Tax-saving investment options under Section 80C in 2017
You could very well save the most amount of tax in 2017. How so? There are many new types of tax benefits. With these, saving tax could become a reality. You can use investments, insurance, and reimbursements to reduce tax. You have to be smart about your financial dealings, though. You also need to know about the various sections of the Income Tax Act. There are many ways in which you can use Section 80C to get the highest tax benefits. Take a look.
What is Section 80C?
You may have heard the term ‘Section 80C’. But you are not sure about its benefits. The first step is to understand this section. Under this section, you qualify for a maximum tax deduction of Rs 1.5 lakh. This means a maximum of Rs 1.5 lakh can be deducted from your taxable income. Then you could fall into a lower tax bracket. This would give you a lower tax liability. But how can you do that? The answer is quite simple – just invest wisely.
Investments under Section 80C
Have a look at some investments that qualify for tax deductions under Section 80C:
- National Savings Certificate: You might know them better as NSCs. These are very good investment options. You can buy them from post offices. And you can invest a maximum of Rs 1.5 lakh in them. Even better, they are low-risk investments. They give full tax deductions under Section 80C.
- Public Provident Fund: This is better known as PPF. It is another investment option providing tax benefits under Section 80C. Your maximum yearly deposit may be Rs 1.5 lakh. Your minimum deposit is only Rs 500. You can claim tax benefits on the amount deposited. You then earn interest on your PPF. You also get a maturity benefit. Both payouts are fully tax-free.
- Sukanya Samriddhi Yojna: This is an investment option that benefits the girl child. You can deposit money in the account of your daughter and claim a tax benefit of up to Rs 1.5 lakh. The fund matures after 21 years and the dividends you earn are also completely tax-free. This is a good tax saving scheme that helps the parents to save tax and helps the girl child with a fund to pursue her dreams.
- Fixed deposit: You can get useful tax benefits from fixed deposits (FDs). You need to hold on to these FDs for five or more years. But you need to be careful when investing in an FD. Not all FDs offer tax benefits. Only some tax-saving FDs offer the benefits under Section 80C.
Expenses under Section 80C
Here are the expenses qualifying for tax deductions under Section 80C:
- Insurance: Are you paying premiums for your life insurance plan, health insurance plan, and ULIP? All these qualify for tax deductions under Section 80C.
- Tuition fees: Are you paying the tuition fees of your children? Then you can submit the receipts and get a tax deduction. All full-time education fees are eligible for tax deductions under Section 80C. These can start from the pre-primary level and go up to the university level.
In 2017, you need to invest carefully. Only then will you benefit from tax-saving investment options under Section 80C. Keep in mind that Rs 1.5 lakh is a large amount. If you have invested this much, use it to the fullest. Speak to your employer. Find out about other available deductions. Speak to a financial expert to clear your doubts. It is important to understand the various investment options you can explore. Then maximise your investments and expenses to save tax.