Among a slew of instruments available under section 80C of The Income-tax Act, 1961, equity-linked savings schemes (ELSS) returned the most in the last five years, although it has the lowest lock-in period of just three years.
Section 80 C is the most commonly used section for saving taxes. Other than ELSS, it includes premium paid towards a life insurance policy, Public Provident Fund (PPF), National Savings Certificate (NSC), five-year notified tax-saving bank deposits, five-year post office time deposits, Senior Citizens' Savings Scheme (SCSS), Sukanya Samriddhi Account, and Employees' Provident Fund (EPF) etc under its ambit.
Under expenses and outflows, the 80C section also includes principal component of a housing loan repayment, expenses on children’s tuition fee and so on.
The maximum tax that can be saved under section 80C is Rs 7,725, Rs 30,900 and Rs 46,350 for 5.15 per cent, 20.6 per cent and 30.9 per cent tax brackets, respectively.
Looking into the data of the last five years, ELSS returned over 19 percent, while investment under PPF, NSC, Bank FD, and Employee Provident Fund grew just in the range of 8.4 to 8.7 per cent during the same period.
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