Choosing an product to max out your Section 80C, here are the top investments to consider:
- PPF is a good choice if you prefer safe returns and are ok with longer lock in period. Your money is locked in for 15 years but you can do partial withdrawals starting the 6th year. Returns and withdrawals are tax free.
- Parent to a girl child? Open a sukanya samridhi account. It earns a tax free interest of 9.2%, best in class. Withdrawals are exempt too. Comes with a lock in of minimum 18 years.
- You can claim your contribution to EPF in Section 80C. EPF contributions are deducted from your salary by your employer. They can help you claim a large part of Rs 1,50,000.
- Consider purchasing an NSC of 5 year term (10 year term NSCs have been closed by the government, old ones shall continue). Interest is taxable though, and can be claimed under section 80C in each year of the NSCs term.
- But if you are up for some risk, consider ELSS. Sit back for the next 3-5 years and see your investment grow. Of all the products under section 80C ELSS has the least lock in period of 3 years. Returns from it are tax free.
- Choose life insurance if you really need one! And not because someone is hard selling their product. Check the terms and conditions carefully.
- Be cautious if you are purchasing ULIP. This is a longer term commitment and you must spend time evaluating its terms, conditions and charges. Do remember you may end up losing tax benefits and ULIP advantages if you do not continue payments over the prescribed term. This one may be a hard one to choose!
- Buy medical insurance. Rising medical costs have made it harder for families to take care of regular medical expenses. You can buy a policy to cover yourself, your spouse, your kids, even your parents. A maximum of Rs 55,000 can be claimed by you.
This article was published on Yahoo! Finance India on 18th February 2016.