Nobody likes paying taxes. But what if I told you there are legal ways to pay less tax? The government actually wants you to save money through certain investments.
This is where section 80C of income tax act comes in. You might have also heard people talk about PPO and wondered what is PPO. Don’t worry. We’ll explain everything in plain language.
What Does Section 80C Mean?
Here’s the deal. Section 80C lets you lower the amount of income on which you pay tax.
You can claim up to Rs. 1.5 lakh every year. How does this work? Let me show you with an example.
Say you earn Rs. 10 lakh in a year. You invest Rs. 1.5 lakh in things covered under Section 80C. Now the tax department will only count Rs. 8.5 lakh as your income. You pay tax on this lower amount only.
That’s real money saved in your pocket.
Where Can You Invest Under Section 80C?
The section 80C of income tax act accepts many types of investments. Pick what suits you best.
Here are your options:
- Public Provident Fund (PPF) – Safe savings with decent interest
- Employee Provident Fund (EPF) – Gets cut from your salary automatically
- Life Insurance Premium – Money you pay for life insurance
- National Savings Certificate (NSC) – Government savings bond
- Tax Saving Fixed Deposits – Bank FDs locked for 5 years
- Equity Linked Savings Scheme (ELSS) – Mutual funds that save tax
- Sukanya Samriddhi Yojana – Special account for daughters
- Tuition Fees – What you pay for kids’ school or college
- Home Loan Principal – The actual loan amount you repay (not interest)
Mix them up if you want. Just stay under Rs. 1.5 lakh total.
What is PPO?
Let’s clear this up. PPO usually means Post Office schemes when people talk about savings and taxes.
The Post Office runs different saving plans. These plans are safe and also help you save tax. Many of them fall under Section 80C.
Post Office Schemes Under Section 80C
Now that we know what is PPO, lets see several saving plans it has. Here are the main ones that cut your tax:
National Savings Certificate (NSC)
You buy this certificate from any Post Office. After five years, you get your money back with interest. The government decides the interest rate. Your NSC investment counts under section 80C of income tax act.
Many people like NSC because it’s super safe. There’s zero risk. Plus you don’t need a bank account for this. Just walk into any Post Office with your ID and money.
Post Office Time Deposit
This is like a bank fixed deposit. You keep money for a fixed time. When that time ends, you get your money plus interest. The five-year deposit gives you tax benefits.
You can also get shorter deposits of 1, 2, or 3 years. But only the 5-year one saves tax.
Older People Savings Scheme (SCSS)
Only for people above 60 years. Good interest rates. Tax benefits included.
This scheme is popular with retired folks. The interest comes every three months. Many retirees use this as regular income after retirement.
Sukanya Samriddhi Account
For girl children. Parents can open this. Really good interest rates. Full deposit gets tax deduction.
You can open this till your daughter turns 10. The account matures when she turns 21. The money can help with her education or wedding.
Why Choose Post Office Schemes?
Post Office schemes work well for most people.
Your money is safe because the government backs it. Post Offices are in every corner. You’ll find them in small towns too.
Opening an account takes little time. Not much paperwork either. The interest you get is often better than banks. You can pick short or long term plans based on what you need.
How to Claim These Deductions
Claiming is not hard. Just keep your papers organized.
Save all receipts. PPF, NSC, insurance – whatever you invest in, keep the papers. You will need these to claim deductions under Section 80C of the Income Tax Act.
When filing your tax return, list these investments. There’s a place in the form for Section 80C items.
Working in an office? Tell your HR about your investments. They’ll cut less tax from your salary each month. This way you don’t have to wait till year end for a refund.
Many people forget this step. Your employer takes out tax based on your full salary. But if you tell them about your investments, they adjust it right away.
Common Mistakes to Avoid
People mess up sometimes. Here’s what not to do.
Don’t wait till March to start investing. Start early. You’ll earn more that way.
Tell your employer about your investments. If you don’t, they’ll take out more tax than needed.
Don’t lose receipts. No proof means no tax saving.
Investing more than Rs. 1.5 lakh doesn’t help. You won’t get extra benefit beyond this limit.
Making the Right Choice
Your friend’s choice might not work for you. Everyone is different.
What are you saving for? Retirement? Kids’ education? A house? Pick investments that fit your goal.
Some schemes lock your money for years. Make sure you can manage without that cash.
Compare interest rates. More interest means more money for you.
Final Thoughts
Learning about section 80C of income tax act can save you thousands in taxes. Understanding what is PPO and Post Office schemes gives you more ways to save.
Start investing early. Don’t wait. Small amounts add up over time.
This isn’t just about cutting tax. You’re building money for your future. That house, that car, your child’s college – these investments help you reach those goals.
Keep your papers safe. Talk to your employer. Plan ahead.
The government is giving you a chance to pay less tax. Use it. Your wallet will thank you later.