{"id":6677,"date":"2019-12-02T09:21:00","date_gmt":"2019-12-02T03:51:00","guid":{"rendered":"http:\/\/www.apnaplan.com\/?p=6677"},"modified":"2019-12-02T10:56:46","modified_gmt":"2019-12-02T05:26:46","slug":"best-tax-saving-investments-80c","status":"publish","type":"post","link":"https:\/\/www.apnaplan.com\/best-tax-saving-investments-80c\/","title":{"rendered":"15 Investments to Save Tax u\/s 80C – Which is the Best?"},"content":{"rendered":"

The tax season is here and I have started getting mails and comments asking for the \u201cBest Tax Saving Investments<\/span>\u201d<\/strong>. Unfortunately there is no straight answer to this.\u00a0The best investment is different for different people and is aligned with their return expectations, risk taking ability, personal circumstances, and alignment with their financial goals among other things.<\/em><\/p>\n

Investments for Section 80C<\/h2>\n

You can claim maximum deduction of Rs 1.5 Lakhs u\/s 80C (including Sections 80CCC, 80CCD)<\/strong>\u00a0by investing in eligible instruments. Unfortunately investments and expenditures allowed u\/s 80C is too crowded and that makes the choice difficult for most people.<\/p>\n

Below is the list of investments\/expenses eligible for deduction u\/s 80C:<\/strong><\/p>\n

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  1. \n
      \n
    1. Provident Fund (EPF\/ VPF)<\/li>\n
    2. Public Provident Fund (PPF)<\/li>\n
    3. Sukanya Samriddhi Account (SSA)<\/li>\n
    4. National Saving Certificate (NSC)<\/li>\n
    5. Senior Citizen\u2019s Saving Scheme (SCSS)<\/li>\n
    6. Tax Saving Fixed Deposits (for 5 Years)<\/li>\n
    7. Life Insurance Premium<\/li>\n
    8. Pension Plans from Mutual Funds<\/li>\n
    9. Pension Plans from Insurance Companies<\/li>\n
    10. New Pension Scheme (NPS)<\/li>\n
    11. Tax Saving Mutual Funds (ELSS)<\/li>\n
    12. Central Govt. Employees Pension Scheme<\/li>\n
    13. Principal Payment on Home Loan<\/li>\n
    14. Tuition Fees for up to 2 children<\/li>\n
    15. Stamp Duty for registration of Home<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n
      \n

      Download:<\/strong> Free ebook for Income Tax Planning for FY 2019-20<\/a><\/p>\n<\/blockquote>\n

      The post below suggests the approach to select the investments for tax planning.<\/strong><\/p>\n

      \"Best
      Best Tax Saving Investment Plans u\/s 80C<\/strong><\/figcaption><\/figure>\n

      Expenditures Eligible for Tax Benefit<\/h2>\n

      The first step is to check all expenditures which are eligible for tax deduction. Below is the list:<\/p>\n

      1. Tuition Fees for up to 2 children<\/h3>\n

      The expenses on tuition fees for full time courses\u00a0for maximum of two children is eligible for deduction u\/s 80C. However, the deduction is not available for tuition fee to coaching classes or private tuitions.\u00a0The following expenses are not considered as tuition fees \u2013 Development Fee, Transport charges, hostel charges, Mess charges, library fees, Late fines, etc.<\/p>\n

      2. Stamp Duty for registration of New Home<\/h3>\n

      Stamp duty and registration charges up to Rs 1.5 Lakh can be claimed for deduction u\/s 80C.\u00a0The payment should have been made in the same financial year for which the tax is being paid. i.e. the deduction cannot be carried forward to next year. Also the house should be in the name of assessee claiming deduction.<\/p>\n

      \n

      Also Read:<\/strong>\u00a0How builders use super built-up area to deceive home buyers?<\/a><\/p>\n<\/blockquote>\n

      In case you have paid stamp duty for new home, you most probably would exhaust your 80C limit for the year and no further investment might be required.<\/em><\/p>\n

      Compulsory Deductions<\/h2>\n

      There are some compulsory deductions that are eligible for tax benefit u\/s 80C. Check if you contribute in any of such deductions:<\/p>\n

      1. Provident Funds (EPF\/VPF)<\/h3>\n

      EPF\u00a0is a compulsory deduction for most salaried employees. The deduction can be 12% of the basic salary & dearness allowance or Rs 1,800 every month. Look at your salary statement to know how much have you contributed for the year. Count only your contribution. Employer\u2019s contribution is not eligible for tax saving investment. You can also have some amount contributed through Voluntary Provident Fund (VPF)<\/strong>, which can be up to 100% of the basic salary & DA.<\/p>\n

      \n

      Also Read:<\/strong> VPF –\u00a0A Good Retirement Option!<\/a><\/p>\n<\/blockquote>\n

      2. National Pension Scheme (NPS)<\/h3>\n

      NPS (Tier 1)<\/strong> is compulsory for most Government employees who joined after 2004. Look at your salary slip to check your deduction. Again only your contribution is valid deduction. Employer\u2019s contribution is not eligible. The good thing is you can use this contribution to claim additional tax deduction up to Rs 50,000 under the newly introduced Section 80CCD(1B)<\/strong>. We have explained this at the last paragraph of the post.<\/p>\n

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      Also Read:<\/strong>\u00a0NPS \u2013 Maturity, Partial Withdrawal & Early Exit Rules<\/a><\/p>\n<\/blockquote>\n

      Recurring Deductions<\/h2>\n

      There are some deductions which happen year on year like home loan repayment, insurance premium etc.<\/p>\n

      1. Home Loan Principal Amount<\/h3>\n

      Are you paying home loan? The principal component paid every year is eligible as tax deduction. For this you can download the tax statement from banks\u2019 website. In case not get it from the loan provider. This would give you an estimate of principal and interest paid for the financial year.<\/p>\n

      2. Insurance Premium<\/h3>\n

      Have you bought life insurance products like ULIP, Endowment Plan or Term Insurance where you need to pay the premium for subsequent years? If you want to continue investing in the same you can continue to claim tax benefit.<\/p>\n

      3.\u00a0PPF (public Provident Fund)<\/h3>\n

      If you have PPF account you should contribute minimum Rs 500 in a financial year. In case you don\u2019t do, a fine is levied.<\/p>\n

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      Also read:<\/strong> How to Claim Tax Exemptions while filing ITR?<\/a><\/p>\n<\/blockquote>\n

      4.\u00a0Sukanya Samriddhi Account (SSA)<\/h3>\n

      Minimum deposit of Rs 1,000 needs to be made every year else penalty of Rs 50 is levied.<\/p>\n

      5. NPS<\/h3>\n

      Do you have NPS account? A minimum contribution of Rs 1,000 is required every financial year to keep the account active.<\/p>\n

      \n

      For many people the 80C deduction limit is reached by this time. In case not, choose from the list below depending on your risk profile and investment goals:<\/em><\/p>\n<\/blockquote>\n

      New Investment for 80C<\/h2>\n

      1. Term Life Insurance<\/h3>\n

      Do you have dependents? Would they survive financially in case something happens to you? Do you have enough life insurance? If no go get a term insurance first. It\u2019s important to opt for protection first.<\/p>\n

      Useful Tips:<\/strong><\/span><\/p>\n