• Investments in NPS (National Pension System)
• ULIPS or Unit Linked Insurance Plan
• Tax Saving FDs (Lock-in Period 5 years)
• Equity Linked Savings Scheme
• Employee Provident Fund
• Public Provident Fund
• Principal Repayment of Home Loan
• Investment in Sukanya Samridhi Yojana (SSY)
• Payment in Children’s tution fees (max. 2 children)
• Payments in LIC – Life Insurance Premium

Investments in NPS (National Pension System)

The NPS is a pension scheme that has been started by the Indian Government to allow the unorganised sector and working professionals to have a pension after retirement. Investments of up to Rs 1.5 lakh can be used to avail tax deductions under Section 80C

• Can be opened by every Indian citizen between the age of 18 and 60
• Partial withdrawals are allowed after 15 years but under special conditions
• Returns rate on the NPS varies between 12% – 14%
• Investment Limit: No limit on maximum contribution
• Tax Treatment : Employer contributions are tax-free

Investments in ULIP (Unit linked Insurance Plans)

ULIPs are a mix of insurance and investment. A part of the invested amount in ULIPs is used to provide insurance and the rest of the amount is invested in the stock markets. Investments of up to Rs 1.5 lakh in ULIPs are eligible for tax breaks under Section 80C

• You can buy ULIP for yourself or spouse or child
• Interest rate varies as it is market linked
• Return rate on the ULIP varies between 12% – 14%
• No limit on maximum contribution
• Investment and withdrawals & maturity amount are tax-free

Investments in Tax Saving FDs

Tax-saving FDs are like regular fixed deposits but come with a lock-in period of 5 years and tax break under Section 80C on investments of up to Rs 1.5 lakh.

• Can be opened by Resident Indian individuals.
• Minimum investment limit is Rs 1000.
• Fixed Deposits have lock-in period of 5 years.
• FD interest rate across different banks ranges from 5.5% to 7.75%
• Interest earned in taxable.

Investment in ELSS Fund or Tax Saving Mutual Fund

• best tax saving option
• dual benefit of saving taxes and getting higher returns on investment.
• Invest in ELSS and save upto Rs 46,800 in taxes
• Lowest locking period of 3 years
• Delivered historically higher returns than FD, PPF or NPS
• Interest earned is partially taxable

Investments in EPF (Employee Provident Fund)

EPF is a retirement benefit scheme that is available to all salaried employees. This amounts to 12% of basic salary + DA, that is deducted by an employer and deposited in the EPF or other recognised provident funds.

• Can be opened by employee with basic salary greater than 15,000 /month
• Can withdraw PF balance after 2 months of leaving job and does not take up employment within two months with an employer covered by PF Act
• Interest rate on the EPF is 8.5% for the financial year 2020-21.
• Both employer and employee have to contribute a minimum 12% of Basic Pay + D.A.
• Entire PF balance (including interest) is tax-free, if withdrawn after continuous service of 5 years

Investments in PPF (Public Provident Fund)

PPF are long term investments backed by government of India. Deposits made in a PPF account are eligible for tax deductions under Section 80C.

• Can be opened by Resident Indian individuals, salaried and non-salaried individuals. A HUF cannot open a PPF account.
• PPF account have lock-in period of 15 years, but can be further extended by 5 years. Partial withdrawals are allowed after 7 years.
• Current interest rate is 8.0% p.a.
• Minimum and maximum investment limit is Rs 500 and Rs 1.5 lakh respectively.
• Interest earned is tax-free.

Principal Repayment of Home Loan

The repayment of the principal of a loan taken to buy or construct a residential property is eligible for tax deductions under Section 80C. This deduction is also applicable on stamp duty, registration fees and transfer expenses.

Investments in Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana/Scheme is one of the most popular schemes by the Government of India. The scheme is aimed at the betterment of girl child in the country.

• Parents/guardians can open an account in the name of a girl child till she attains the age of 10 years
• Up to 50% of the deposit amount can be prematurely withdrawn once the girl reaches the age of 18 years.
• Interest rate on Sukanya Samriddhi Yojana is 8.5%
• Investment is limited to maximum Rs.1,50,000 in a financial year
• Investment and withdrawals & maturity amount are tax-free

Payments in LIC – Life Insurance Premium

The annual premium paid for life insurance in the name of the taxpayer or the taxpayer’s wife and children is an eligible tax-saving payment under Section 80C. The deduction is valid only if the premium is less than 10% of the sum assured

Payments in Children’s tuition fees

The tuition fee paid for the education of two children is eligible for tax deduction under Section 80C of up to Rs 1.5 lakh. The fee can be paid to any school, college, university or educational institute situated in India. The fees have to be for a full-time course only.