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Tax Saving Investments under section 80c

Published on Thursday, February 05, 2015
Today I am going to share details about various tax saving investments.

Scheme Minimum lock-in period Rate of Return Tax on return Tax free investment under 80c
Public Provident fund 15 years
Withdrawals allowed after 6th years (Upto 50% of deposits at the end of 4th year)

Can take loan after 3 years. Interest on loan is 2% more than return on PPF
8.75% - Compounded annually Interest and sum received on maturity is tax free Rs. 1,50,000
NSC VIII 5 years 8.5%
Compounded half-yearly
Interest is taxable (No TDS is deducted) Rs. 1,50,000
NSC IX 10 years 8.8%
Compounded half-yearly
Interest is taxable (No TDS is deducted) Rs.1,50,000
Contribution to EPF Till retirement 8.5% Interest is taxable
ELSS 3 years
Interest is taxable Min. – Rs.5,000
Max – Rs.100,000
Fixed Deposit Minimum lock-in period – 5 years Varies around 8.5% Interest is taxable Rs. 1,50,000
Post office time deposits 5 years
In case of premature withdrawal – Interest paid will be 1% less than scheme rate
Varies around 8.5% Interest is taxable Rs. 1,50,000
Senior citizen saving scheme 5 years 9.2% Interest is taxable Rs. 1,50,000
Infrastructure bonds 5 years 9% Interest is taxable Min – Rs.30,000
Max – Rs. 100,000
ULIP 5 years
Return is taxable Rs.100,000
Life insurance 2 years NA NA

Senior citizen saving scheme scheme is giving highest return but it’s available to Indian citizens who have reached 60 years of age while individuals who
crossed 55 years and took voluntary retirement can take benefit of this scheme.

Infrastructure bonds provide extra tax saving under section 80CCF. You can deposit upto Rs 20,000 under this scheme.

Out of them ULIPs are least recommended. ULIP policy is a combination of insurance and an investment in marketable securities. There is huge fees in first
year which can be upto 35% of policy value.

Out of above investment schemes I have invested in PPF and Bank Fixed deposits.

Interest and principle paid in a Home loan is also tax free under section 80c

What is best for you

It actually depends upon your liquidity needs and return expectations.

If your under 30 and liquidity is not a problem. Then PPF is the best scheme for you.

Fixed deposits is a nice option, my banker IDBI bank doesn't charge any pre-mature withdrawal penalty. If you make a pre-mature withdrawal then interest rate will be 4% instead of 8.75% as 01-02-2015.

Although I have shared whatever I know, please comment with your insights so that I can make this article better.

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ramandeep singh

Ramandeep Singh, your guide to banking and insurance exams. With 14 years of experience and 5000+ selections, Ramandeep understands the path to success, having transitioned himself from Dena Bank and SBI. He's passionate about helping you achieve your banking and insurance dreams.

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