return :- 8.70%
Tax Benefit :- Interest earned and maturity amount is tax free under PPF Account.
Limit :- Minimum Rs.500 and maximum Rs.1.5 are saved under PPF Account.

3. EPF & VPF

Another popular way and similar like PPF account, EPF and VPF accounts also provide tax benefit under 80C act. But this option is mostly suited for Salaried person. you can save 12% of your Basic+DA in EPF Account while in VPF you can save any part of your salary.

Annual Return :- 8.75%
Tax Benefit :- Under EPF & VPF, you get tax benefit if you withdraw after 5 year of account opening. Though, you can withdraw money for specific reason (marriage etc) but in that case you won't eligible for tax benefit.

4. NSC (National Savings Certificates)

You can buy NSC from post office to save tax. But it is not 100% tax saving since you need to pay tax on the interest earned on deposit. Also, you can withdraw your money anytime soon in NSC. You can buy NSC starting from Rs.500 per annum.

Annual Return :- 8.50% for 5 years.

5. Tax Saving FD

You can invest in super popular way of save tax in india, Fixed Deposit. There is Tax saving FDs also available with different term (like 1 year 2 year etc). you can invest starting from Rs.100 to Rs.1.5 lac in these FDs.

Annual Return :- 7.75-8.25%.
Tax Benefit :- Interest earned on income is taxable.

6. LIC Policy

The all time favorite tax saving scheme is LIC Policy. You can N number of LIC Policy. Also, LIC periodically lunched many policy where you can invest your money. The major benefit is that there is no limit to invest in LIC but at the same time there is quite low return too.

Tax benefit :- you can save tax on premium paid and also on periodic payouts (if any).
Annual Return :- vary from policy to policy (but mostly less than 7-8%).

Check out newly launched LIC Jeevan Labh and LIC Jeevan Shikhar.

7. National Pension System (NPS)

You can invest in NPS. its a pension system, pension scheme by government of india where you can get periodic payouts after certain age. This scheme is linked with share market so the return is not fixed but you can expect good return of 8-9% atlest.

Limit :- Rs.6000 per annum
Tax Benefit :- you can get tax benefit on maturity amount and also on dividend you receive.

8. Other Pension Plans

You can invest in other pension plans (like Atal pension plan). Where you can invest Rs.2000-25000 yearly. This schemes are also linked with share market, return is not fixed in some schemes and fixed in some schemes. You get tax benefit in almost all pension plans. Also,you can withdraw money after 3 years of period.

9. ELSS Mutual Funds

You can invest in ELSS (Equity linked savings schemes) Mutual Funds. Via directly or via Mutual Fund SIPs. Starting from rs.500 to Rs.5000, you can invest in ELSS Funds. You can withdraw after 3 years of lock in period.

Tax Benefit :- Divided received and maturity amount are tax free.
Annual Return :- Since its mutual funds, which are linked with market, no fixed return but almost all ELSS funds gives 15-20% return.

10. Retirement Mutual Funds

This is same as ELSS Mutual funds (or just another mutual fund) where no fixed return is given since all your money will be invested in market.If you withdraw money from these mutual funds, you need to pay Exit loads.Investment Limit Rs.500-5000.

Tax Benefit :- Divided received and maturity amount are tax free in Retirement Mutual funds.

11. ULIP Plans

There are different ULIP Plans available in market (like HDFC Life Click 2 Retire Online ULIP Plans) in which you can invest up to (Rs.2000 to) 25000 Annually, and you will get tax benefit on whatever you earn. No fixed return (as its market linked investment scheme). 

Also check :- LIC Endowment Plus ULIP Plan

So, these are the saving options available under IT Act Section 80C. Choose best option among all and invest as early as possible. You can also choose Investment plans from post office which provide good return.

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