Section 80 - Best Tax Saving Investment option and its Impact on Income Tax

As responsible taxpayers and investors, we all know the value of tax saving and the overall benefits that it carries for or savings corpus. To ensure that we do not end up getting overtaxed and feel the resultant pinch on our pockets, it is important for us to have a clear understanding of Section 80C of the Income Tax Act, 1961 because it serves as the key mechanism of governing tax exemptions and the eligibilities, due investments and instruments for seeking those exemptions. In essence, Section 80C governs the whole set of exemptions that are applicable for the following payments:

1. PPF (Public Provident Fund):

All the contributions to the PPF made by individuals (excluding Hindu Undivided Families or HUFs) are eligible for deduction under Section 80C.

2. EPF (Employees Provident Fund):

Equal contributions to EPF by the employer and the employee are mandated and these contributions are eligible for deduction under Section 80C.

3. ELSS (Equity Liked Savings Scheme):

An ELSS comes with a lock in period of three years and is considered to be one of the best instruments for saving taxes in India. Under Section 80C, the contribution towards an ELSS is eligible for tax exemption (with an upper capping of Rs. 1.5 Lac in the particular financial year).

4. SCSS (Senior Citizens Savings Scheme):

Under Section 80C, the contribution towards an SCSS is eligible for tax exemption (with an upper capping of Rs. 1.5 Lac in the particular financial year).

5. Post Office savings schemes:

Starting from the year, contributions towards Post Office savings schemes have been brought under the purview of Section 80C.

1. NSC (National Savings Certificate): Under Section 80C, the contribution towards NSC is eligible for tax exemption (with an upper capping of Rs. 1.5 Lac in the particular financial year).
2. Unit linked insurance plans (ULIPs): ULIPs are market-related instruments and Under Section 80C, the contribution towards a ULIP is eligible for tax exemption (with an upper capping of Rs. 1.5 Lac in the particular financial year).
3. Payable premiums to life insurance.
4. NPS (National Pension Scheme): Under Section 80C, the contribution towards NPS is eligible for tax exemption (with an upper capping of Rs. 1.5 Lac in the particular financial year).
5. Sukanya Samriddhi Yojana
6. Installments towards home loan repayments
7. Fee paid towards children's education.

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