Best 8 tax saving option in 80C available today

Every year we look forward for tax deduction under section 80C. Rather than investing in last moment do make proper analysis before investing so that you can earn expected returns. Following is the Ranking based on research conducted.

 

Option in 80C

Research Ranking

Expected Returns

Lock In Period  

Tax Free Return

Equity Linked Saving Scheme (ELSS)

1

12 – 15%

3 Years

Yes

Senior Citizen Saving Scheme (SCSS)

2

8.3%

5 Years

No

National Pension Scheme (NPS)

3

10 to 12%

10 Years

No

Public Provident Fund (PPF)

4

7.8%

15 Years

Yes

National Saving Certificate (NSC)

5

7.8%

5 Years

No

Bank Fixed Deposit (FD)

6

6.5%

5 Years

No

Insurance

7

4%

5 Years

Yes

 

Equity Linked Saving Scheme (ELSS)

Stock markets are all time high and investors may not prefer to put in mutual funds at current level. However, contrary to the above belief as per our research, from various options available in 80C, ELSS still will remain the best option in terms of return and tax benefit. As there is Lock in period of 3 years the investor will easily be able to generate returns of approx. 12 to 15% p.a for next 3 years. The following are some of funds which can offer better returns

ELSS Scheme

6 Month Return

1 Year Return

2 Year Return

3 Year Return

Axis Long Term Equity Fund

12

29

15

13

Reliance Tax Saver

15

36

20

12

HDFC Tax Saver

11

30

19

10

ABSL Tax Relief 96

17

36

20

16

 

In case of ELSS form filing or availability to pick up from you can contact Manish Tervankar at 8424949136 from expertmile.com

 

Senior Citizen Saving Scheme (SSCS)

An individual of the Age of 60 years or more may open the account with maturity period of 5 years. A depositor may operate more than one account in individual capacity or jointly with spouse (husband/wife). Any number of accounts can be opened in any post office subject to maximum investment limit by adding balance in all accounts.

8.4​% per annum, payable from the date of deposit of 31st March/30th September/31st December in the first instance & thereafter, interest shall be payable on 31st March, 30th June, 30th September and 31st December. There shall be only one deposit in the account in multiple of INR.1000/- maximum not exceeding INR 15 lakh. Premature closure is allowed after one year on deduction of an amount equal to1.5% of the deposit & after 2 years 1% of the deposit. TDS is deducted at source on interest if the interest amount is more than INR 10,000/- p.a.

 

National Pension Scheme (NPS)

This new scheme is an instrument designed to get a lump sum amount and a regular source of income on attaining retirement. Both Salaried as well as Self Employed can enjoy the tax benefit under this scheme. Once matured NPS also gets partial tax exemption. It’s basically a retirement saving scheme which encourages to accumulate the savings during the working life of an individual. It is categorized in the following manner Tier I & Tier II. In the 1st category a person is not allowed to withdraw the amount until he/she attains 60 years of age. However, in certain specific cases partial withdrawal shall be allowed. Whereas, the 2nd category operates on similar lines of that of a saving account holder and the person so opting this scheme is free to withdraw as and when they require.  It also provides an additional benefit of doing investment of Rs. 50000/- under section 80 CCD (1B) of income tax act. In other words any individual who is eligible can invest upto Rs. 200000/- under NPS account and avail a tax benefit up to Rs. 61800/- in its highest tax bracket. However, any deferred annuity which shall be received during the time of retirement shall be made taxable. The lock in period under this scheme is 10 years.

 

Public Provident Fund (PPF)

PPF is one of the safest option for any individual to invest their money as the returns are fixed and guaranteed but are also subject to changes made on quarterly basis.  PPF is another retirement benefit. It is indeed one of the best and safest investment to be opted by an individual. It has one of the highest lock in period i.e., 15 years in comparison to any other investment scheme.  The interest received is completely exempt under 80 C.

 

National Savings Certificates (NSC)

No maximum limit for investment. No Tax deduction at source. Certificates can be kept as collateral security to get loan from banks. Trust and HUF cannot invest. Rate of interest 7.8%.​ Maturity value of a certificate of INR.100/- purchased on or after 1.10.2016 shall be INR. 146.93 after 5 years.

 

Bank Fixed Deposit

Bank fixed deposit is yet another way to avail tax benefit under 80C. But one should be aware that a bank FD for a fixed period of 5 years shall only be eligible for tax saving.  It’s one of the safest and guaranteed way of providing returns as well. Although the interest generated from FD is taxable yet it is a better option to opt for in comparison to the normal saving account as the interest incurred  in normal saving  account is also very less.

Life Insurance (LI)

Mainly bought for the purpose of protecting one's family from risk. Maturity benefits are also exempt from income tax. The return are in range of 4 to 5% however insurance is not an investment product it is for ensuring family protection in case of a risk. Recently mostly people therefore opt for term policies where premium is low and there is no return on premium paid.

 

For details of Forms & Investment Contact Manish Tervankar at 8424949136

 

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CA Chirag Chauhan

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