Tax Savings Section 80C: List of Qualifying Investments under section 80C

Details about List of Qualifying instruments under Section 80C of the Income Tax for tax savings and tax benefit purposes
We all know the need for tax savings. Especially the salaried employees take this very seriously. In this article, we specifically cover the details of investments which can be made under section 80C, for benefit of tax savings.

Section 80C Tax Benefits

The section 80C allows for a limited amount of your taxable money to be deducted from your taxable salary, thereby giving you the benefit of tax savings. So how much tax savings can you make for the various savings under section 80C depends upon your individual gross salary and the investments you make under section 80C.
Let's take an example:
Suppose your taxable salary/income is Rs 5.8 Lakhs. Based upon the current income tax slabs, you need to pay tax on the entire 5.8 Lakhs at the rate of 0% for first 1.8 Lakhs, then at 10% for the income of 1.8 Lakhs to 5 lakhs, and 20% for the rest 80,000 Rs., which is above 5 Lakhs. The total tax on 5.8 Lakhs (including cess and surcharges) will be around 51,500 Rs.

Howver, now suppose that you make an investment of say 85,000 in tax saving instruments which qualify under section 80C. Now all the maths changes for your tax calculations.
Reduce the 85K from your income, you are left with net 4.95 Lacs only. Now, you need to pay 0% tax on forst 1.8 laks, and then 10% for the income from 1.8 lacs to 4.95 lakhs. Now, the total tax on 4.95 Lakhs (including cess and surcharges) will be around 34,505 Rs
Hence, in this particular case, just by investing 85,000 Rs., you were able to save taxes worth almost Rs. 17,000. You also brought down your effective tax slab from 20% to 10%.

Let's take another example. Suppose there is someone who has a net income/salary of Rs. 8.8 Laks. So his tax will come to around 121,540.00
Now suppose He too invests the same 85,000 in tax saving instruments under section 80C. Hence, his taxable income comes down to 7.95 Lakhs. Now, his effective tax is 95,790.00 only.
Hence, in this particular case, just by investing the same 85,000 Rs., this person was able to save taxes worth almost Rs. 25,750.

Most importance Point from the above example: Effective Tax Benefit from section 80C depends upon your individual total income, and your tax slab. The higher income bracket you are in, the more you save on taxes by investing in tax saving instruments under section 80C. You can attempt to bring down the tax slab to a lower bracket depending upon your own income details.

Now, from the above example it is clear that one can benefit by investing in section 80C qualifying instruments. Then we proceed to the next step - What all options are available for investments under tax savings under section 80C?. Please note that not just investments, some of your expenses can also be eligible for tax deductions under section 80C. Proceed to the Complete List of Qualifying investments under section 80C