Tax Saving Tips & Investments - Section 80C Schemes - YouTube

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Namaskar, My name is Mukul, and welcome to Asset Yogi.

Friends this video is going to be very important.

In this video, we will talk about tax-saving investments.

Tax planning we all need to do,

and a very big portion in tax planning is of investment,

in which we get a tax rebate.

This is covered in section 80-C under the Income Tax Act.

Where you get a limit of 1.5 Lakh on today's date.

This limit could also increase in the future.

Other than that you give an additional limit of Rs 50,000

if you invest under National Pension Scheme.

So you can take a total rebate up to 2 Lakh under section 80-C.

Now, what are these investments under section 80-C?

See whenever someone suggests us about tax saving investments,

first of all, everyone says to invest in Life Insurance.

Life Insurance yes, we should all take but how to take that

we will surely talk about it in this video.

And another option people suggest is to invest in Tax saving FD for 5 years.

And to invest in PPF, Public Provident Fund cause interest is good.

These two or three products are mostly suggested but there are

many more products under section 80-C.

Secondly, there are many things in section 80-C

where you need not invest in the first place,

We will also cover that in this video.

I will follow a step by step approach in this video,

Where you should invest first, after that your one limit is generated,

after that what investment should you do,

so in this way, I have divided these investments into 5 categories.

And this is priority wise like category A is priority 1

category B is limit 2, so as your limit start to end

so you can move forward.

So do watch this whole video, so that you could see all the categories.

You should have the complete knowledge of all the products then only

you will be able to take the correct decision so stay tuned in this video.

So first of all let's talk about category A in which you don't need to invest anywhere.

We will cover all the different invest based on these parameters.

Coverage means, how much of your investment will get covered under 80 C.

Investment type,

how much risk would be in that investment?

How much would be the lock-in period,

will the returns will be taxable or not.

Finally how many post-tax returns we would get and time horizon meaning

is that investment good for mid-term, short term, or long term?

Category A- You need not do any extra investment.

This first investment is Employee Provident Fund (EPF).

Your company must be deducting EPF, and how much amount is this?

It is 12% of your basic salary + DA (dearness allowance).

12% of that is deduced.

So here your coverage is 12% of your basic +DA.

Investment type- fixed income because you get a fixed interest rate here.

The risk is very low because there is government backing.

Lock-in, these funds are generally for retirement.

You can only withdraw before in case of emergency.

I have already made a video on EPF, calculations, benefits, I have

covered everything, you can watch that video.

And other than retirement if you leave your job in the middle

you can surely withdraw money then if your unemployment period is

more than 2 months.

This is not a taxable return, it comes under the EEE category which means

Exempt Exempt Exempt,

there is no tax during investment,

neither it is taxable during investment.

Finally when you withdraw money after maturity, then also it's tax-free,

you get the total interest amount of whatever the interest you get.

So because of this our post-tax returns are good,

you get interest upto 8-9 percent.

And time horizon will be very long because this fund is for retirement.

Now other than EPF,

the principal repayment of the home loan also gets covered under 80-C.

A lot of people don't know this also.

So here is the principal payment that you would repay

let say your installment of home loan is Rs 50,000,

I am just talking about principal

so this Rs 50,000 will directly be covered from the home loan of your 1.5 lakh limit.

And similarly, if you pay for your kid's school fee

or college fee then the tuition fee part of it,

is also covered under section 80-C.

So let's say for an example, school fee per year

we are just talking about the tuition fee,

Rs 25,000 goes for the school fee.

And Rs 50,000 is for a home loan, and in EPF let' say

Rs 25,000 also gets deducted per year here.

So if you see the total, then Rs 1 lakh

here from 1.5 lakh limit

got covered from category A, then only

if you want to do an extra investment,

you only need to invest Rs 50,000.

That you can see from other categories.

Now I would also like to talk about post-tax returns of home loan

here see, I have written moderate returns,

because if the interest rate that you are paying on a home loan is 9-10%

then you can count it as returns,

because you don't need to pay that interest now.

So whatever your limit reached in category A

after that, you can move to other categories.

The next category I kept here is insurance premium.

We all have to take insurance

so here I recommend you take term insurance,

that is pure insurance, meaning

there is no investment there, whatever much money you are investing suppose

you are paying a premium of Rs 10,000 per year,

then that Rs 10,000 will be claimed from your 80-C.

So here, the second type of insurance is Endowment plans, which are very popular.

I don't recommend these Endowment plans

because you get very low returns here.

The third type is of ULIPs meaning Unit Linked Insurance Plans.

now once let's cover all three of them.

So whatever you are paying annually in term insurance,

that would get covered under 80-C.

This is a pure investment here, and it is not any type of investment.

And time horizon is very long term

because this insurance is taken for the long term.

Now, second is our Endowment plans here also a total annual premium

will get covered under section 80-C.

There is investment on insurance + debt,

because some portion goes under insurance

and the rest goes to fixed income securities.

Risk here is very low,

lock-in period is minimum 5 years.

And these returns could be taxable or non-taxable

If the premium that you pay per year is less than 10% of the sum assured.

Then these tax returns won't be taxable.

Otherwise, it would be taxable.

So if we say, you get the least post-tax returns here,

you don't get returns of more than 4-6%,

therefore I don't recommend Endowment plans.

So if you want to take insurance then take term insurance

and you can buy mutual funds from the leftover money

or you can invest somewhere else.

And here also time horizon is very long term.

Now let's talk about ULIPs

here also you will get a rebate on your annual installment under 80-C.

maximum limit is Rs 1.5 lakh only.

Here some portion of your money goes to insurance and some portion

get's invested in equity, i.e., it is invested in the stock market.

Because it is invested in the stock market therefore risk becomes moderate.

And lock-in period is 5 years here

Your returns are not taxable here, whatever long term capital gains tax

has been introduced but ULIPs are exempted under it.

So there is no long-term capital gain tax here.

Returns i will say is high,

I have kept returns more than 10% under the high category.

But you can get better returns than this in case mutual funds i.e.,

in the ELSS category which are your tax-saving mutual funds.

So we will talk about that soon.

Here invest horizon is long-term.

If you want to see good returns in ULIPs then you

need to invest for a very long time,

i.e., if you run any ULIP for over 10 years then only

you get somewhat better returns.

Here because there could also be a lot of ups and downs in the market

and here you take insurance for safety,

so I generally don't recommend ULIPs

because here both your investment and insurance are getting mixed.

So it's better to take term insurance and second if you want to take

a tax-saving mutual fund, then you can invest under ELSS.

So how to do that? We will talk soon about that too.

Before that, we need to see the third category,

see some limits get covered under category A

some limits get covered under category B,

mainly we are talking about term insurance. Let's say

you paid premium of Rs 10,000 for the year,

so Rs 1 lakh was before and Rs 10,000 now, so Rs 40,000 limit is left.

So how to do that Rs 40,000 limit, let's talk about that too.

So first let's talk about the National Pension scheme,

You can also invest under the National Pension Scheme, under this

you will get exemption on the money that you put in that 1.5 lakh limit

but other than this you get an additional rebate of Rs 50,000.

There is a sub clause of section 80-C, section 80 CCD(1B),

So you are getting this additional rebate of Rs 50,000 over Rs 1.5 lakh,

you should take it.

So under NPS, at least invest this Rs 50,000.

Now, what is special about NPS?

you will get a rebate on the much money you invest here

Investment type, investment is done on both equity and debt.

So the money you can put in the stock market and some in debt instruments also

where you get a fixed income.

The risk here is moderate, I am saying moderate because some portion

is also investing in the stock market here.

Lock-in here is the maximum if we compare all the investments

because you get money directly at your retirement.

Before that, there are only one or two emergency cases where you can

withdraw your money otherwise,

National Pension Scheme, meaning pension you will get directly in your

retirement, so the main purpose of this fund is

of retirement.

These returns are taxable, we can say partially.

Whatever the lumpsum amount is generated,

if you withdraw all lump sum, or whatever portion you will withdraw lumpsum

it won't be taxed

but some portion that you need to take as minimum pension,

so when you get the pension then according to the tax slab

tax is applied, hence I wrote partially here.

Post-tax returns, because your money could also be invested in the stock market

so it is high here,

you can expect return upto 12- 13%.

If you invest all the money in equity,

but if you invest all your money in debt, you can expect returns of 8-8.5%

The time horizon is very long because you will get all the money at retirement.

Therefore I recommend at least taking the limit of Rs 50,000 under NPS.

So till now, we talked 1 lakh 10 thousand of which we took 1 lakh from

category A, and Rs 10,000 from category B,

so Rs 1 lakh 10 thousand we got from there.

Rs 50,000 let say additionally you took from NPS.

And other than 1 lakh 10 thousand, the limit which is left is of Rs 40,000.

Now, where should you invest this Rs 40,000?

This is just an example, you can calculate it according to your situation.

Next category is mutual funds,

tax saving mutual funds.

This is my favorite category.

So we call this Equity linked saving scheme,

Here whatever you invest, I mean the limit of 1.5 lakh will be get covered.

You can invest all the amount in equity,

here you can a combination of equity and debt.

If you invest all the money in equity

and if you keep it for a long time 5-10 years, then you will get good returns.

The risk here is moderate, moderate because

your money is getting invested in the stock market.

And because it gets invested in multiple stocks so the risk is not that high also.

Therefore we will keep it at moderate risk.

The Lock-in period is 3 years, here also I would like to highlight,

that in compared to all the investment categories this is the shortest period.

So I will say if your horizon is mid to long term then

ELSS is also a very good investment option here.

These are taxable returns, long term capital gain tax

but, if you get a return of more than 1 lakh from your equity,

that means if long term capital gains are more than 1 lakh

then only it is taxable

If we talk about post-tax returns, you can expect returns up to 13-14% here

and this is also the highest compared to all other investment categories.

The time horizon is from mid to long term, so this is also a benefit

because you don't need to wait for a very long time.

Even after 3 years, you think the market is good I want to withdraw money

and also there is some need for money, so you can withdraw also.

Now a lot of people also ask how should we invest in ELSS or mutual funds?

So that you can do it online, I do it online only.

For that you can open a Demat account, with that you can invest

in mutual funds online and along with that if you wish to invest or trade in stocks

then you can do that as well.

So if you want to open a Demat account I have given a link in the description

the box below, all step by step process is explained,

you can open the Demat account.

Now let's move on to next category, next category is,

Fixed income deposits.

Here first of all I recommend Sukanya Samriddhi,

If you have a daughter then you can collect a fund for her study and marriage

this is a government scheme.

Here all the money that you invest gets covered under section 80-C.

Overall in the 1.5 lakh limit.

There is fixed-income security because a fixed-income rate is promised to you.

Risk is very low, and there is also backing of the government.

Lock-in period is long,

this investment is of 21 years.

In between, you can withdraw money for study and marriage.

These are not taxable returns, these also come under the EEE category so

you won't get taxed on the interest rate.

So you get good interest rates here, nowadays it's around 8.5%.

The time horizon is long-term.

Now second category here is PPF or VPF.

PPF means Public Provident Fund,

VPF means Voluntary Provident Fund.

You would remember we talked about EPF at the start,

that it is deduced of 12 % of your basic salary.

If you want to contribute more than that, you can do that as well.

We call it VPF i.e., Voluntary Provident Fund.

You get all the same benefits, you get tax benefits and you get the same returns.

And second Public Provident Fund, a lot of people don't have this option

of EPF or VPF

so they can go to Public Provident Fund,

returns are good there as well.

So there you get 8% returns nowadays.

So here also you get coverage under 80-C, there income security,

risk is also less.

The time horizon is of 15 years if we talk about PPF,

VPS is operated similarly to EPF.

So this is also a long term investment, you can withdraw money in between

for some cases only.

These are not taxable returns, these also come under the EEE category

so there will be no tax on the interest rate.

So here also you can expect moderate returns of 8-9%.

Time horizon, this is also long-term.

Then other than this, there are some other deposits too,

I have clubbed them together, what are these deposits?

Like there are 5 years FD, there is a National savings certificate,

there are senior citizens savings schemes, post office deposits.

All of these are more or less operated in the same way

here also all your investment gets covered under the 80-C limit.

There are fixed income securities, you get fixed income interest here too.

Risk is also less here,

and generally, there is a lock-in of 5 years,

i.e., it should be an FD of 5 years, National saving certificate is also of 5 years.

And Post office deposits, are of a lot of kinds, but you will get a rebate

only when the deposits are of a minimum of 5 years.

And these are taxable returns, I will highlight this as well a little.

Whatever the interest rate you are getting, let say you are getting 7%

and if you come in the 30% bracket,

then your effective interest rate would be near 5% only.

So here keep this in mind you get 5-7% returns,

I have written 6-7% so this is very little.

We have other options where you could get better returns.

So that's why I kept it in the last category.

But yeah this is a benefit that for you this investment completes

under the midterm, if you want any money under 5 years,

or want to do a safe investment

then surely you can put your money under FD or NSC, etc.

Otherwise, if you can take even a little bit of risk ELSS is a very good option.

So here I tried to cover all the investments

that is under 80-C and I covered it category-wise.

So first of all category A then category B and so on you can move up to

category E and priorates.

I hope you liked this video. So do like and share this.

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