It’s not too late…

If you still haven’t invested to save taxes under Section 80C, you can do it now. You have time till this month end to invest and claim deduction under Section 80C of the Income Tax Act for FY 2019-20. The last date to make income tax saving investment for the financial year 2019-20 is July 31. In general, the last date for making these investments for any financial year is March 31 but this year became an exception due to the Covid19 pandemic.

Here is a list of investments that qualify for tax deduction under Section 80C.

Investments in Provident Funds such as EPF, PPF, etc., payment made towards life insurance premiums, Equity Linked Saving Schemes (ELSS or tax saving mutual funds), payment made towards the principal sum of a home loan, Sukanya Samriddhi Yojana, NSC, Senior Citizen Savings Scheme

-Tax Saving FDs offered by both banks and post offices

While there are many tax-saving options as seen above, i would suggest to opt for an Equity Linked Savings Scheme (ELSS) in case it is a suitable option, based on your age and income profile.

Why choose an ELSS over other Tax-saving options like Life Insurance, Government Small Savings Schemes, Tax Saving Fixed Deposits, etc.?

I can think of three reasons:

• As the name indicates, an ELSS invests in equities. Equities in general – when held for a few years – offer you a greater opportunity to create wealth, compared to options offering ‘fixed-returns’.
• Most Tax-saving options, require you to stay invested for periods of five years or more. On the other hand, the lock-in period for an ELSS is merely three years.
• As of today, an ELSS enjoys the same Capital Gains Tax treatment as enjoyed by other India-focused Equity Schemes. However, income earned from most other tax-saving instruments is taxed according to your income-tax slab.

ELSS is ideal for investors who:

• Understand that equity investments are ideal investments only for the long-term.
• Prefer simple investment solutions rather than complex ones.
• Welcome, rather than fear, stock market volatility.

The other options available under various sections are as under:

Payment made towards pension plans, as well as mutual funds under Section 80CCC

-Payment made towards certain Government-backed schemes such as National Pension System, Atal Pension Yojana, etc. under Section 80CCD(1)

Investments of up to Rs.50,000 in NPS is considered for exemption under Section 80CCD(1B)

-Employer’s contribution towards NPS under Section 80CCD(2)

Happy Savings!

R♥Vi