Best Tax Saving Investments Under Section 80C, 80CCD, and 80D

Every taxpayer tries to look for ways to reduce his/her tax liability. Several tax-saving investment instruments can help a person save money on tax.

In this article, we will explain different tax-saving investments under Section 80C, 80CCD, and 80D.

In order to lower the tax liability, a person can invest in various investment options. These investments can provide tax exemptions and deductions. Therefore, reducing the taxable income and the tax amount.

It is wise for every person to look for tax saving investment options. These instruments can allow the taxpayer to save more on tax.

Tax-saving Investment Instruments Under Section 80C

There is a wide variety of investment options that a person can choose to claim a tax deduction under Section 80C, such as life insurance, infrastructure bond, National Savings Certificate (NSC), National Pension Scheme (NPS), Unit linked insurance plan (ULIP), etc.

Let’s take a look at a few popular options-

National Savings Certificate

Investment of up to Rs. 1.5 Lakh in NSC is eligible for a tax deduction. Interest accrued every year is reinvested on behalf of the investor. This interest is also eligible for a tax deduction. However, the limit is Rs. 1.5 Lakh.

ULIP

Unit linked insurance plans are unique policies that provide the benefit of investment as well as life cover. People who invest in a ULIP can claim a deduction of up to Rs. 1.5 Lakh under Section 80C.

By investing in instruments under Section 80C, a person can reduce the tax amount. However, the tax deduction limit is up to Rs. 1.5 Lakh. Furthermore, every taxpayer must keep in mind their investment goals before investing in instruments under this section.

Tax-saving Investment Instrument Under Section 80CCD

Section 80CCD is a subsection under Section 80C. The investment made towards NPS is eligible for tax deduction under this section.

Section 80CCD (1)

Tax deduction under Section 80CCD (1) is allowed for individuals who make an investment into their pension account. For salaried individuals, the maximum deduction allowed is 10% of salary. Maximum deduction allowed for self-employed individuals is 20% of gross total income.

Section 80CCD (1B)

A taxpayer can claim an additional tax deduction of up to Rs. 50,000 under Section 80CCD (1B).

Section 80CCD (2)

An additional tax deduction is allowed for the employer’s contribution to the NPS account of the employee. A deduction of up to 10% of the salary is allowed.

Tax-saving Investment Instrument Under Section 80D

Under Section 80D, the premium paid to purchase a medical insurance policy can be eligible for a tax deduction. The tax deduction allowed to a taxpayer is Rs. 25,000. While there are many tax-saving options under Section 80C, deductions under Section 80D can be availed for a few investments.

Finding investment instruments that offer tax deductions can help in lowering the tax amount. Therefore, it is recommended that every person should consider investing in different options.

Keep the aforementioned points in mind to lower your tax amount.