Investment options under Sec 80C
The most popular tax-saving options available to individuals in India are under Section 80C of the Income Tax Act. Section 80C includes various investments and expenses one can claim deductions on – up to the limit of Rs. 1.5 lakhs in a financial year.

Section 80D: Payment of medical insurance premium

The amount paid as medical insurance premium (mediclaim) is eligible for deduction under this section. The policy can be taken in own or spouse’s name, dependent parents or/and children.

Section 80DD: Expenditure on the health of disabled person

This deduction is available to a taxpayer for the expenditure incurred by him/her on the expenditure of caring for disabled persons – dependant parents/spouse/children/brother or sister.
The maximum deduction amount that can be claimed under this section is Rs 75,000 per annum.
Section 80DDB: Expenditure on a specified disease

This deduction is available on the expenditure incurred by a taxpayer on the treatment of specified diseases for self or spouse, and dependent parents, children, brother and sister.

The deduction will be equal to the amount actually spent or Rs 40,000, whichever is less.

Section 80E: Payment of interest on education loan

If one has taken an education loan from any financial institution for self, spouse, children then he/she can claim this deduction for the interest paid on the loan amount.

Section 80EE: Payment of interest on home loan

This deduction is available to an individual for the amount paid as interest on loan taken for the purchase of a residential property. The maximum deduction that can be claimed under this section is Rs 50,000 per annum.

Section 80G: Donations made to certain funds, temples

If a person has donated to a fund notified by the central government under this section, then he/she would be eligible for deduction of the amount donated, but it should not exceed 10 per cent of the adjusted gross total income. This deduction is also available for donations given for renovation of temples, mosques, and churches, which are approved by the central government.

Section 80GG: Rent paid for accommodation

A declaration in Form 10BA has to be submitted to avail this deduction.

Section 80GGC: Donations to political party

There is no ceiling on the deduction amount that can be claimed under this section. The only condition is that the payment should be made by any mode other than cash.

Section 80QQB: Royalty income to author

The maximum deduction that can be claimed when royalty is received in lump sum is Rs 3 lakh.

Section 80RRB: Royalty income from patents

For any patent registered after April 1, 2003 and associated royalty income for it, one can claim deduction under this section for the amount received as royalty. The maximum deduction that can be claimed under this section is Rs 3 lakh.

Section 80TTA: Interest on savings account

Interest earned on savings bank account or/and post office savings account is allowed as deduction. The maximum amount that can be claimed as deduction under this section is Rs 10,000.

Section 80TTB: Interest on deposits with banks, post office

Interest earned on deposits made with banks and post offices or cooperative societies, (whether on savings account or term deposits or any other post office deposits or RD account deposits) will be allowed as deduction in the hands of a senior citizen. Further, the maximum amount of deduction available under this section is Rs 50000 in a financial year

Tax saving options Section 80C

1. Equity-linked savings schemes (ELSS)

Equity-linked savings schemes (ELSS) are diversified equity mutual funds – they qualify for tax benefit under Section 80C of the Income Tax Act, 1961, up to a limit of Rs 1.5 lakh a year and the amount invested has a lock-in period of 3 years. Every mutual fund (MF) house offers them and generally uses the word tax-saving in its name to distinguish them from their other mutual fund schemes.

From April 1, 2018 any LTCG made on transfer of equity MFs that have an equity exposure of 65 per cent or more including Equity-linked savings schemes (ELSS) will have to pay a 10 per cent tax on long-term gains. Gains made above Rs 1 lakh per annum will only be subject to tax and any gains made below that limit in one FY remains tax-exempt. The LTCG made till January 31, 2018, however, remains tax-exempt. Major fund houses offering ELSS funds are:
• HDFC MF
• IDBI MF
• Birla Sun Life MF
• ICICI Prudential MF
• SBI MF

2. National Pension Scheme
NPS can help save tax in the following ways:
• Contributions of up to Rs 1.5 lakh can be claimed as deduction under the overall Section 80C.
• There is an additional deduction of up to Rs 50,000 under Section 80CCD(1b).
• If the employer puts up to 10% of the basic salary of the individual in the NPS, that amount will not be taxable.
• The entire 60% of the corpus that can be withdrawn at the time of retirement will be tax free. Till now, only 40% of this withdrawn amount was tax free, while the remaining 20% was taxed.
Experts say investors can expect better returns from NPS than pure debt products such as PPF or bank deposits. While the higher exposure to equities can help, even those with a balanced portfolio or a small exposure to equities can expect good returns. All investors in NPS have earned double-digit returns in the past five years.

3. Public Provident Fund

Advisers say that PPF remains a good tax saving option because the interest is tax free, giving the small savings scheme a distinct advantage over fixed deposits.

The PPF scores high on safety, flexibility and ease of investment. An account can be opened in a post office branch or designated branches of PSU banks. One can opt for a bank that allows online access to the PPF account. The current Interest rate is 8% for Jan-Mar 2019 .

4. Senior Citizens’ Saving Scheme

The Senior Citizens’ Savings Scheme (SCSS) was already the best tax-saving option for those above 60, but last year’s Budget made it more attractive by offering senior citizens an additional Rs 50,000 exemption on interest income. This means that the overall tax exemption for senior citizens above 60 is now Rs 3.5 lakh and for very senior citizens above 80 is Rs 5.5 lakh.

The interest rate 8.7% offered by the SCSS is the highest among all small savings schemes. Only IDFC Bank is offering a higher rate of 8.75% to senior citizens on its five-year tax-saving fixed deposits. The tenure of SCSS investment is five years, which is extendable by another three years. However, there is a Rs 15 lakh overall investment limit per individual.

5. Sukanya Samriddhi Yojana
For taxpayers with a daughter below 10 years, the Sukanya Samriddhi Yojana is a good way to save. The interest rate is linked to the government bond yield and is subject to change every quarter. The Interest rate stands at 8.5% in March.
The interest earned is tax free and there is an annual cap of Rs 1.5 lakh on the investment.

6. ULIPs

Ulips came into focus again last year after the Budget introduced tax on long-term capital gains from stocks and equity funds. Income from Ulips is completely tax free under Sec 10(10d). Ulips not only offer equity funds but also debt and liquid fund options to investors. Switching from equity to debt or vice versa does not have any tax implications, either.
Return were at 8-14% for past five years.

7. NSCs
At Interest rate of 8% in March 2019 , it is a good option for those who just want to invest in a hurry and forget. The interest earned on the NSC is also eligible for deduction under Section 80C in the following years.

8. Bank FDs

Tax saving fixed deposits are available from scheduled banks. These fixed deposit schemes are available with a tenure of 5 years. Investors can claim a maximum of Rs.1.5 lakhs as tax benefits through tax saving fixed deposits as per Section 80C of the Income Tax Act. Currently Interest rate is at 7.5-8.25%. Top banks offering tax saver FDs in India are:
• ICICI Bank
• HDFC Bank
• Axis Bank
• IDBI Bank
• SBI

9. Insurance

Life insurance is critical because it helps protect the goals of the individual even if he is not around. One can claim deduction under Section 80C from taxable income on account of premium paid towards life insurance for self, spouse or children. Deduction will be allowed up to a maximum of 1.5 lakhs. The returns earned from Life Insurance policies are tax-free subject to conditions of Section 10(10D) of the Income Tax Act (1961).

Income Tax Slabs

Income Tax Rate AY 2019-20 | FY 2018-19 – Individuals less than 60 years
Taxable income Tax Rate
Up to Rs 2,50,000* Nil
Rs 2,50,000 – Rs 3,00,000 5%
Rs 3,00,000 – 5,00,000 5%
Rs 5,00,000 – Rs 10,00,000 20%
Above Rs 10,00,000 30%

Income Tax Rate AY 2019-20 | FY 2018-19 – Individuals between 60 years and 80 years
Taxable income Tax Rate
Up to Rs. 3,00,000 Nil
Rs. 3,00,000 to Rs. 5,00,000 5%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

Income Tax Rate AY 2019-20 | FY 2018-19 – Individuals 80 years and more
Taxable income Tax Rate
Up to Rs. 5,00,000 Nil
Rs. 3,00,000 to Rs. 5,00,000 5%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

*The above rates are exclusive of surcharge and cess.
A resident individual, whose taxable income does not exceed Rs. 3, 50,000, can claim a tax rebate under section 87A. The amount of rebate shall be lower of 100% of income-tax or Rs. 2,500.
*The health &education cess at the rate of 4% shall be computed on aggregate of Income-Tax and Surcharge.

Debalina Roy Chowdhury
Dilzer Consultants

Sources

https://www.bankbazaar.com/tax/tax-saving-schemes.html
https://economictimes.indiatimes.com/wealth/tax/how-to-save-income-tax-here-are-6-investments-with-tax-free-income/articleshow/62567377.cms?from=mdr
https://cleartax.in/s/income-tax-slabs
https://economictimes.indiatimes.com/wealth/tax/look-beyond-section-80c-have-you-missed-out-on-any-of-these-tax-breaks/articleshow/53226279.cms?from=mdr