Five ways to save tax

Section 80C of income tax gives a person the benefit of exemption of up to ₹ 1.5 lakh from taxable income. This is the most popular option. Under this, there are several ways by which tax exemption can be taken. 

(1) PPF Investment 

Investing in PPF is not only safe, but also provides full benefits of tax exemption. Currently, PPF is getting 7.1 % interest. which is compounded annually. Deductions up to ₹ 1.5 lakh can be taken on the amount invested in this scheme. Tax exemption is available on both the interest earned in PPF and the maturity amount.

(2) Investment in ELSS 

Investments are made in the equity market through ELSS. There is a lock in period of three years. ELSS is a tax saving investment instrument. Investors get big benefit in the form of tax savings with higher returns of ELSS. Tax exemption can be availed by investing in it for a long time.  

(3) Insurance plans

The premium paid for the insurance plan under 80C comes under the purview of tax exemption. You can choose a traditional or unit linked plan i.e. ULIP. The premium given for this gets tax rebate.  

(4) Tax Saving FD 

There is a tax benefit on FD's maturity. Under Section 80C of the Income Tax Act, tax exemption can be taken on fixed deposit investments up to ₹ 1.5 lakh. A five-year FD of any bank is called a tax-saving FD. All banks offer tax saving FD. Senior citizens also get higher interest than others on tax saving FD. 

(5) Sukanya Samriddhi Yojana

One can invest in Sukanya Samriddhi Scheme for a maximum period of 15 years. In this, tax deduction of up to ₹ 1.5 lakh can be claimed under Section 80C on the amount to be paid. Apart from this, the interest on the deposit and the money received on completion of the maturity period is also tax free. 

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