Best Tax Saving Plans Under Sec80C Of The Income Tax Act

Tax saving investment plans are best as they allow you to save tax on the investments and add in your savings. People of all earning groups frequently wish to invest in these tax-saving investment plans. Particularly, the middle class earning individuals are the most frequent investors in these investment schemes. All these investment plans fall under section 80C of the Income-tax act, 1961, which offers tax deduction and saving money in your pocket.

What is section 80C of the Income Tax Act, 1961?

Section 80C is among the most well-known and popular sections among taxpayers since it allows them to lower their taxable income by making tax-saving investments or incurring qualified costs. It provides a maximum deduction of Rs 1.5 lakh from the total income of the taxpayer each year. Individuals and HUFs (Hindu Undivided Families) can both take advantage of this discount. This deduction is not available to corporations, partnership firms, or LLPs.

Subsections 80CCC, 80CCD (1), 80CCD (1b), and 80CCD (1c) are all found in section 80C. (2).

There are a number of tax-saving investment plans under section 80c but when it comes to the highest return on the investment these 5 investments plans are best among others.

1. Equity-Linked Saving Scheme (ELSS) Fund

Eligibility: Can be opened by Resident Indian individuals.
 Liquidity: Fixed Deposits have a lock-in period of 3 years.
 Rate of Interest Offered: FD interest rate ranges from 15% to 18%
 Investment Limit: You can invest any amount in ELSS, there is no upper capping.
 Tax Treatment: Interest earned is taxable.
 Save up to : Rs 46800 in taxes a year.

2. National Pension Scheme

Eligibility: Every Indian citizen between the ages of 18 and 60 can open it.
 Liquidity: After 15 years, partial withdrawals are permitted, but only under certain circumstances.
 Rate of Interest Offered: The returns rate varies between 12% and 14%.
 Investment Limit: No limit.
 Tax Treatment: Interest earned is tax-free.
 Save up to: It allows you to deduct up to Rs 1.5 lakh from your investment in each financial year.

3. Unit Liked Insurance Plan (ULIP)

Eligibility: ULIPs can be purchased for oneself, a spouse, or a child.
 Liquidity: Because it is market-linked, interest rates fluctuate.
 Rate of Interest Offered: The returns rate varies between 12% and 14%.
 Investment Limit: No limit.
Instalments: 12 instalments in a year.
 Tax Treatment: Investments, withdrawals, and the amount due at maturity are all tax-free.
 Save up to: Under the overall limit, a tax deduction of up to Rs.1.5 lakh is available.

4. Sukanya Samriddhi Yojna

Eligibility: Parents/guardians can open a bank account in their daughter's name till she turns ten years old.
 Liquidity: Once the daughter reaches the age of 18, she can withdraw up to 50% of her money.
 Rate of Interest Offered: The scheme offers an 8.5% interest rate.
 Investment Limit: A financial year's investment is limited to a maximum of Rs.1,50,000.
 Tax Treatment: Investments and withdrawals are tax-free, as is the maturity amount.
 Save up to: It allows you to deduct up to Rs 1.5 lakh from your investment in each financial year.

5. Public Provident Fund

Eligibility: Residents of India, both salaried and non-salaried, are eligible to create a bank account. A HUF is not eligible to open a PPF account.
 Liquidity: PPF accounts have a 15-year lock-in period that can be extended by another five years. After 7 years, partial withdrawals are permitted.
 Rate of Interest Offered: The interest rate is 7.10% P.A
 Investment Limit: In one financial year, you can deposit as little as Rs 500 and as much as Rs 150,000.
Instalments: 12 instalments in a year.
 Tax Treatment: Interest earned is tax-free.
 Save up to: It allows you to deduct up to Rs 1.5 lakh from your investment in each financial year.