Best Tax Saving Investments Under 80c

“A penny saved is a penny earned.”

When it comes to building wealth, tax saving investments play a crucial role in your financial planning. They don’t just help you reduce your tax burden but also allow you to accumulate wealth over time. In India, the most popular way to save tax is by making investments eligible under Section 80C of the Income Tax Act, 1961.

But with the new tax regime now available, many individuals wonder if tax-saving investments still make sense. The answer? It depends — and we’ll explain why.

This comprehensive guide will walk you through:

• What Section 80C is and how it works
  
• The best tax saving investments under 80C
  
• A quick look at how things differ under the new tax regime
  
• Why you should plan with the help of tax planning services or a tax consultant
  

Let’s dive in.

Understanding Section 80C

When it comes to reducing your income tax liability, Section 80C is the most widely used provision under the Income Tax Act, 1961. It allows you to claim deductions of up to ₹1.5 lakh per financial year on specified investments and expenses, effectively reducing your taxable income.

For example, if your annual taxable income is ₹10 lakh and you invest ₹1.5 lakh in eligible tax saving investments, your taxable income comes down to ₹8.5 lakh — directly lowering the amount of tax you pay.

Why Section 80C Matters

Section 80C is more than just a way to save tax — it is designed to encourage individuals to build a habit of long-term savings and investments. It helps you create a corpus for future needs such as retirement, child’s education, or wealth creation while simultaneously lowering your tax outgo.

Key Highlights of Section 80C

• Deduction Limit: You can claim up to ₹1.5 lakh in a financial year (combined for all eligible instruments).
  
• Eligibility: Applicable to individual taxpayers and HUFs (Hindu Undivided Families).
  
• Wide Range of Options: Includes PPF, ELSS, EPF, NSC, ULIPs, Life Insurance Premiums, Sukanya Samriddhi Yojana, and more.
  
• Goal: Promote disciplined saving habits, financial security, and long-term investment planning.
  
• Flexibility: You can choose from low-risk guaranteed-return options or market-linked investments depending on your risk appetite.
  

In short, Section 80C acts as the cornerstone of tax planning in India. Whether you are a salaried professional, business owner, or self-employed individual, making the right choices under 80C can help you achieve both tax efficiency and financial growth.

Best Tax Saving Investments Under 80C

Here’s a detailed look at the top options available under Section 80C:

1. Public Provident Fund (PPF)

When it comes to safe and reliable tax saving investments, the Public Provident Fund (PPF) tops the list. It is a government-backed small savings scheme that combines guaranteed returns, tax benefits, and long-term wealth creation — making it a favorite among risk-averse investors.

Key Features of PPF:

• Type: Government-backed, completely risk-free
  
• Lock-in Period: 15 years (with the option to extend in blocks of 5 years)
  
• Investment Limit: Minimum ₹500 per year; Maximum ₹1.5 lakh per year
  
• Interest Rate (2025): Around 7.1% (compounded annually, reviewed quarterly by the government)
  

• Tax Treatment: EEE (Exempt-Exempt-Exempt) – The amount you invest qualifies for Section 80C deduction, the interest earned is tax-free, and the maturity proceeds are also completely tax-free
  

Why PPF Is Popular:

• Safe and Secure: Being backed by the Government of India, it carries negligible risk
  
• Wealth Creation: Encourages disciplined long-term saving due to the 15-year lock-in
  
• Flexible Contributions: You can invest lump sum or in installments (up to 12 times a year)
  

• Loan and Partial Withdrawal Facility: You can take a loan against PPF from the 3rd to the 6th financial year, and partial withdrawals are allowed from the 7th year onwards
  

Who Should Invest in PPF:

PPF is ideal for:

• Conservative investors who want guaranteed returns
  
• People looking to build a retirement corpus without taking market risk
  
• Individuals who want tax-free income at maturity
  

Overall, PPF is one of the most trusted, long-term, and tax-efficient investment options under Section 80C, making it a must-have in every balanced financial plan.

2. Equity Linked Savings Scheme (ELSS)

The Equity Linked Savings Scheme (ELSS) is one of the most popular tax saving investments under Section 80C, especially among young professionals and investors with a growth-oriented mindset. ELSS is a type of mutual fund that primarily invests in equities and equity-related instruments, offering the potential to generate inflation-beating returns over the long term.

Key Features of ELSS:

• Type: Market-linked mutual fund with equity exposure
  
• Lock-in Period: 3 years (the shortest lock-in among all 80C options)
  
• Investment Mode: Lump sum or SIP (Systematic Investment Plan)
  
• Returns: Market-linked, historically among the highest compared to other 80C options
  
• Tax Treatment:
  
  • Eligible for deduction under Section 80C (up to ₹1.5 lakh)
    
  • Long-Term Capital Gains (LTCG) over ₹1 lakh taxed at 10% (without indexation)
    

Benefits of Investing in ELSS:

• Shortest Lock-in: Only 3 years, which offers liquidity compared to other tax-saving investments like PPF (15 years) or NSC (5 years)
  
• Wealth Creation: Higher potential for long-term growth since it is equity-oriented
  
• Flexibility: No upper limit for investment (you can invest more than ₹1.5 lakh, though tax benefit is capped)
  
• Convenience: SIP option allows you to invest monthly and average out market volatility
  

Things to Keep in Mind:

• Returns are not guaranteed since ELSS is market-linked
  
• Recommended investment horizon is 5+ years for better returns and to ride out market fluctuations
  
• Choose funds based on past performance, fund manager expertise, and expense ratio
  

Who Should Invest in ELSS:

ELSS is best suited for:

• Young investors or first-time taxpayers looking for wealth creation + tax saving
  
• Individuals with moderate-to-high risk appetite
  
• Those seeking a balance between tax efficiency, liquidity, and growth potential
  

Overall, ELSS is a great way to combine tax planning and long-term wealth creation. If you are comfortable with market fluctuations, ELSS can be one of the most rewarding instruments under Section 80C.

3. National Savings Certificate (NSC)

The National Savings Certificate (NSC) is a popular government-backed, fixed-income investment option designed to encourage small savings while providing assured returns. Since it is backed by the Government of India, it carries virtually zero default risk, making it one of the safest avenues under Section 80C.

Key Features of NSC:

• Type: Fixed-income, low-risk small savings scheme
  
• Issuer: Government of India
  
• Lock-in Period: 5 years (fixed maturity)
  
• Investment Mode: Available in denominations as low as ₹1,000, no maximum limit
  
• Interest Rate: ~7.7% p.a. (fixed, but revised quarterly by the government)
  
• Tax Treatment:
  
  
  • Principal amount invested qualifies for deduction under Section 80C (up to ₹1.5 lakh)
    
  • Interest earned is taxable, but the interest accrued (except for the final year) is considered reinvested and qualifies for 80C deduction as well
    

Benefits of NSC:

• Safe & Guaranteed Returns: Being government-backed, NSC offers capital protection with guaranteed interest
  
• Affordable Entry Point: Investors can start with as little as ₹1,000 and increase in multiples, making it accessible to all
  
• Auto-Reinvestment of Interest: Interest gets compounded annually and reinvested, helping your money grow without active intervention
  
• No TDS: No Tax Deducted at Source (TDS) is applied on interest; you declare and pay tax as per your slab
  

Things to Keep in Mind:

• Premature withdrawal is allowed only in exceptional cases (death of the holder, court order)
  
• Interest is fully taxable under “Income from Other Sources”
  
• Does not offer the flexibility or liquidity of market-linked instruments like ELSS
  

Who Should Invest in NSC:

NSC is an excellent choice for:

• Risk-averse investors seeking guaranteed returns
  
• Individuals who prefer a fixed tenure and assured income over market-linked volatility
  
• Those looking for diversification in their tax-saving portfolio with a stable, government-backed product
  

Overall, NSC is a great option for conservative investors who want stable growth, guaranteed returns, and tax benefits without taking on market risk.

4. Employee Provident Fund (EPF)

The Employee Provident Fund (EPF) is one of the most reliable and widely used tax-saving investments for salaried individuals. Managed by the Employees’ Provident Fund Organisation (EPFO), it ensures disciplined, long-term savings by automatically deducting a fixed percentage of your salary each month and depositing it (along with an equal employer contribution) into your EPF account.

Key Features of EPF:

• Type: Retirement-focused, government-regulated savings scheme
  
• Eligibility: Salaried employees working in organizations registered under EPFO
  
• Contribution:
  
  
  • Employee contributes 12% of basic salary + DA
    
  • Employer contributes an equal amount (split between EPF, EPS, and EDLI components)
    
• Interest Rate (2025): ~8.25% p.a. (declared annually by EPFO)
  
• Lock-in Period: Till retirement, but partial withdrawals are allowed under specific conditions (e.g., marriage, education, medical emergencies, home purchase)
  
• Tax Treatment:
  
  
  • Exempt-Exempt-Exempt (EEE): Contributions, interest earned, and withdrawals (after 5 years of continuous service) are all tax-free
    
  • Premature withdrawal before 5 years may attract TDS and tax on interest
    

Benefits of EPF:

• Disciplined, Forced Savings: Contributions are automatic, ensuring consistent savings for retirement
  
• Employer Contribution: Adds to your retirement corpus at no extra cost
  
• Safe & Government-Backed: EPF enjoys sovereign guarantee, making it one of the safest long-term savings tools
  
• Compounding Advantage: Monthly contributions grow steadily due to interest compounding annually
  
• Loan Facility: You can avail partial withdrawals (effectively interest-free loans) for emergencies
  

Things to Keep in Mind:

• Withdrawals before 5 years of continuous service may be taxable
  
• Employer’s contribution to EPF, EPS, and NPS combined exceeding ₹7.5 lakh per annum is taxable
  
• Updating KYC (Aadhaar, PAN, Bank details) is crucial to avoid withdrawal delays
  

Who Should Invest in EPF:

EPF is a must-have for:

• Salaried individuals looking for a low-risk, long-term savings tool
  
• Anyone seeking tax-efficient retirement planning
  
• Individuals who prefer automatic savings without actively managing investments
  

EPF is not just a tax-saving investment but also an essential pillar of financial security and retirement planning for salaried employees.

5. Life Insurance Premiums

Paying life insurance premiums is one of the most common and trusted ways to claim tax deductions under Section 80C. Life insurance is not just a tax-saving tool — it is an essential element of financial planning, ensuring that your family is financially secure in case of an unfortunate event.

Eligible Policies Under 80C:

Premiums paid for the following types of policies qualify:

• Term Insurance Plans – Pure protection plans offering a death benefit
  
• Endowment Plans – Insurance + savings with guaranteed maturity benefits
  
• ULIPs (Unit Linked Insurance Plans) – Insurance + market-linked investment growth
  
• Whole Life or Money-Back Policies – Provide long-term coverage and periodic payouts
  

Key Conditions for Tax Deduction:

• Premium Cap: For policies issued after April 1, 2012, premiums must not exceed 10% of the sum assured to claim the full deduction under Section 80C
  
• Maximum Deduction: Combined deduction limit under 80C is ₹1.5 lakh per financial year
  
• Eligibility: Deduction available for premiums paid for self, spouse, children (dependent or independent)
  

Tax Treatment:

• Premiums Paid: Eligible for deduction under 80C (within the overall limit)
  
• Maturity Proceeds: Exempt under Section 10(10D) if premium ≤ 10% of sum assured (subject to conditions)
  
• Death Benefit: Entirely tax-free regardless of premium amount
  

Benefits of Life Insurance Premiums:

• Financial Protection: Ensures your dependents are financially secure in case of your untimely demise
  
• Wealth Creation: ULIPs and endowment plans help build a corpus over time
  
• Dual Advantage: Offers both tax saving and insurance coverage
  
• Estate Planning Tool: Proceeds can help settle liabilities and protect family assets
  

Things to Keep in Mind:

• Choose Term Plans First: Term plans are pure protection plans with high coverage at low cost — ideal for securing your family’s future
  
• Don’t buy insurance solely for tax benefits — inadequate coverage defeats the purpose
  
• Review your coverage periodically to ensure it aligns with your income and life goals
  

Who Should Consider This Option:

Life insurance is essential for:

• Earning individuals with dependents who need financial protection
  
• People looking for long-term financial planning tools that offer both security and tax savings
  
• Investors seeking market-linked growth with tax benefits (ULIPs)
  

In short, life insurance premiums under Section 80C serve a dual purpose — protecting your loved ones and reducing your taxable income — making it a cornerstone of any comprehensive tax planning strategy.

6. Sukanya Samriddhi Yojana (SSY)

The Sukanya Samriddhi Yojana (SSY) is a government-backed small savings scheme launched under the Beti Bachao Beti Padhao initiative, specifically designed to help parents build a secure financial future for their girl child. It is one of the most rewarding tax saving investments under Section 80C in terms of interest rates and benefits.

Key Features of SSY:

• Eligible Beneficiary: Parents or legal guardians of a girl child below 10 years can open the account
  
• Number of Accounts: Maximum two accounts per family (one per girl child)
  
• Minimum & Maximum Investment:
  
  • Minimum deposit: ₹250 per year
    
  • Maximum deposit: ₹1.5 lakh per year
    
• Lock-in & Maturity:
  
  • Deposits allowed for 15 years from the date of account opening
    
  • Account matures when the girl turns 21 or upon her marriage after age 18
    
  • Partial withdrawal allowed (up to 50%) for higher education once the girl turns 18
    

Interest Rate (2025):

• Currently around 8.2% per annum (compounded annually)
  
• One of the highest interest rates among small savings schemes
  
• Reviewed and notified by the government quarterly
  

Tax Treatment:

• EEE Status (Exempt-Exempt-Exempt):
  
  
  • Investment qualifies for deduction under Section 80C (up to ₹1.5 lakh)
    
  • Interest earned is completely tax-free
    
  • Maturity amount is also tax-free
    

Benefits of SSY:

• High Returns with Safety: Being government-backed, it is virtually risk-free while offering attractive returns
  
• Long-Term Wealth Creation: Ideal for meeting big-ticket expenses like higher education or marriage
  
• Promotes Financial Discipline: Regular contributions encourage systematic savings for a child’s future
  
• Social Impact: Aligns with the larger national mission of promoting education and empowerment for girls
  

Things to Keep in Mind:

• Must open the account before the girl turns 10
  
• Missing annual contributions could lead to account deactivation (but can be revived with a penalty)
  
• Since funds are locked in until 21 years, liquidity is limited — suitable for long-term planners
  

Who Should Consider This Option:

SSY is perfect for:

• Parents planning for their daughter’s higher education or wedding expenses
  
• Investors seeking safe, guaranteed, and tax-free returns over the long term
  
• Families looking to build a dedicated financial corpus exclusively for their girl child
  

In short, SSY combines attractive interest rates, tax savings, and social purpose, making it one of the most meaningful and rewarding 80C investments for parents of young girls.

7. Unit Linked Insurance Plans (ULIP)

Unit Linked Insurance Plans (ULIPs) are a unique financial product that offers the dual benefit of life insurance coverage and market-linked wealth creation. They allow policyholders to grow their money by investing in equity, debt, or balanced funds while simultaneously providing a safety net for their loved ones.

Key Features of ULIPs:

• Combination of Insurance + Investment: A portion of your premium goes toward life insurance, while the remaining is invested in market-linked funds
  
• Fund Options: Choose from equity funds (high growth potential), debt funds (low risk), or balanced funds based on your risk appetite
  
• Flexibility: Option to switch between funds during the policy term depending on market conditions
  
• Transparency: Break-up of charges, insurance cover, and investment allocation is clearly mentioned in the policy
  

Lock-in Period:

• 5 years minimum – among the longer lock-in periods under 80C
  
• However, ULIPs are best suited for long-term wealth creation (10–15 years or more) to maximize compounding and market growth
  

Tax Benefits (As per Current Rules):

• Premiums Paid: Eligible for deduction under Section 80C (up to ₹1.5 lakh annually)
  
• Maturity Proceeds: Tax-free under Section 10(10D) if annual premium ≤ ₹2.5 lakh (across all ULIPs)
  
• Death Benefit: Always tax-free, regardless of premium amount
  

Why ULIPs Are Popular:

• Wealth Creation Potential: Since part of the premium is invested in market-linked instruments, ULIPs can deliver inflation-beating returns over the long term
  
• Goal-based Planning: Ideal for long-term goals such as children’s education, retirement, or wealth accumulation
  
• Life Cover Protection: Ensures your family receives financial support even if something happens to you
  
• Discipline & Flexibility: Lock-in period encourages disciplined investing while switches allow active portfolio management
  

Things to Consider:

• ULIPs have higher charges (mortality, fund management, and administration) in the initial years — but these typically reduce over time
  
• Returns are market-linked, so there is an element of risk compared to guaranteed-return products like PPF or NSC
  
• For short-term goals (under 5 years), ULIPs may not be suitable due to lock-in and market volatility
  

Who Should Consider ULIPs:

• Investors with a long-term horizon and a moderate-to-high risk appetite
  
• Individuals looking for a single product offering both insurance and investment
  
• Taxpayers seeking to optimize 80C benefits while also growing wealth
  

In short, ULIPs are best suited for goal-oriented investors who want to stay invested for the long term, benefit from market growth, and enjoy the dual protection of life cover and tax savings.

What’s Different in the New Tax Regime?

The new tax regime (introduced in Budget 2020, made default from FY 2023-24) offers lower tax rates but does not allow most deductions, including 80C.

Key Takeaway:

• If you already invest in 80C options for long-term goals, the old regime might still give you higher net savings.
  
• If you don’t want to lock money in investments just for tax deduction, the new regime might work better.
  

Tip: Use a calculator or consult a tax consultant to see which regime saves you more overall.

Role of Tax Consulting Services in Choosing 80C Investments

Choosing the right mix of investments is not always straightforward. Professional tax planning services can help you:

• Compare old vs. new regime benefits
  
• Select suitable instruments based on risk appetite
  
• Align investments with life goals (retirement, education, wealth creation)
  
• Stay updated with changing tax laws
  

A trusted tax consultant ensures you are not just saving tax but also building a well-structured financial plan.

Final Thoughts

Tax saving investments under 80C remain one of the most powerful tools to grow wealth while reducing tax liability. The key is to pick the right combination of instruments — PPF, ELSS, EPF, NSC, ULIP — based on your goals and risk profile.

With the new tax regime in place, evaluate both options carefully and choose what benefits you most. When in doubt, seek professional guidance through tax consulting services to optimize your savings and build a stronger financial future.

Remember, tax saving is just the start — smart planning today ensures financial freedom tomorrow.

 Also Read: Long Term Investment – What is it and How Does it Work?