80 c Investment Options

 1 : National Saving Certificate: The invested amount in 5-year NSC is eligible for tax deduction under section 80 c of the Income Tax act. Interest paid on NSC is compounded half-yearly and added to the total accumulated value but the best part is that the same for the first 4 year can be claimed as deduction under section 80 c because it deemed to be reinvested in the certificate. Also the deposits are exempt from the wealth tax also. Click here to read in detail about NSC……

2 : Public Provident Fund(PPF): Public provident fund or the commonly known as PPF is long-term saving instrument established by the central government with an objective of providing the old-age income security to the self-employed.Tax deduction on deposits, guaranteed return and tax-free maturity are the biggest driving force which pulls the investor towards it. Click here to read in detail about PPF….

3: Employee Provident Fund: Employee Provident Fund is the saving scheme mandatory for all employees working in Government, Public and Private sector organisation where a 12% of the basic salary is contributed monthly in to a PF account and the same contribution an employer made to it. The amount in a PF account earns an interest rate which is decided by the central government in consultation with central board of trustees. Above all, there is an Income tax benefit also on an Invested Amount. A matching contribution from an employer coupled with the tax benefit plus the power of compounding makes it more lucrative and efficient investment option.

4: Rajiv Gandhi Equity Saving Scheme: RGESS is an excellent initiative taken by the government in March 2012-13 budgets whereby an investor will get a tax rebate on his investment to an equity market. It gives an income tax benefit for an investment of up to Rs 50000 in RGESS eligible securities.Click here to read in detail about RGESS…

5: Accrued Interest on NSC: Interest paid on NSC is compounded half-yearly and added to the total accumulated value; annual interest earned is deemed to be reinvested and qualifies for tax rebate for the first 4 year under section 80 c of the Income Tax Act. Let me try to explain it with the help of an example. Click here to read in detail…

6: Life Insurance Premium: An Insurance that helps an insured to protect his income capacity and further assist in fulfilling his saving goals like child education or retirement in case of any mis-happening or eventuality. The best part is that we need to shell out a bit for the financial security of our family as the best term insurance for Rs 1 Cr is available for Rs 10000 per annum for a person aged between 25-30 and that comes out to be Rs 27 a day, above all, the premium qualifies for sec 80 c of Income Tax Act. Click here to read in detail about Life insurance…

7:Unit Link Insurance Plan(ULIP): ULIP is a combination of both insurance & mutual fund, where an insured pays the premium to insurer and insurer in return after deducting some charges like allocation or mortality, invest the rest of the amount in the securities as specified in the available fund with the insurer. All the premium amount is available for income tax exemption under sec 80 c of the income tax act. However an insured is liable to claim this deduction only when he is choosing the 10 times sum assured of the premium amount. Click here to read in detail about ULIP…

8:Principal Repayments on Housing Loan: Your EMI for home loan consists of 2 portions:  the principal amount, and the interest on the loan. Through the principal portion of the EMI; you repay the loan in small bits every month. Thus, the outstanding loan amount (or the remaining loan amount) reduces every month by this amount. Through the interest portion of the EMI; you pay the bank the interest on the outstanding loan amount. Every time you are paying the principal portion, you become eligible for a tax rebate for the same amount under sec 80 c of the Income tax act but the rebate amount remains within the total limit of Rs 1.5 lac only.

9: Equity Link Saving Scheme: Equity linked saving scheme are one of the mutual funds schemes that provides tax benefit under sec 80c of the Income Tax Act, these are diversified equity mutual funds that comes up with a lock-in period of 3 year: the shortest among all the investment option available under sec 80 c and no tax is levied on the long term capital gains from these funds. Click here to read in detail about ELSS..

10:Voluntary Provident Fund: Voluntary Provident fund is the another option available only to salaried class individual where they can go beyond 12% of their basic salary & dearness allowance that flows into EPF account every month and can contribute up to 100% of the above component every month into the same EPF account, the voluntary contribution will earn the same rate of interest,will fetch you the same 80 c tax benefit and the maturity corpus will also be tax free. However an employer contribution will remain same i.e. 12% of the basic and dearness allowance, it will not increase as with your increasing contribution and employee contribution is eligible for tax exemption up to a maximum of Rs 1.5 lakh under section 80 c.Click here to read in detail about VPF… 

11:New Pension Scheme: Any individual whether government employee, employed with private sector, self employed or professional can now avail of pension benefits and plan his or her retirement by enrolling in New Pension Scheme. It is a government of India initiative to extend pension benefits or to build a universal social security system to protect the elderly against economic deprivation. The NPS is the least complicated, simplest and lowest cost pension scheme. In order to make it more lucrative, New pension scheme is to offer the tax deductions on investment under sec 80 c of the Income tax act in a financial year, however the amount received at the end of NPS would be taxable. It works more like Mutual Fund or ULIP plan where the investment is linked with the market, managed by the professional fund managers within the defined objective set by the government. Returns are linked with the market and are not guaranteed but the capital is protected as the scheme is backed by the government of India.

Click here to read in detail about NPS…

12: Fixed Deposit: Fixed deposit is one of the saving instruments which the bank offers to their customer, It is available for different terms and return vary based on the term investor is choosing. Senior citizens generally get a .5 to 1% extra returns. It also lures the investor by giving the tax benefit under section 80 c if invested with a lock-in of 5 year.

13: Child Education allowance : Child Education allowance is exempt to the extent of Rs 100 p.m. per child up to 2 children i.e. the maximum an employee can claim is Rs 2400 per year for 2 of his children.

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