Section 80C limit exhausted? From PPF to Sukanya Samriddhi, 5 investment options you should still go for

By: | Updated: January 28, 2019 7:55 AM

Some of these investments are more than just tax savings. Hence, even if you have exhausted the limit under section 80C, you can still go for these instruments that are great for investments.

Some of these investments are more than just tax savings. Hence, even if you have exhausted the limit under section 80C, you can still go for these instruments that are great for investments.

The tax-saving season is here, and most people are looking for investment avenues to get tax deductions on their investments. Popular options to get tax deductions under Section 80C, where a deduction up to Rs 1,50,000 can be claimed from an individual’s total income, are mostly looked at. These include investment options like LIC plans, Public Provident Fund (PPF), ELSS, 5-years fixed deposits (FDs), NPS, SCSS, SSY and NSC.

Industry experts say, most people look at these investment avenues just to save tax. However, some of these investments are more than just tax savings. Hence, even if you have exhausted the limit under section 80C, you can still go for these instruments that are great for investments.

From PPF to Sukanya Samriddhi, here are 5 investment options you should go for:

Public Provident Fund (PPF) – Under PPF account you can deposit a maximum of Rs 1,50,000 per year. Contributions towards the Public Provident Fund are eligible for tax deductions under Section 80C and come under the EEE category. PPF scheme is a long-term investment and comes with a locked-in period of 15 years. However, partial withdrawals can be made after 7 years. A PPF account can also be further extended by 5 years after its maturity period of 15 years. Pre-mature closure of this account is also allowed after 5 years. Investments can be made under this scheme starting from Rs 500 up to Rs 1.5 lakh, and the current rate of interest is 7.9 per cent per annum. You can open a PPF account either in your own name or in the name of a minor child.

Equity Linked Saving Scheme (ELSS) – Equity linked savings scheme is an open-ended Equity Mutual Fund which comes with a mandatory lock-in period of three years from the date of investment. Experts suggest investors who are planning to invest for longer periods, for instance, 5-7 years, should opt for this equity schemes. Under this scheme around 65 per cent of the fund is invested in the equity market. Investments in ELSS qualify for tax deduction under section 80C and fall under the EEE category. The rate of interest on investment is directly linked to the market performance. Starting from Rs. 500, you can invest in this scheme and there is no upper limit for investment.

National Pension System (NPS) – Since its rollout in 2008-09, the Pension Fund Regulatory and Development Authority (PFRDA) has made this scheme more and more subscriber friendly. Working professionals under the unorganized sector can opt for this Government scheme to get a pension on retirement. You can make a maximum investment of Rs. 1.5 lakh. There are various NPS plans you can choose from as per your risk appetite. Investors can also claim tax deduction under Section 80C. However, if the investment made by the individual is voluntary, as per Budget 2016, you can make an extra Rs. 50,000 claims under Section 80CCD(1B). On the other side, the earnings from NPS are taxable at maturity which is a disadvantage. Also, there is no guarantee of earnings with this scheme.

Senior Citizens Savings Scheme (SCSS) – Suitable for senior citizens, investments in Senior Citizens Saving Scheme can be made by an individual after 60 years of age. However, you can opt for it after the age of 55, if you have taken Voluntary Retirement Scheme (VRS). SCSS scheme comes with a tenure of 5 years. You can make investments in this scheme starting from Rs 1,000 up to Rs 15 lakh. The maturity period of this scheme is 5 years. However, the account can also be extended for more 3 years after maturity. You can also make a pre-mature withdrawal after 1 year. The current rate of interest offered is 8.4 per cent per annum, paid on a quarterly basis. The interest income under SCSS qualifies for deduction under Section 80C, and the maturity amount is exempt from tax.

Sukanya Samriddhi Yojana (SSY) – Investments can be made under this scheme by a parent or legal guardian of a girl child. The investment has to be made for a girl child who has not reached the age of 10 years. Sukanya Samriddhi Yojana account can be opened for up to two girl children. You can also include a third girl child in case of twins. The investments made under this scheme are also eligible for tax deduction under Section 80C and come under the EEE category.

Experts suggest that the Sukanya Samriddhi Scheme is one of the best investment options available today. Under this scheme, deposits can be made every year till the end of 14 years from the year of opening the account. The maturity period of this account is 21 years after the opening of the account. For higher education or marriage after attaining the age of 18 years, you can also make partial withdrawal up to 50 per cent of the balance. An account can be opened at a public sector bank or post offices. Currently, the rate of interest offered is 8.4 per cent and you can make investments starting from Rs 1,000 to Rs 1.5 lakh per annum.

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