10 Best Investment for 80c
Navigating the labyrinth of tax-saving investments can be daunting, yet it’s a crucial endeavor for every taxpayer aiming to optimize their financial portfolio. Section 80C of the Income Tax Act, 1961, offers a plethora of investment avenues that not only help in reducing taxable income but also foster disciplined savings and wealth accumulation. With a maximum deduction limit of ₹1.5 lakh per financial year, selecting the right investment instruments becomes paramount. This comprehensive guide delves deep into the top 10 investment options under Section 80C, unraveling their features, benefits, and nuances to empower you with informed decision-making.
10 Best Investment for 80c
| Investment Option | Lock-in Period | Expected Returns | Risk Profile | Additional Tax Benefits |
|---|---|---|---|---|
| Equity Linked Savings Scheme (ELSS) | 3 years | 12-15% (market-linked) | High | None |
| Public Provident Fund (PPF) | 15 years | 7-8% (government-backed) | Low | Tax-free interest |
| National Pension System (NPS) | Till retirement | 9-12% (market-linked) | Moderate | Additional ₹50,000 under Section 80CCD(1B) |
| Employee Provident Fund (EPF) | Till retirement | 8-9% (government-backed) | Low | Tax-free interest |
| Tax-saving Fixed Deposits (FDs) | 5 years | 5-7% (fixed) | Low | None |
| Sukanya Samriddhi Yojana (SSY) | 21 years | 7-8% (government-backed) | Low | Tax-free interest |
| Unit Linked Insurance Plan (ULIP) | 5 years | Varies (market-linked) | Moderate | None |
| National Savings Certificate (NSC) | 5 years | 6-8% (fixed) | Low | Interest reinvested qualifies for 80C |
| Senior Citizens Savings Scheme (SCSS) | 5 years | 7-8% (government-backed) | Low | Tax-free interest |
| Tuition Fees | N/A | N/A | N/A | Up to ₹1.5 lakh for two children |
Best Investment for 80c
1. Equity Linked Savings Scheme (ELSS)
Key Features
Lock-in Period: 3 years, the shortest among Section 80C options.
Returns: Market-linked, historically ranging between 12-15%.
Risk: High, due to equity exposure.
Tax Treatment: Investments up to ₹1.5 lakh are deductible under Section 80C. Long-term capital gains (LTCG) over ₹1 lakh are taxed at 10%.
Why Consider ELSS?
For investors with a higher risk appetite aiming for substantial returns and a relatively short lock-in period, ELSS stands out as an attractive option.
2. Public Provident Fund (PPF)
PPF is a government-backed, long-term savings scheme offering assured returns and tax benefits.
Key Features
Lock-in Period: 15 years, with partial withdrawals allowed after 7 years.
Returns: Currently around 7.1%, reviewed quarterly by the government.
Risk: Low, as it’s government-backed.
Tax Treatment: Exempt-Exempt-Exempt (EEE) status; contributions, interest earned, and maturity amount are tax-free.
Why Consider PPF?
Ideal for risk-averse investors seeking a safe avenue for long-term wealth accumulation with tax-free returns.
3. National Pension System (NPS)
NPS is a government-sponsored retirement savings scheme encouraging systematic savings for retirement.
Key Features
Lock-in Period: Till the age of 60 (retirement), with partial withdrawals permitted under specific conditions.
Returns: Market-linked, depending on asset allocation; historical returns range between 9-12%.
Risk: Moderate, varies with equity exposure.
Tax Treatment: Investments up to ₹1.5 lakh deductible under Section 80C. Additional deduction of ₹50,000 under Section 80CCD(1B).
Why Consider NPS?
Suitable for individuals planning for retirement with a balanced approach to risk and return, along with additional tax benefits.
4. Employee Provident Fund (EPF)
EPF is a mandatory retirement savings scheme for salaried employees, facilitating systematic retirement corpus building.
Key Features
Lock-in Period: Till retirement, with partial withdrawals allowed under specific circumstances.
Returns: Currently around 8.5%, determined annually by the EPFO.
Risk: Low, backed by the government.
Tax Treatment: Contributions up to ₹1.5 lakh are deductible under Section 80C. Interest and maturity amount are tax-free, subject to conditions.
Why Consider EPF?
An excellent tool for salaried individuals to build a substantial retirement corpus with assured returns and tax benefits.
5. Sukanya Samriddhi Yojana (SSY)
One of the most rewarding and socially responsible investments under Section 80C is the Sukanya Samriddhi Yojana (SSY) — a government-backed scheme that supports the future of the girl child.
💡 Key Features
Eligibility: Only for parents/guardians of a girl child under the age of 10.
Lock-in Period: Until the girl child turns 21, or upon marriage after age 18.
Interest Rate: Currently around 8% (compounded annually), reviewed quarterly.
Minimum Deposit: ₹250 annually.
Maximum Deposit: ₹1.5 lakh annually.
Tax Treatment: EEE (Exempt at investment, interest, and withdrawal).
📘 Story Snapshot
Imagine planning your daughter’s education from the day she’s born. With SSY, you’re not only ensuring her financial security but also reaping tax benefits every year. Plus, the high interest rate, combined with compounding, means you’ll build a sizable corpus by the time she’s ready for college or marriage.
6. Unit Linked Insurance Plans (ULIPs)
ULIPs blend investment with insurance, making it an attractive 80C option for individuals looking to build wealth with a protection plan.
💡 Key Features
Lock-in Period: 5 years.
Risk: Market-linked; depends on equity/debt allocation.
Returns: Vary (average range: 6%–12%).
Tax Treatment: Premiums up to ₹1.5 lakh eligible under Section 80C. Tax-free maturity under Section 10(10D) if annual premiums < ₹2.5 lakh (as per latest updates).
📘 Story Snapshot
Think of ULIP as your financial Swiss knife. Not only do you get a life cover, but your premiums are also strategically invested in funds of your choice. You can even switch between equity and debt to optimize performance — a luxury not offered by many other instruments.
7. National Savings Certificate (NSC)
A traditional yet reliable choice, NSC is ideal for conservative investors seeking assured returns and tax deductions.
💡 Key Features
Lock-in Period: 5 years.
Interest Rate: ~7% (compounded annually but payable at maturity).
Tax Treatment: Up to ₹1.5 lakh eligible under Section 80C.
Bonus: Interest earned every year is also eligible for 80C (if reinvested).
📘 Story Snapshot
Your grandparents probably swore by NSC — and for good reason! It’s secure, requires no extensive paperwork, and is perfect for someone seeking certainty over speculation. The reinvestment of interest makes your ₹1.5 lakh work even harder.
8. Senior Citizens’ Savings Scheme (SCSS)
Designed specifically for individuals aged 60+, SCSS offers unmatched returns and stability.
💡 Key Features
Eligibility: Indian residents aged 60 and above (or 55+ if retired under VRS).
Lock-in Period: 5 years (extendable by 3 years).
Interest Rate: ~8.2% (revised quarterly).
Maximum Investment: ₹30 lakh per individual.
Tax Treatment: Eligible for Section 80C deduction up to ₹1.5 lakh.
📘 Story Snapshot
Retired individuals often worry about regular income. SCSS is like a pension supplement — with quarterly interest payouts — ensuring financial comfort without compromising capital safety.
9. Children’s Tuition Fees
Yes, even your child’s education expenses can help you save tax under Section 80C — but with a few conditions.
💡 Key Features
Who Can Claim: Only parents (biological/adoptive/legal guardians).
Eligible Expenses: Full-time education tuition fees for up to 2 children.
Max Deduction: Up to ₹1.5 lakh (included in the 80C limit).
📘 Story Snapshot
Ravi, a salaried individual with two kids in school, realized he was paying nearly ₹1 lakh in tuition fees annually. By including it under Section 80C, he didn’t just educate his kids — he also lowered his taxable income significantly. Win-win!
10. Life Insurance Premiums
Whether you’re buying term insurance or an endowment policy, your premium payments qualify for Section 80C benefits.
💡 Key Features
Coverage: Life insurance only.
Eligibility: Policies for self, spouse, or children.
Tax Limit: Up to ₹1.5 lakh under Section 80C.
Lock-in: Minimum 2 years (endowment plans).
Story Snapshot
If peace of mind had a tax benefit, life insurance would be it. A term plan ensures your family is secure in your absence, and the premium gives you a tax deduction — ensuring that protection doesn’t pinch your wallet.
11. Pension Plans from Life Insurance Companies
Pension plans from insurers like LIC or HDFC Life are long-term wealth creators with retirement as their core focus.
💡 Key Features
Lock-in Period: Varies (usually 5-10 years).
Return Type: Annuity-based or lump sum at maturity.
Tax Deduction: Premiums qualify under Section 80C.
📘 Story Snapshot
Think of it as your retirement partner. These plans allow you to contribute regularly and reap benefits during your golden years. Not only does it ease your future lifestyle, but you also reduce your current tax burden.
FAQs
1. What is the maximum deduction allowed under Section 80C?
→ ₹1.5 lakh per financial year.
2. Can I claim both ELSS and PPF under Section 80C?
→ Yes, as long as the combined investment doesn’t exceed ₹1.5 lakh.
3. Is NPS covered under 80C?
→ Yes, and you also get an extra ₹50,000 deduction under Section 80CCD(1B).
4. Are ELSS funds risky?
→ Yes, they are equity-based and carry market risk but offer higher returns.
5. What happens if I withdraw from PPF before 15 years?
→ Premature withdrawal is allowed under specific conditions after 7 years, but partial only.
6. Is the interest on tax-saving FDs taxable?
→ Yes, interest earned is fully taxable.
7. Can I invest in NSC online?
→ Yes, through authorized bank and post office portals.
8. Can I open an SSY account for my niece?
→ No, only parents or legal guardians can open the account.
9. Are ULIPs better than ELSS?
→ ULIPs offer insurance + investment but have higher charges. ELSS is pure investment with potentially higher returns.
10. What documents are needed for 80C claims?
→ Investment receipts, policy documents, PPF passbooks, school fee receipts, etc.
Conclusion:
Section 80C offers a buffet of tax-saving instruments catering to diverse financial goals, risk appetites, and life stages. Whether you’re a young professional venturing into ELSS, a parent opting for SSY, or a retiree relying on SCSS, there’s an 80C product tailor-made for you.
Our recommendation?
Start with life insurance and term plans — these are your protection backbone.
Add PPF or EPF if you prefer security and long-term compounding.
Consider ELSS for wealth growth if you’re comfortable with some risk.
Use SSY or Tuition Fees if you’re planning for your child’s future.