Close this search box.

Looking to maximise 80 C benefits? Here are the top smart ways.

  • April 18, 2024
  • 5 min read
Looking to maximise 80 C benefits? Here are the top smart ways.

Section 80C permits you as a taxpayer to reduce taxable income by making investments in qualifiable financial products. This tax deduction applies to various financial instruments. These involve PPF, EPF, life insurance premiums, NSC, and other products.  Read on to learn how you can enhance your 80 C deductions to lower your income tax liabilities.

  • NSC or national savings certificate

NSC is a tax-savings fixed deposit option that enables you to save Rs 1.50 lakhs as per Section 80C. NSC has a 5-year investment term and assures to offer guaranteed returns. The interest constituent generated annually gets reinvested and is claimed as a deduction as per Section 80C. 

  • Life insurance premium

This product protects your family’s future while also helping you save money on taxes. This policy’s premium provides for a tax deduction under Section 80 C. This provides both financial stability and budgetary benefits.

  • Invest in the PPF or public provident fund

PPF is a product, which is government-backed and has a long-term investment plan with a decent interest constituent. The amount in PPF is permitted for deduction as per Section 80C. Also, the interest generated and maturity value are not taxed, making it an excellent option to claim as per Section 80C deduction

  • Employee provident fund (EPF)

EPF is similar to PPF. This is a retirement option in which both the employee and the company contribute and the amount contributed by the employee is taxable as per Section 80 C.

  • 5-year fixed deposits

Under Section 80C, FDs with a maturity period of 5 years with banks and post offices are also eligible for deduction. Nevertheless, the interest on these FDs is taxable. They are a safe investment as they always provide returns regardless of any circumstances.

  • Home loan repayment

The principal repayment of your house loan is tax deductible under Section 80C. This makes house loans a realistic choice for saving taxes while accumulating assets.

  • Invest in ELSS funds or equity-linked savings scheme

ELSS mutual funds fall in the equity category. This option provides both tax benefits and financial growth. Investments in such options qualify for tax benefits under Section 80 C. Also, they have the shortest lock-in than other financial instruments in the market. This product offers a lock-in of just three years.

  • Tuition fees

Tuition costs for up to two children are deductible under Section 80C. This deduction is only available to two kids and involves payments of full education at school, university, or any educational centre.

  • SCSS or senior citizens savings scheme

This product is backed by the government for anyone over 60 years. Section 80 C provides tax deductions for this product.

  • Post office time deposit

A five-year time deposit arrangement with the post office allows you to deduct expenses under Section 80C. The interest rate is often greater than in normal savings accounts, allowing for bigger returns.

  • Sukanya samriddhi yojana

This scheme is for the parents or guardians of a girl child, where the account deposit is eligible for deduction under Section 80C. The account is due when the girl reaches 21, generating a good return.

  • Infrastructure bonds

Such bonds are issued by infrastructure companies. Investments in such bonds may be claimed as deductions as per Section 80 C. These bonds usually offer a longer maturity period, which makes them an enticing choice for long-term investments. Moreover, the interest constituent earned from such bonds is usually tax-free. This enhances the overall returns of the retail investors.  

  • ULIP or unit linked investment product

ULIPs offer twin benefits. It provides insurance protection. Also, it is an excellent product for making investments in market-linked products. The amount invested in ULIP is even deductible as per Section 80 C. Such plans allocate a part of the premium in either debt or equity mutual funds, thus ensuring life coverage too. By investing in such products, you can be rest assured to be covered and potentially view growth in your investment over the long term, based on the performance of the selected funds.

  • Pension funds

Pensions are managed by PFRDA or Pension Fund Regulatory and Development Authority and provide tax benefits under Section 80 C. Such funds provide you with income post-retirement and are excellent for long-term investment.

  • Purchase of a residential house

The payment towards stamp duty, registration charges and other expenditures incurred to transfer a house property are tax deductible as per Section 80 C.

  • Invest in NPS

Some may ask what is NPS? Please remember National Pension Scheme also called NPS is a government-backed plan available to everyone. It is a long-term financial product, offering tax benefits as per Section 80 C. The NPS invests the corpus in equity and debt and the allocation is varied based on the age of the subscriber.

  • Term insurance plans

The tax benefit of term insurance premiums is 80C. Term insurance plans are cheap and offer a high life cover which is suitable for young and working people.

  • Children’s mutual funds

Certain mutual funds attempt to secure your children’s financial future. These funds also provide 80C advantages, making them a great option for tax savings and future planning.

  • Repayment of housing loan

The major component of EMIs paid to certain institutions is tax deductible under Section 80C. This substantially decreases overall taxable income, giving homeowners tax relief.

  • Invest in tax-saving fixed deposits

Tax-saver FDs are comparable to conventional FDs but have a 5-year lock-in term and provide tax benefits under Section 80C. The rate of interest is set by banks at the start of the term, assuring guaranteed returns.

Ending note

Making investments strategically in Section 80 C investment products is an effective way to reduce your tax obligation while even ensuring your fund is put to excellent use. It is a win-win scenario where you save tax while at the same time witnessing financial growth. So, make sure you use the full limit of Section 80C to gain the most tax benefit and save for a brighter future.


About Author