Everyone wants to increase their savings and build a stable financial future that can support them in the future when they don’t have a steady source of income. Savings are, quite rightly, essential to any financial plan’s success. Paying income taxes on your entire taxable income, however, may lower your savings and leave you with less savings for future planning.

What if you could lower your taxable income and still build more money to protect your future? You may not know about the important tax savings options available under Section 80C to reduce your taxable income up to Rs 1,50,000/- under the old tax regime. Let us understand such options:

(1) Life Insurance policy

A premium is paid for a life insurance policy for an individual, spouse and children. any premium or other payment made on an insurance policy. To the extent that the premium paid in a financial year is not in excess of ten percent of the actual capital sum assured, except in a case where the premium is paid for a person with a disability or a person with a severe disability or suffering from a specified disease or ailment, the premium paid in a financial year should not exceed 15% of the annual sum assured.

(2) Deferred Annuity Plan

• Premium paid to effect a contract for a deferred annuity for individuals, spousesand children., other than the contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, where such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity.
• Payment to effect or to keep in force a contract for such an annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, specify.

(3) Contribution to Provident Fund

• Contribution by an individual to any provident fund to which the Provident Funds Act, 1925 (19 of 1925)
• contribution to the government provident fund and the public Provident Fund
• contribution to a recognised provident fund.

(4) Contribution to an approved superannuation fund

Contribution by an employee to an approved superannuation fund.

(5) Contribution to Sukanya Samridhhi Account

A subscription is made by an individual or any girl child of the individual or any girl child for whom such person is a legal guardian.

(6) Investment in the Saving Certificates

subscription to any such savings certificate as defined in clause (c) of Section 2 of the Government Savings Certificates Act, 1959 (46 of 1959), as the Central Government may, by notification in the Official Gazette, specify on this behalf.

(7) Contribution in ULIP

• Contribution in the name of Individual, spouse and child of the individual in the Unit-linked Insurance Plan, 1971, specified in Schedule II of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002
• contribution in the name of Individual, spouse and child of the individual for participation in any such unit-linked insurance plan of the LIC Mutual Fund

(8) Subscription in the Units of Mutual Fund

• subscription to any units of any Mutual Fund registered under Securities and Exchange Board of India Act
• subscription to any units of any Mutual Fund set up by a Public Sector Bank or Public fund approved by the RBI

(9) Contribution to the Pension Fund

• contribution by an individual to any pension fund set up by any Mutual Fund registered under Securities and Exchange Board of India Act
• contribution by an individual to any pension fund set up by a Public Sector Bank or Public fund approved by the RBI
• contribution to any such pension fund set up by, the National Housing Bank

(10) Subscription to specified Deposit Schemes

• Subscription to deposit scheme of the National Housing Bank
• Subscription to deposit scheme of a public sector company that is engaged in providing long-term finance for construction or purchase of houses in India for residential purposes.
• Subscription to deposit scheme of any authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, developing or improving cities, towns, and villages, or for both,

(11) Payment of Tuition Fee

Payment of tuition fees (excluding any payment towards any development fees or donation or payment of similar nature), at the time of admission or thereafter to any university, college, school or other educational institution situated within India,for the purpose of full-time education of two children of the individual.

(12) Payment for purchase or construction of a residential house

For the purposes of purchase or construction of a residential house, where such payments are made towards or by way of and the deduction for which is not allowable while computing income from house property,

• any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or
• any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or

repayment of the amount borrowed by the assessee from—

(1) the Central Government or any State Government, or

(2) any bank, including a co-operative bank, or

(3) the Life Insurance Corporation, or

(4) the National Housing Bank, or

(5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction u/s 36(1)(viii)

(6) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses,

(7) the assessee's employer, where such employer is an authority, a board, a corporation or any other body established or constituted under a Central or State Act, or

(8) the assessee's employer, where such employer is a public company, a public sector company, a university established by law, a college affiliated to such university, a local authority or a co-operative society;

Other than the payment towards or by way of—

• the admission fee, cost of share and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming such shareholder or member; or
• the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on his behalf or been let out; or
• any expenditure in respect of which deduction is allowable under Section 24.

(13) Stamp Duty and Registration fee

For the purposes of purchase or construction of a residential house, where such payments are made towards stamp duty, registration fees and other expenses for the purpose of transfer of such residential house property

(14) Subscription to Bonds of NABARD

Subscription to the bonds issued by the National Bank for Agriculture and Rural Development, notified by the Central Government.

(15) Deposit in Senior Citizens Savings Scheme

Deposit made in an account under the Senior Citizens Savings Scheme Rules, 2004.

(16) Investment in the Fixed Deposit

• Deposit made in five year time deposit in an account under the Post Office Time Deposit Rules, 1981
• Fixed deposit for a minimum period of 5 years with a scheduled bank under Bank Term Deposit Scheme .

(17) Deposit in NPS

Deposit as an employee of the Central Government as a contribution to an additional account of the National Pension Scheme for a fixed period of not less than three years.

Conclusion

Maximizing tax savings through Section 80C can significantly impact your financial well-being by reducing your taxable income by up to Rs. 1,50,000.

By taking advantage of these tax-saving opportunities, you not only secure your future but also optimize your current financial position. Remember, tax planning is a crucial aspect of financial planning, and making informed decisions today can lead to a more prosperous tomorrow.

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[Disclaimer- The article is only for educational purposes. The relevant provisions of the Income-tax Act and relevant rules may be referred to for complete understanding.]