One of the most well-liked tax-saving provisions for Indian individuals and Hindu Undivided Families (HUFs) is Section 80C. If you invest or spend in certain ways, you can deduct up to ₹1.5 lakh annually from your taxable income.
Popular Tax Saving Options Under Section 80C
Public Provident Fund (PPF)
• Lock-in: 15 years
• Returns: Government-backed, tax-free, and fixed
• Extremely low risk
• Ideal for: Safe, long-term retirement funds
Equity-Linked Savings Plan (ELSS)
• Three years is the shortest lock-in period of any 80C option.
• Returns: Linked to the market, with the potential for large returns
• Medium to high risk
• Ideal for: Using mutual funds to create wealth and save taxes
Employee Provident Fund (EPF)
• Lock-in: Until retirement or a job change
• Returns: fixed plus compounding, as determined by the government
• Minimal Risk
• Ideal for: Salaried workers who receive a portion of their pay from their employers
Life Insurance Premiums
• Lock-in: Varies by policy
• Returns vary depending on the type of policy (ULIP, endowment, or term).
• Low to medium risk
• Ideal for: Tax savings and family protection
National Savings Certificate (NSC)
• Lock-in: 5 years
• Returns: Fixed (quarterly updated)
• Extremely low risk
• Ideal for: Secure fixed-income investments
Tax-Saving Fixed Deposit (5-Year FD)
• Five-year lock-in
• Fixed returns (taxable interest)
• Minimal Risk
• Ideal for: Investors who are conservative
Sukanya Samriddhi Yojana (SSY)
• Lock-in: Until girl turns 21 or gets married after 18
• High, fixed, and government-backed returns
• Extremely low risk
• Ideal for: Parents of girls
Senior Citizens Savings Scheme (SCSS)
• Five-year lock-in (with a three-year extension)
• High, fixed returns (quarterly payouts)
• Minimal Risk
• Ideal for: People over 60 who are retired
Principal Repayment of Home Loan
• Lock-in: Dependent on loan term
• Returns: Not possible
• Hazard: N/A
• Ideal for: Homeowners making loan repayments
Children’s Tuition Fees
• A maximum of two children are eligible.
• pertains to: Full-time education in India, ranging from kindergarten to college
• Returns: None
• Hazard: N/A
• Ideal for: Parents whose children are attending school or college
Important Note:
Under 80C, the maximum deduction is ₹1.5 lakh per financial year (not per instrument).
To get to the limit, you can combine several investments.
Some of these, such as PPF and SSY, are also eligible under the EEE model (Exempt-Exempt-Exempt), which means that your investment, returns, and withdrawals are all tax-free.