Tax planning: Perks of 80C

Saving and tax planning areamong the most crucial aspects of managing your finances well. The advantages that come along with tax planning include tax saving and higher accumulation of wealth. When a personsaves enough to invest they need to follow a tax, to reap the benefits in terms of the availability of more money at hand even after taxation.

Reason why you should be saving early for 80C benefits

The Government of India has been trying to inculcate the habit of investments and savings among the people through tax planning and by offering deductions under 80C. The sooner an investor starts planning their taxes; the more will be their savings. Proper tax planning will help them to choose better investments schemes that save taxes and generate more returns. It will not only create wealth and improve their living standard but will also strengthen the economy.

Most fruitful schemes are long-tenured and in order to reap more benefits from them one need to start saving early in the following schemes which also come under 80C benefit:

  • Equity Linked Savings Scheme:The equity-oriented funds come with a minimum 3-years lock-in period. It yields higher returns ranging between 12-15%.
  • Employee Provident Fund: The rate of interest on this fund is around 8.8% and up to 12% of the salary of an employee can be claimed under 80C as the deduction.
  • Investment in Public Provident Fund:This traditional investment scheme can be availed from government-sanctioned banks and post offices only. The fund compounds annually and comes with a 15-year lock-in period. Investors can take loans against their PPF account and the withdrawals made from the account areexempted from tax.
  • Fixed Deposit(Tax saving): The tax saving fixed deposits come with a 5-year lock-in period and is mostly like the traditional fixed deposits availed from the bank. On maturity the proceeds is taxable.
  • New Pension Scheme:The proceeds on this market linked scheme are taxable on maturity and the returns are not guaranteed on it. One can claim a deduction of Rs 50,000 on this government initiated scheme.
  • National Savings Certificate:One of the oldest tax saving schemes that are issued by the post offices and is mostly for the long-term. Around 8.1% is the rate of interest earned from this tax saving scheme.
  • Unit Linked Insurance Plan:This hybrid product is a mix of mutual funds and life insurance. Besides life cover, a part of this plan’s premium can be invested and therefore, brings market-lined returns.
  • Life Insurance Policy:The premium of life insurance plans can be claimed for deduction, given the premium of the plan is less than around 10% of the total sum assured.
  • The Senior Citizens Savings Scheme, SukanyaSamriddhiYojanaand repayments on certain home loans also fall under the eligible category for availing deductions under section 80C.

Contact our financial experts and tax analysts to determine the benefits of tax planning and saving early. Find out in details how you can maximise the benefits under 80C in your favour.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not an indicator of future returns. Wealth Redefine is a AMFI registered Mutual Fund distributor – ARN - 85350

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